Switching invoice finance provider: what to consider

Invoice finance facilities are rarely reviewed as often as they should be. A facility arranged when the business was smaller, or under pressure, can quietly become expensive, restrictive or simply a poor fit. Switching provider is a normal part of the market and is usually more straightforward than people expect.

Signs it may be time to review

• Fees have crept up, or minimum charges are biting because turnover through the facility has changed
• Availability is frequently restricted by concentration limits or disallowed invoices
• Service has deteriorated, or the relationship manager has changed repeatedly
• You have outgrown factoring and now want confidential discounting
• The facility does not accommodate a new customer, contract or sector

Check your existing agreement first

Before doing anything else, read the notice and termination provisions in your current agreement. Most facilities require a notice period, often several months, and some carry exit fees, particularly within an initial term. Knowing these terms tells you when a move can realistically happen and what it might cost.

How the transition works

When you move, the new provider will typically repay the outgoing provider's balance as part of the initial funding, and the two providers will agree the handover of the ledger. There is usually a short period where availability is calculated carefully to make sure the business is not left short during the switch. A well-planned transition should not disrupt your customers, particularly with confidential facilities.

Things to weigh up

• Total cost of the new facility against the old, including any exit costs
• Whether the new provider's advance rates and limits genuinely improve availability
• The quality of service and sector understanding on offer
• Whether renegotiating with your current provider could achieve the same result

Sometimes the best outcome is a better arrangement with your existing provider rather than a move. An independent review will tell you which. We are happy to look at an existing facility and tell you honestly whether it still fits.