When Should You Switch Your Invoice Financing Provider?

24 February 2023

A quick search for invoice finance deals will bring up a wide range of different contracts, terms, and arrangements – as well as a broad cross-section of suppliers.

Invoice finance was traditionally provided mainly by banks.

But over the past couple of years, a growing number of independent lenders and venture capital firms have also entered the market, giving agencies greater choice than ever to choose a finance deal that best meets their budget, cash flow goals, and strategic objectives.

The presence of multiple options means that you no longer have to stick with your current invoice finance provider if you are not satisfied with their service or prices – there are other options available, and some of the new generation of lenders cater specifically for businesses in niche industries, such as recruitment agencies.

Is It Time To Switch Your Invoice Finance Provider?

If your current contract with your invoice finance provider is due to be renewed, now is the perfect time to consider whether to change to a different provider. But what are the key considerations when making this decision?

1. Are Your Provider’s Concentration Limits Holding Back Your Business?

A concentration limit restricts the exposure a lender has to any one of your debtors – mitigating their risk. If you have a broad portfolio of clients, concentration limits are not normally an issue. However, if your current invoice finance provider’s concentration limits are holding your business back, explore alternative providers who can offer preferential terms. Make sure you have credit protection on your debtor book and that your clients are proven to be credit-worthy, as this will improve your chances of securing good rates when negotiating a new deal.

2. Do You Plan To Expand Your Business Overseas?

Not all invoice finance providers can support recruitment businesses who plan to access international markets. If you’re considering venturing beyond the confines of the UK, your chosen provider must be capable of carrying out international back office procedures such as complying with cross-border lending regulations and currency conversions.

3. Is Your Business Being Hit By Hidden Costs?

An invoice financing arrangement should be easy to understand and clearly costed. Before you commit to extending your current arrangement, it is worth reviewing it to consider whether you are being offered a fair deal. A complex invoice finance arrangement can be confusing, while hidden costs can raise the cost of borrowing and affect your recruitment margins. Switching to a provider who is open and honest about costs and goes the extra mile to help you to understand how the arrangement will work could save you money and reduce anxiety.

Ready To Switch Your Recruitment Invoice Finance Provider?

If you’re planning to change your invoice finance provider to one that understands the challenges faced by recruitment agencies, please contact us for more information about our services.

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