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• 11 Jul

  Single Fee Factoring Typical Pricing.

  Single fee factoring is attractive to some customers because they like the idea of the predictability of charging. With a single fee arrangement, you know that there is just one charge that you have to pay, and there are no complex discount margin calculations to be made – so you know what the costs are going to be at any time, an agreed percentage of your invoice value.

  As I explained in my previous article about single invoice finance, the traditional way of pricing facilities is to have a service charge and a discount charge. The discount charge can be complex to work out, as it is composed of a margin over base or LIBOR, and is charged against the funds in use.

  Single Fee Factoring

  With a single fee factoring facility it is a flat percentage against the value of your invoices. Therefore the costs are very predictable. Some providers only offer single-fee arrangements, and others have this as a pricing option within their portfolio.

  See this case study about Factoring A Single Invoice.

  Typical Price

  To give some indication about the level of fees that should be expected. On average, single fee factoring pricing is about 2.5% of your sales invoice value. That means that there may be some facilities charged below this rate, and possibly some above.

  However, at that rate, you know that 2.5% of your invoice value is all that you need to add to your cost of sales. With this type of arrangement and pricing system, you do not have other costs such as re-factoring fees, credit line fees or facility renewal fees, to worry about.

  Credit Control Benefits And Cost Savings

  You should also remember that with a factoring facility, you are not only receiving funding against your unpaid invoices, but you are also receiving a credit control service. With some single-fee providers, this can be fully comprehensive, such that you do not need to employ your own credit controllers or undertake the task yourself. This in itself could result in a significant cost saving for your business, that will additionally offset (or even exceed) the fee for the factoring arrangement.

  By Glenn Blackman