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• 19 Feb

  The Pros And Cons Of Selective Invoice Finance

  Selective invoice finance (SIF) has a number of pros and cons when compared with a whole turnover (WT) facility.

  It should be noted that there are many similarities between both SIF and WT, for example, both types of facility deliver cash flow improvements, both have credit control, bad debt protection and confidentialty options.

  This is an explanation of the key differences.

  Pros And Cons Of Selective Invoice Finance

  1. Choosing Invoices To Fund - the obvious difference is that you don't have to factor, or discount, all your invoices with a selective facility. You can pick and choose invoice that you wanted to have funded. With whole turnover, as the name suggests, you submit all your invoices (although there can be some exceptions by debtor or type of invoice).
  2. No Minimum Fees - it is normally the case that you will not have any minimum fees with SIF. This means that if you don't choose to submit any invoices, you don't get charged anything. This can be a great advantage if you operate a company with seasonal trading peaks and troughs.
     
     
  3. Set Up Charges - you can have a set up charge in both cases, but often they can be negotiated away with WT. The fact that you may never use the SIF at all means that a set up fee is likely to be present, although it is often just a few hundred pounds. 
     
     
  4. Controlling Charges - when you decide which invoices you want to submit with SIF, you are very much in charge of the costs. However, there are fixed fee deals available on WT which can make the charges even more predictable than for SIF (where you are normally charged additional amounts the longer debts remain outstanding).
     
     
  5. Maximising Funding - if you want to unlock the maximum amount of funding, then you need to consider a whole turnover facility to fund against all your invoices.
     
     
  6. Losing Out On the Bulk Discount - by funding all your invoices with WT, you effectively get a discount on the charges. We have seen examples where it is cheaper to fund all your invoices for an entire year than to select a few invoices to fund for a few months.
     
     
  7. Workload - there are slick upload systems available for both types of product, although you could argue that there is more workload in selecting invoices to upload, especially when compared with WT sales ledger upload facilities that take your entire debtor book and transmit it in the background.

  By Glenn Blackman