Three years ago, you implemented invoice finance. It solved an immediate problem – gave you breathing room when payment terms stretched to 60 days and growth required working capital you didn’t have sitting in the bank.
It worked. Still does, technically.
But here’s the conversation most brokers won’t have with you: the facility that made sense at £3 million turnover rarely makes sense at £8 million. The product appropriate for a business chasing payment often isn’t appropriate for a business with established client relationships and internal credit control. And the terms you accepted when you desperately needed funding aren’t the terms you’d negotiate today from a position of strength.
Most businesses don’t realise they can – or should – review their invoice finance arrangements. They assume switching is complicated, that loyalty matters, or that “if it’s not broken, don’t fix it” applies to financial facilities the same way it applies to operational systems.
It doesn’t.
Why Businesses Stay in the Wrong Facility
After twenty years arranging and reviewing invoice finance across RBS, Yorkshire Bank, and Aldermore, I’ve seen this pattern repeatedly. A business implements a facility under pressure – tight timeline, limited options, urgent need. The lender who says yes quickly gets the business. Fair enough.
But then the business evolves. Turnover doubles. Customer base stabilises. Internal systems improve. The finance team who couldn’t handle credit control three years ago now manages it confidently. The seasonal peaks that terrified the bank originally have become predictable, manageable patterns.
The facility, though? Often stays exactly the same. Same product structure. Same margin percentages. Sometimes the costs have crept up slightly each annual review, buried in paperwork nobody reads closely because “everything’s fine.”
Well, not quite.
What I mean is – the facility still functions. Money still arrives when you draw against invoices. But functioning isn’t the same as optimal. And the gap between those two states costs businesses tens of thousands annually.
The Warning Signs Your Facility Has Stopped Fitting
You won’t receive a letter saying “Your invoice finance arrangement is now inappropriate.” Lenders don’t proactively suggest you might benefit from a different product or better terms elsewhere. You have to spot the mismatch yourself.
Here’s what I look for when businesses ask me to benchmark their existing arrangements:
Your business has matured but your product hasn’t. You’re still using full factoring – where the lender manages your credit control and contacts your customers – but you now have an internal finance team perfectly capable of handling collections. You’re paying for a service you no longer need and giving up control you’d prefer to keep.
The margin structure reflects old risk, not current reality. When you started, you had six months’ trading history and two major customers representing 60% of turnover. Now you have three years of consistent performance and a diversified customer base of thirty established clients. Your risk profile has changed significantly. Your pricing probably hasn’t.
Usage patterns have shifted. The facility was sized for your peak requirement three years ago. But your business has grown, and you’re now regularly hitting or exceeding the facility limit – triggering over-limit fees or, worse, having to decline work because you can’t fund it. Alternatively, you’re using far less than originally anticipated, but still paying minimum fees based on the full facility size.
You’ve never compared terms against current market rates. Not once since implementation. You know what you’re paying. You don’t know what you should be paying. That gap matters – particularly when margins throughout your business are under pressure from other cost increases you can’t control.
Sounds obvious, but most businesses operating on 2-5% net margins cannot afford to overpay for finance by even half a percentage point. The cumulative impact over three years can represent significant profit erosion.
The Loyalty Trap
The most common reason businesses give for not reviewing their facilities is relationship preservation. “Our lender supported us when we needed it. We don’t want to seem ungrateful.”
I understand that instinct. But here’s what two decades in commercial banking taught me: lenders respect businesses that manage their finances strategically. Reviewing your facility isn’t disloyal – it’s competent business management. If your current lender genuinely offers the best terms for where you are now, that review confirms you’re in the right place. If they don’t, staying put isn’t loyalty – it’s overpaying.
Banks review your business annually. They assess whether your risk profile justifies current pricing. They adjust terms when their assessment changes – usually upward. Reviewing whether your facility still fits your business simply applies the same commercial logic from your side of the relationship.
Besides, the broker or lender who arranged your original facility three years ago received their fee then. They don’t benefit from you staying in an increasingly unsuitable arrangement. The only person who benefits from you not reviewing your options is the lender continuing to charge above-market rates for a product that no longer matches your needs.
What Happens When You Review
Most businesses imagine reviewing their invoice finance involves months of disruption, complex paperwork, and operational chaos during transition. The concern is understandable but usually exaggerated.
A proper benchmarking review – which is what we provide – involves us examining your current facility documentation, understanding your actual usage patterns and business evolution, then comparing that against what the market would offer today for a business with your current profile.
Often we identify opportunities immediately. A business using factoring when invoice discounting would be more appropriate – saving the factoring fee and keeping credit control in-house. A margin structure that hasn’t adjusted despite three years of perfect payment history and reduced risk. Minimum fees based on facility limits that no longer reflect actual requirements.
Sometimes the review confirms you’re already well-placed. That has value too – you now know with confidence that your arrangement is competitive, rather than simply hoping it probably is.
If we do identify better options, transition typically takes 4-8 weeks and happens behind the scenes. Your customers notice nothing. Your operations continue uninterrupted. The new lender pays out the old facility as part of implementation. You simply end up with more appropriate terms or a better-fitting product structure.
When to Benchmark
Ideally, invoice finance arrangements should be reviewed every 2-3 years – or when significant business changes occur. Major growth, customer base changes, new product lines, improved systems, or acquisition of premises all represent moments when your facility should be reassessed.
If you implemented your facility more than two years ago and haven’t reviewed it since, the question isn’t whether you should benchmark – it’s what you’re losing by not doing it. That’s a calculation worth making, particularly when the review itself involves no obligation and no disruption to your current operations.
The businesses that thrive aren’t the ones that set up finance once and never revisit it. They’re the ones that ensure every element of their operation – including funding – evolves as the business does.
If you’re unsure whether your current invoice finance facility still fits where your business is now, that uncertainty alone justifies a conversation. We can review your existing arrangement, show you what the market offers today for a business with your profile, and let you decide whether staying put or switching makes more sense.
Book a free consultation call with our team by clicking here to explore how we can benchmark your existing facility, or simply call 0113 5182253.