Factoring, invoice discounting and asset-based lending are often misunderstood – especially when it comes to cost. We are here to put the record straight.
Common questions about invoice finance pricing
Q. Why can’t you provide an online quotation?
A. Quite simply, because we don’t want to give you an inaccurate or misleading figure.
Factoring, invoice discounting and asset-based lending are complex products to cost – we need to understand the nature of your business, your customer base and precisely what you would like to achieve. This requires a telephone conversation or face-to-face discussion, so that we can provide a tailored quotation.
Q. You only pay a maximum of 90% of the invoice amount.
What happens to the rest?
A. The 90% is the usual upper limit for the initial payment we make. However, we certainly do not keep the remaining 10%. This is paid when your customer settles the invoice, minus our service charges. Service charges pay for our collection service - when we collect money on your behalf.
Q. I prefer to use a loan or overdraft to get capital into my business. Why should I even consider invoice finance?
A. When you look closely at costs, invoice discounting can compare very favourably with overdrafts. Loans and overdrafts will not usually match the amount of funds available through invoice finance – and they will often require you to offer additional forms of security.
Q. Why is factoring more expensive than invoice discounting?
A. With factoring, we process payments and deal directly with the clients who owe you money.
With invoice discounting, your business would have to perform all these functions. Factoring is an added-value service that is particularly useful for companies that don’t want to bring these functions in house.