When it comes to invoice finance, having a long-term provider is generally beneficial. This is because it allows both you and your provider to get to know each other well and for them to understand your business inside and out. However, there are times when businesses need to change their invoice finance arrangements and provider.

Reasons for this could be anything from the funder provider no longer offering services your business needs (which we are currently seeing with a number of companies), a reduction in service or an increase in price, through to them not being willing to support your business growth any longer.

In this blog post, we will look at some of the reasons why businesses might need to change their invoice finance facility provider, as well as how to go about it to ensure that their next funder can fulfil all their business requirements.

Reasons Businesses Need to Change Invoice Finance Providers.

It’s not often that businesses need to change invoice finance providers, but let’s take a look at some of the most common reasons.

The provider no longer offers the products or services that you need: As your business grows and develops, your financing needs are likely to change. If your current provider doesn’t offer the products or services that you now need, then it’s time to look for a new one.

The provider can no longer support your business growth: Invoice finance is usually used by businesses that are growing quickly and need access to working capital to help them fund that growth. However, there may come a time when your provider can no longer support that growth, either because they don’t have the capacity to advance any more money, they have changed their view on the risk associated with advancing funds to you, or because the products they offer are no longer suitable.

The relationship has broken down: While it’s not always possible to avoid disagreements with your provider, it’s important to have a good working relationship with them. If the relationship has broken down to the point where you no longer feel like you can work together, then it may be time to look for a new provider and be honest with them as to why the current relationship has deteriorated.

The terms and conditions are no longer favourable: When you first took out invoice finance, the terms and conditions may have been very favourable. However, over time, things may have changed, and the terms and conditions may no longer be as advantageous to you or there are better deals in the market. If this is the case, then it’s worth shopping around for a new provider with more favourable terms and conditions.

You’ve reached your current funding level: As your business grows, you may find that the level of funding you need from invoice finance increases. Your current provider may not be able to provide the extra level of funding you need, which means you’ll need to look for a new one.

You feel that you are receiving poor service and excessive additional fees and disbursements from your current provider: We all know that feeling when we’re not getting the level of service we expect, or we’re being charged hidden fees that we weren’t expecting. If you feel like your current invoice finance provider is giving you poor value for money, then it may be time to look elsewhere.

You feel your current provider has a lack of understanding about your business objectives: If you feel like your provider doesn’t understand your business, what you’re trying to achieve or just doesn’t seem that interested, then it’s time to look for one that can offer more support and will take an active role and interest in your business development and growth.

How to Change Invoice Finance Providers.

What happens if your business does find itself in one of the above situations? If you’ve reached the point where you have decided you need to change your invoice finance provider, then it’s important to do it in the right way. So, how do you go about finding a new provider and what should you be looking for?

Here’s a quick guide on how to go about changing your provider:

  1. Once you’ve identified why you want to change your invoice finance provider, research potential new providers. This is important so that you can find a provider that is a good fit for your business in the long term. Here it can be beneficial to engage with a commercial finance broker who should have a good understanding of the market and be able to match your needs to the best company as well as guide you through the process.
  2. When you have a shortlist of potential providers, approach them to discuss your business needs. This is a crucial step so that you can identify which provider is the best fit for your business.
  3. Once you’ve chosen a new provider, work with both old and new to agree a smooth transition. Depending on the size and structure of your business this process could be complex, and you need to make an allowance for how long this will take to transfer matters over and ensure your cash flow is not impacted. Members of UK Finance have agreed procedures and timescales in place that are worked to when a transfer happens between members, which can be beneficial.
  4. Finally, review your business needs on a regular basis to ensure that your new invoice finance provider is still meeting them. This will help you to avoid any potential issues in the future and ensure that you are getting the most out of your invoice finance facility.

What to Look for in an Invoice Finance Provider.

When you are looking for an invoice finance provider there are a few key things that you will want to keep in mind.

Cost – Ensure that you get detailed quotes. In order to try and compare like-for-like costs you will want to look at any other associated fees as well as the headline discount rate and service fee.

Capacity – Make sure that the new provider will be able to support your future growth. This means looking at things such as their credit limits and whether they offer any flexibility around this, the level of prepayment they will offer, and if there are any conditions that may restrict your access to the headline funding level.

Service Levels – It’s important to choose a provider who you feel you can build a good relationship with. You will want to make sure that they offer a good level of customer service and are easy to contact when you need them.

Reputation – Take some time to read online reviews of the different providers you are considering. This will give you an idea of what other businesses have experienced with them.

Are they UK Finance Accredited? – This is something you will definitely want to check as it shows that the provider has met high standards set by the industry bodies.

It’s important to ask the following questions before entering into an invoice finance agreement with a new provider to ensure you have a complete overview of their services.

  • How much can I borrow against my invoices?
  • Are there any restrictions on how I can use the funding and the level provided?
  • How long does it take to move from my existing provider to a solution with you?
  • What will it cost? Are there any additional fees?
  • Are you a member of UK Finance?
  • How can your invoice finance solution help my business grow?
  • Are there any exit fees should the partnership not work out?

By doing your research and taking the time to find the right provider for your business, you can ensure that you are getting the best long-term invoice finance solution for your business.

No matter how great your relationship with your invoice finance provider is, there may come a time when you need to make the switch. Whatever the reason, it’s important that you know how to go about changing providers in order to minimise any disruption to your business’s cash flow.

At Partnership Invoice Finance we have a wealth of experience and invoice finance solutions for all businesses. If you feel you need to change your current provider or need any invoice finance advice, contact us and we will always be happy to assist and advise.