Invoice Discounting Consultants
 

Invoice Discounting
Consultants

Invoice Discounting Consultants

Getting the best invoice discounting agreement can be very difficult for a company acting on its own. Our invoice discounting consultants provide the expertise you need to select the most appropriate service for your needs. A consultant will also ensure that you don't fall foul of the pitfalls described below.

Potential Invoice
Discounting Problems

Consultants benefit

Minimum charges

1% of a £500/£600,000 turnover does not sound too bad but beware, most invoice discounting companies have a minimum charge of at least £12,000.

Invoice Discounting ConsultantsWe know the invoice discounters who specialise in the SME market and they have much lower minimum fees.

Advance Levels
Do not believe what the glossy brochures tell you. Advance levels up to 90% are the exception, not the rule. Factoring companies conduct regular audits during which they will look at the levels of contras', credit notes / returns, invoices over 90 days old and customers exceeding their credit limits. Once these are taken into account the true level of advance is more typically 70/75%. You need to be realistic about this.We can help you find an invoice discounter that will accept three or six month's notice from day one, so reducing any financial exposure.
Minimal Annual Fee (MAF)
A relatively new innovation in the invoice discounting industry, the use of MAFs has increased rapidly in recent years. Typically a minimum of one year is stipulated but we have seen agreement's spanning two and three years. An initial one-year period is not unacceptable with three months notice thereafter, but make sure the break fee is pro-rata after the initial period.We can help you find an invoice discounter that will accept three or six month's notice from day one, so reducing any financial exposure.
Excessive break fees
Not content with tying clients in for extensive periods invoice discounters will also often establish a lending limit up to twice the level of that needed, i.e., £10m when £5m is more that enough. Needless to say the break fee is based on the higher of the two figures.We can ensure that the correct lending limit is set up so that a realistic break fee is in place from the start of the agreement.
Concentration Levels
Most invoice discounting companies like to see a wide spread of customers with no one representing more than 30% of turnover. If this happens they will disallow the excess with potentially disastrous consequences for your cash flow.
This is not much help to new start-ups with few customers or growing young companies looking to take on all the business they can.		We know the invoice discounting companies that will happily accept concentration levels of 100% and we can put you in touch.
High Export Content
Many invoice discounting companies are not comfortable with an export level of more than 20-25%. Others will not fund exports at all.We will introduce you to a number of market specialists who accept export levels of 70-80% and up to 100% where appropriate.
Service charge
This is levied on turnover including Vat. Notice how many of the invoice discounters web sites and literature do not make this clear.We alert clients to all costs up front to enable an informed decision to be made.
Miscellaneous Charges
These include quarterly audit charges, electronic transfer fees, bank charges and re-discounting fees. You need to check all of these out carefully before signing any invoice discounting agreement.We do all the leg work for you to ensure you get the best package.
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