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Invoice finance is surprisingly cost effective; charges and fees are extremely competitive with many lenders providing low rates for specific industries. The main fees and charges are explained below and can vary from funder to funder depending on how each business is evaluated by the invoice finance company.

Service Charge - A service charge covers the cost of operating an account and it can be varied depending whether additional services such as bad debt protection and credit control are included within an arrangement. The service charge is applied to your account on a monthly basis subject to the value of invoices entered into the facility each month and is normally subject to a monthly minimum threshold. The service charge percentage applied is fixed for the duration of the initial term of the agreement.

Discount Fee - This is applied to an account like a rate of interest applied to an overdraft facility and is usually charged as a percentage over base rate. The discount fee is therefore variable as it is subject to change in line with movements to base rates. Hence it is important to ensure you understand which particular base rate is being applied as it may not necessarily be that of the Bank of England.

Arrangement Fee - An arrangement fee also known as an admin fee or set-up fee is a one off charge made by the invoice finance company to put a facility in place.

Legal Fees - These cover the costs of putting the appropriate security in place for the lender and will include the registration of a charge in favour of the invoice finance company at Companies House.

Re-factoring Charge - Your invoice finance agreement will indicate the length of time a lender will advance you funds against an outstanding invoice. This will normally be 90 days to 120 days. In the event your customer fails to settle payment within this time frame, the lender will apply a re-factoring charge to the invoice in question.

Disbursements - These may be applied if additional fees are incurred by the invoice finance company due to bounced cheques, additional credit searches or same day cash transfers. These are always explained to clients in advance so companies have the opportunity to keep them to a minimum.

All costs are rolled into the drawn funds balance so it operates like an overdraft on a current account held with the invoice finance company. The process could not be simpler or more transparent. The use of invoice finance solutions has assisted many businesses who required an urgent injection of funds to help them with their business plans and resolved long standing cash flow problems in just 24 hours.

To discuss how Intelligent Factoring Solutions can assist you to find the most suitable and competitively priced invoice finance facility for your business, call us today on 01753 888 737.                         

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