Thinking of renewing your invoice finance contract with your current facility provider? 

There are numerous factors to consider whenever you’re considering engaging a provider for invoice financing services. Whether you’re signing up for the first time or looking over a contract to renew a previously established invoice finance arrangement, we’ve put together the questions you should be asking before putting your pen on the dotted line. 

Invoice Financing Contracts: Questions you should be asking your provider

1. Is invoice finance still the best option for my business?

Invoice finance offers many benefits and advantages, as you’d know from your previous arrangement. However, there are more financial and working capital solutions available that don’t require you to turn to traditional banks and crawl through mounds of red tape.

Businesses change and grow and your capital solutions may need to change accordingly. Have a discussion with your provider about whether or not invoice finance is still right for you and your business, and whether it’s actively helping you achieve your business goals.

2. Do you still offer the service and terms I need?

Even if you establish that a continued invoice finance arrangement is the best option, it is possible that your current provider is not right for you.

Consider the level and customer service you’ve received in the past and think about the difference in services your business needs moving forwards. Similarly, service providers change themselves and may not be able to offer you the flexible arrangement or favourable terms due to market conditions. By having this transparent and open conversation upfront, you can make sure that you’re informed and empowered to make the smartest financial decision. 

3. Why should I renew the contract with you?

Just because you used a provider for your first invoice financing contract does not mean you need to stick with them moving forwards.

The end of your contract and the start of a new financial arrangement is a good opportunity for you to consider switching providers. Asking point blank why your service provider thinks that they offer a superior financial solution is a good way of putting them on the spot and checking what their ongoing service offers you more value than that of their competitors. 

4. What are the ongoing fees and costs?

Invoice finance incurs some costs such as administrative and processing fees. Just because you’re renewing your invoice finance contract doesn’t mean the fees and costs are going to be the same.

Make sure you ask about the annual, account management, auditing and processing fees and compare that to your previous contract and those offered by other providers in the market. 

5. Are there any changes to the terms of the contract?

Are there penalties for customers paying invoices late? Can you submit more than one invoice to be used as collateral for the loan? Does the contract lock you in for a specified period?

There are many different terms and conditions that your contract will spell out. It’s important you have a frank conversation with your provider should any of the favourable terms from your previous contract have changed. 

6. What is the entire cost?

Some invoice finance contracts include built-in costs that are not necessarily outlined explicitly. That’s why we recommend you ask your financial solutions provider outright what the entire cost of accessing this facility is going to be. The less nasty surprises down the road, the better. Some providers advertise their low service costs but actually charge a variety of additional, hidden fees. 

7. Is there a renewal fee?

There are providers that charge a renewal fee for re-signing your invoice finance contract. If this is the case, it’s important you know about it from the get go. Ask your provider at the start what fees and costs are specifically associated with the contract renewal?

8. Is there a termination fee?

Seeing as you’re considering renewing, you may not have actually ever had to consider whether there is a termination fee in your current contract.

Nonetheless, moving forwards it’s worth checking to see if terminating the arrangement prior to the renewed contract being out of term has any associated fees. 

9. Can you increase your funding/working capital access?

One of the key benefits of invoice financing in general is the flexibility of the arrangement, especially compared to more traditional forms of finance and working capital solutions.

Nevertheless, make sure to ask your provider before renewing the contract whether you may be able to increase your funding in the future, should your business need it. At the same time, if the answer is yes make sure to clarify any associated fees with this increase as well. 

10. Are there monthly minimums?

On the other side, if you wish to reduce your line of credit, this can be affected by monthly minimums. Make sure to check your contract and have the conversation with your current provider about what sort of limits are set on monthly use. 

ScotPac – the leader in flexible invoice finance solutions

If you’re looking for flexible funding that empowers you to determine how much money you need and how often you need it, then you’re looking for ScotPac.

For over 30 years our financial solutions have been utilised by businesses of all sizes and across a range of industries. With multiple offices across Australia and New Zealand, it’s easier than ever to arrange a consultation with a friendly, knowledgeable member of our team. They’ll be more than happy to sit down with you and answer any or all of the questions above to ensure you have access to the right financial solution, be it invoice finance or something else.

Would you like to find out more? Contact ScotPac today.