Factoring Costs
Factoring costs can often be hard to calculate. When calculating factoring costs we feel it is important to consider the total costs involved in a facility over a 12 month period. This can be difficult to do but we are happy to do this for you.
Headline rates can be misleading so we consider all fees including:
- Service fee - this is typically shown as a percentage and it is applied to your gross turnover. Yes the VAT inclusive turnover is used.
- Discounting fee - this is the cost of actually borrowing money and is usually quoted as a percentage over base rate. Please be aware of what base rate is being used and if any minimum base rate is any effect.
- Arrangement fee - some lenders now charge an arrangement fee to set up a factoring facility.
- Take-on fee - this is not really a seperate fee but it is worth mentioning. The service fee is applied to the debtor book that is in place at commencement.
- Survey fee - some lenders will charge for the pre-lend survey they undertake prior to making a formal offer
- Audit fees - some lenders charge for their audits while others include them as part of the service. If they are charged seperately it is important to consider both cost and frequency.
- CHAPS fees - this is the charge for a telegraphic transfer of 'same day money'. These can vary quite dramatically so it is worth considering how often you would use this service.
This list is by no means exhaustive and not all lenders charge all these factoring costs. In fact some lenders just charge a service and discounting fee and everything is covered under the service fee. They can sometimes look like the more expensive option until you look at the total costs of other offerings.
Don't be put off by this. Simply contact us and we will walk you through you different options.
