Invoice Factoring, Invoice Discounting and Cash Flow Solutions, logo 1 Invoice Factoring, Invoice Discounting and Cash Flow Solutions, image 1
JKB Invoice Finance Brokers Ltd
2nd Floor
71 Tabors Avenue
Chelmsford
Essex
CM2 7EL
 

What does it cost?

Factoring providers charge two main fees: a service fee and a discounting fee. These combined are 90% of the costs involved.
Thereafter, a facility is also subject to smaller (and sometimes optional) one-off charges, or "disbursements".

Invoice finance charges are levied as follows:

Service fee: an agreed percentage of the invoice factored, eg factored invoice is £1,000, service fee is 2%, factors charge = £20.

Discounting fee: interest of money borrowed, eg an invoice for £1,000 is factored generating the client £750 which is available to be drawn down at the client’s request. If this sum was drawn down in full and was outstanding (borrowed) for 45 days before the customer paid, a client would be charged interest on £750 for 45 days (the fee would equate to an estimated £6). Interest is charged normally at 2% to 3% over base.
Please note, base rates can vary from provider to provider and are subject to capping at an agreed minimum level.

Disbursements: these are extra fees such as chaps payments, normally £15 to £30 if funds are requested same day. These charges are often free if funds are drawn via a three-day payment. With refactoring fees, between 0.5% and 1.25% of the invoice value is levied monthly against old invoices which take longer than four months to pay, bounced cheques and credit searches. Disbursements are the industry’s hidden income and something our services will help explain and keep to a minimum.

In summing up, a £1,000 invoice is financed at 75% at 2% service rate and 2.5% over the agreed base rate (discounting rate). If the £750 is drawn for 45 days, the client should expect to be charged:
£20 service fee (1,000 at 2%)
Circa £6 interest for the 45 days.
Total charge = £26.00 per £1,000 + some small optional disbursements.
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