Cash flow is the lifeblood of any business, and invoice finance has become a popular solution for unlocking cash tied up in unpaid invoices. But while it offers many benefits, it’s crucial to be aware of hidden fees that can eat into your working capital and erode your margins.
In this blog, we’ll unpack the most common hidden fees in invoice finance, how to spot them, and what to ask before you sign on the dotted line.
What is Invoice Finance?
Invoice finance allows you to release up to 95% of the value of your unpaid invoices, giving you immediate access to cash rather than waiting weeks or months for customers to pay. It can be a game-changer for managing cash flow and supporting business growth.
The Hidden Fees You Need to Know About
Unfortunately, not all invoice finance providers are transparent about their pricing. Here are some of the most common hidden fees to watch out for:
Service Fees: Often quoted as a percentage of the invoice value, but some providers add additional charges for administration, audit, or account management.
Disbursement Fees: Charges for transferring funds into your account, which can add up quickly if you draw down frequently.
Renewal Fees: Annual renewal fees or contract extension charges that might not be obvious at the outset.
Minimum Usage Fees: Some providers charge you even if you don’t use the facility as much as expected — meaning you’re paying for finance you’re not actually using.
Exit Fees: If you want to switch providers or end the agreement early, you might face hefty exit penalties.
How to Protect Yourself
Before you commit to an invoice finance facility, make sure you:
🔍 Request a full breakdown of all fees, including any that might apply later.
🔍 Ask about contract flexibility — can you scale up or down, or exit without penalty?
🔍 Compare providers — don’t just look at the headline rate, consider the total cost of finance.
🔍 Seek independent advice — an experienced broker can help you navigate the market and find the best deal.
Final Thoughts
Invoice finance can be a powerful tool for improving cash flow — but only if you understand the true cost. Hidden fees can make an otherwise affordable facility far more expensive than it appears at first glance.
If you’re using invoice finance already, it’s worth reviewing your current agreement to see if you’re paying too much. And if you’re considering invoice finance for the first time, make sure you get clear, transparent pricing and the right advice to avoid nasty surprises.
Need help reviewing your facility or finding the best deal? Get in touch today — let’s make sure your invoice finance works for you, not against you.
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