Arrangement fees for factoring have crept into the industry in recent years. If you look back at historical comparisons between invoice factoring and overdrafts they would typically say that arrangement fees were payable on an overdraft facility and not on an invoice factoring facility. However, this is no longer the case. Some lenders charge an arrangement fee, a legal documentation fee and a ‘take-on’ fee. The take on fee is the service charge applied to the debts in existence when the facility commences. For example, if you have a debtor book of £500,000 and a service fee of 1% then the take on fee will be £5,000 on day one. Add to this the arrangement fee and legal documentation fee and the first day of your factoring facility is an expensive day at the office!!

In fairness I strongly believe that these fees are strongly negotiable. I have argued on behalf of clients transferring from one lender to another that service has already been paid on the debts on the ledger and in effect we would be paying double. On that basis they have often been waived.

The arrangement fee is very much negotiable and I doubt many lenders would risk losing a new client for the sake of an arrangement fee.