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Invoice Finance – Reduce Costs and Improve Structure

At Funding Solutions we specialise in helping companies reducing their invoice finance costs and removing any frustrating restrictions.

The case study below demonstrates how we reduced costs by at least 54%, increased prepayment and reduced frustrating restrictions.

We were approached by a business that was using Close Brother Invoice Finance as a provider of invoice discounting. The business had a turnover of £3.6m + VAT and for the purpose of the comparison we assumed an average borrowing of £300,000.

We went to market and obtained terms that compared as follows:

 Close BrothersFunding Solutions Option
Limit£500,000£500,000
Service Fee0.65%£833 p.m. flat fee
Discount Fee2.5% over base subject to a minimum of 4%2.6% over bank base rate
Monthly Minimums£1,250£833

The Close facility was expensive and 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.

In terms of actual costs the facilities compared as follows:

 Close BrothersFunding Solutions Option
Service Fee£28,080£10,000
Discounting Fee£12,000£8,550
Total£40,080£18,550
Saving ££21,530
Saving %54%

In short we offered the following benefits:

– at least a 54% cost reduction which adds £20,350 to bottom line profits.

 

– no additional charges

 

– no minimum discounting fee

 

– increased prepayment

 

– reduced restrictions as we can accomodate a higher concentration