Updated on 18th November 2017
It’s never been easier to switch Invoice Finance providers.
Business Update: Transferring between invoice finance providers (whether it’s factoring or discounting) has become increasingly easier and common.
The interfactor transfer is a controlled process that lenders execute under guidelines constructed by UK Finance; a combination of the Asset Based Finance Association, the British Bankers’ Association, the Council of Mortgage Lenders, Financial Fraud Action UK, Payments UK and the UK Cards Association. https://www.ukfinance.org.uk//.
The first step is to source a new invoice finance provider to replace your current one. When you’re confident that you’ve found an ideal replacement, it’s important to understand what the contract cancellation terms are with your current provider. There may typically be obligations to fulfill regarding minimum term and/ or a notice period. You will then need to instruct your current provider that you’d like to terminate the agreement and serve notice (usually in writing or as per the contract).
The next step is the new provider “paying off” the existing lender so it’s important that your new facility is large enough to cover this. The detail will be worked through by your incoming lender to lay out the options and implications of the switch. When everything is set up for the switch and a transfer date date agreed, the providers will exchange and work together to execute efficiently.
The reasons for switching lenders have never been more attractive as the market has evolved. These are some of the terms that can be improved:
- Credit Insurance cover
- Personal Guarantees
- Monthly minimum fees
- Disbursement fees such as refactoring charges and CHAPS fees that rack up each month
- Split book options (you can pick and choose the debtors you factor)
- Advance rates
- Restrictive conditions and concentration limits
Transferring can be a liberating experience, but needs to be considered. Here are a few things to keep an eye on:
- Be completely honest with your incoming lender as they will seek reference from the incumbent.
- Ensure you truly understand the full cost of the change, including all the costs associated with the new deal and any with cancelling with your current lender.
- Check your current agreement’s terms of transfer to have peace of mind that you’re able to do so easily.
Comparing top invoice finance suppliers has never been easier. You can get up to 100% of your unpaid invoices, with rates starting as low as 0.2%. The invoice finance market is very mature and competitive in the UK and allows you to access good discount rates and factoring fees from top finance providers.
Inspired Finance has helped thousands of UK SME businesses compare the market with tailored quotes. They are highly experienced and only work with trusted and ethical invoice finance companies, have access to over 40+ factoring companies and make the process of switching easy. Their service is also 100% free and no obligation.
If you’d like to speak to a specialist to find out more, get in touch below.