What Are Invoice Financing Costs in the UK?

 For small businesses, invoice finance costs can vary.

Generally, invoice financing costs are straightforward. Invoice finance UK companies charge interest and credit management fees. Rates typically range from 1.5% to 3% over the Bank of England base rate and are calculated every day. 

A fee of between 0.25% and 0.5% is charged for credit management. The fee and interest are generally billed on a monthly basis. There might also be other costs associated with the process, such as origination fees.

When calculating interest rates and management fees, invoice financing companies will consider risk. In this calculation, creditworthiness, is the length of time it takes for customers to pay. As well as the credit history of your business are all taken into consideration?

Invoice finance UK will usually be cheaper for smaller invoices and more expensive for larger ones. Therefore, there’s often not one rate that applies across all transactions. And it’s worth noting that invoice finance providers aren’t always transparent about their fees; if you want to find out exactly what they are, ask before you sign up.