Invoice Finance – Termination Fees

Invoice Factoring Facility

We have recently seen certain lenders quoting very high termination fees to clients that wish to leave their agreements early. In some instances this is while accepting and admitting that their service levels have been poor and the funding is restricted.

The invoice finance industry came in for some heavy criticism a few years ago and one of the areas that came under this spotlight was early termination fees. Some may remember the articles in the Telegraph. In response the Asset Based Finance Association introduced the ABFA Code of Conduct for lenders that are members of the ABFA. This is a self-regulatory code setting standards of good practice, probity and professionalism for ABFA Members, when offering or providing invoice discounting and factoring services to businesses.

Within the guidelines to this code it states, “Where a client requests termination of a facility without the required or any period of notice, even though Members may not have any legal obligation to agree, they are encouraged to give reasonable consideration to such request, particularly where additional liquidity from a new facility will alleviate hardship”

I really do not feel that certain lenders are acting in the spirit of the ABFA code that they signed up to. One lender in particular advises on their website how committed they are to the ABFA code and how dedicated they are to ensuring these commitments are respected at all times. Sadly, despite this public commitment in my opinion they are quoting very high termination fees that are detrimental to the client. This is inspite of admitting their service has been poor and the client having an offer that generates significantly more working capital from an alternative provider.

All ABFA Members are subject to the independent Complaints Process. This is a system of dispute resolution managed by an independent specialist third-party organisation, Ombudsman Services. – See more at:

I think more invoice finance clients need to be aware of what the members of the ABFA have signed up to with regards the ABFA Code of Conduct and also what the complaints process is with the Ombudsman Services.

Have you had an issue with termination fees? Call us on 0845 251 4040 / 07789 638 178 or email: