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• 29 Mar

  How To Avoid Factoring & Invoice Discounting Disbursements & Additional Charges

  There are ways of avoiding paying many additional disbursements, fees or additional charges for your factoring or invoice discounting facility - read on.

  Traditionally the charging structure within the invoice finance industry has been divided into three categories. The service charge (or administration charge) - typically a percentage of the value of the invoices discounted, discount charge - which works in a similar way to bank interest charges on the amount that is funded by the invoice finance company and "other disbursements and charges".

  The list of other charges or list of disbursements can be long or short (depending on which invoice finance company you speak to). It covers a whole multitude of different extra fees such as charges for CHAPS transfers, charges for reports, refactoring charges (an additional fee once invoices reach a certain age), charges for credit reports, charges for overpayments, charges for bounced or returned cheques. Your factoring or invoice discounting company will be able to give you a full tariff or list of additional charges and disbursements or you can speak to an independent adviser that can advise you about the differences between invoice finance companies but now - how to avoid factoring and invoice discounting disbursements and additional charges.

  Several factoring and invoice finance companies now offer "single fee" facilities whereby you only pay one fee rather than the variety of different fees described above. "Single fee" invoice finance can make the charging very predictable so that you can better manage your cash flow and expenses. Typically this single fee will be expressed as a fixed percentage of the value of the invoices that you finance.

  Furthermore, we know of invoice finance companies that will take a more tailored approach to the charging and agree specific tariffs of charges particular to your business e.g. no CHAPS charges.

  By Glenn Blackman