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Are you paying more than you think for your borrowing?

With record low base rates borrowers should be benefitting. In many cases invoice finance clients are not. Some agreements have a minimum base rate or minimum discounting fee. This means that you could be paying more than you think for the money your borrow.

Close Brothers Invoice Finance Example:

The Bank of England base rate is currently 0.25%. We recently reviewed a facility for a Close Brothers Invoice Finance client whose agreement stated they were paying 2.50% over base rate. Sadly they had a minimum discounting fee of 4% in the agreement. This meant that the client had not benefitted from the record low base rates. Had they been paying 2.50% over bank base rate the discounting fee would have been 2.75% in total. The client was paying 4% so in effect 3.75% over base rate rather than the expected 2.50% over base rate.

We have recently put agreements in place where the discounting fee is 1.70% over bank base rate so in effect 1.95%. In comparison, the 4% fee from Close Brothers in the example above does look expensive.

If you have an invoice finance facility it is worth checking the smallprint to ensure you are not paying more than you think. If you would like a full review please contact Funding Solutions on 0845 251 4040. In recent reviews for clients we have reduced costs by 58% and removed frustrating restrictions.




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