A Lancashire recruitment business paid £32,000 more than they needed to over four years. Not because their facility didn’t work. It did. Cash arrived when invoices were raised, availability was there when needed, the relationship with their provider was perfectly pleasant.
They simply hadn’t looked at whether the terms remained competitive since the facility was first arranged.
When we eventually ran the numbers against current market rates, the difference was significant. The discount margin had never been reviewed. The service fee hadn’t changed despite turnover growing from around £6 million to £9 million. No conversation had been had about whether the structure still made sense.
The reason? “If it ain’t broke, don’t fix it.”
It’s a reasonable position. Well, not quite – what I mean is, it feels reasonable when you’re running a business and the funding works. Cash comes in, operations continue, there are more pressing things demanding attention than reviewing something that isn’t causing immediate problems.
But comfortable and optimal are not the same thing.
Why Invoice Finance Works
Before we get into what businesses miss by never reviewing, it’s worth recognising why invoice finance remains one of the most effective working capital solutions available.
Unlike a traditional loan or overdraft, invoice finance grows with your business. Raise more invoices to creditworthy customers, and more funding becomes available. No need to renegotiate limits or provide additional security every time turnover increases.
The funding is also tied directly to your sales ledger. You’re not borrowing against projected future performance or personal guarantees on property. You’re accessing the value of work you’ve already done for customers who have agreed to pay.
For businesses with 30, 60, or 90-day payment terms, that makes a material difference to cashflow. You can pay suppliers, cover payroll, take on new contracts – all without waiting for customer payments to clear.
The structure is particularly effective for:
Growing businesses where turnover is increasing faster than retained profits can fund working capital requirements.
Seasonal businesses where cash needs fluctuate significantly throughout the year, and a fixed overdraft either sits unused for months or proves insufficient during peak periods.
Businesses winning larger contracts where the working capital required to deliver the contract would otherwise prevent them taking the work.
Management buyouts or acquisitions where the sales ledger provides security and ongoing funding to support the transaction.
It’s one of the reasons invoice finance facilities often stay in place for years. When something works, keeps pace with growth, and doesn’t create operational friction, there’s limited incentive to revisit the arrangement.
That longevity, however, is also where the problem starts.
What a Review Actually Involves
A proper invoice finance review is not complicated, but it does require looking at more than just the headline discount rate.
At a minimum, it should cover:
Current pricing structure: Discount margin, service fee, and how these compare to current market rates for a business of your size, sector, and customer profile.
Availability and restrictions: Concentration limits, debtor exclusions, prepayment reserves, and whether these are restricting access to funding that should theoretically be available.
Fee transparency: Ancillary charges, audit fees, administration costs, and whether these have increased over time or were clearly disclosed at the outset.
Facility structure: Whether factoring, confidential invoice discounting, selective invoice finance, or another structure now makes more sense given how your business has evolved.
Alternative lender appetite: What other providers would offer in terms of pricing, availability, and structure – not as a theoretical exercise, but based on actual appetite for your business.
Transition considerations: If moving provider makes sense, what the process involves, how long it takes, and what disruption (if any) it would create.
The objective is not to change lender for the sake of it. If your current facility remains competitive and fit for purpose, that’s a useful conclusion. But the only way to know is to test it against alternatives.
When to Review
There’s no universal rule for how often an invoice finance facility should be reviewed, but there are certain points where it makes particular sense.
After significant business growth. If turnover has increased by 30%, 50%, 100% or more since the facility was arranged, your risk profile has likely changed. That should be reflected in pricing and structure.
When entering new markets or sectors. If your customer base has shifted – particularly if debtor quality has improved – lenders may now view your business more favourably than when the facility was first put in place.
If availability feels restrictive. When you’re regularly hitting concentration limits, finding that more invoices are excluded than expected, or noticing that headline availability doesn’t match what’s actually accessible, it’s worth understanding why and whether alternatives exist.
Every 2-3 years as a matter of routine. Even in the absence of specific triggers, reviewing your facility periodically ensures it remains aligned with both your business needs and current market conditions.
When market conditions shift. Changes in the broader lending environment – new entrants, changes in bank appetite, shifts in funding costs – can create opportunities that didn’t exist when your facility was last reviewed.
And, of course, when your current provider announces a strategic review of their operations. Which brings us back to where many businesses find themselves now.
The Case for Acting Before You Have To
One of the most valuable aspects of reviewing your facility when you’re not under pressure is that it gives you time.
Time to understand what’s available. Time to compare options properly. Time to transition smoothly if moving provider makes sense.
When reviews happen in response to a crisis – a lender withdrawing, a facility being reduced, or terms changing suddenly – the options narrow. Decisions get made quickly, often without full visibility of what else might be available.
The businesses that benefit most from reviews are the ones that treat funding as something to be managed strategically, not just accessed when needed.
The Lancashire recruitment business didn’t move because their provider was failing them. They moved because someone finally asked whether the terms they’d been paying for four years still represented good value. The answer was no. The saving was £32,000.
Most clients come back. Not all of them, but most. And when we run the numbers, the reason is usually the same: nobody had asked the question in years.
What Happens in a Proper Review
A review does not require you to commit to changing provider. It requires understanding whether what you currently have remains fit for purpose.
The process usually involves providing some basic information about your facility – advance rates, service fees, discount margins, any ancillary charges – alongside a recent aged debtor report and management accounts. From there, an independent broker can benchmark your current arrangement against what else is available in the market.
That benchmarking covers more than just headline pricing. It includes:
Whether your advance rate reflects current market standards for your sector and debtor profile. A business with strong, diversified debtors and low historical bad debt should expect better terms than one with concentration risk or poor payment history. If your facility was arranged years ago and your business has improved significantly since, that improvement may not be reflected in your pricing.
Whether concentration limits are appropriate. Some facilities cap funding against individual customers at 10%, 15%, or 25% of total availability. If your business has grown but those limits haven’t adjusted, you may have headline availability that you can never actually access.
Whether prepayment reserves and retentions are still justified. Many facilities hold back a percentage of funds as a buffer against risk. If your debtor performance has improved or bad debt provision is no longer necessary at the original level, those reserves can often be reduced or removed.
Whether the facility structure still makes sense. Invoice discounting, factoring, selective invoice finance, and asset-based lending all serve different needs. The structure that was right when cashflow was the only priority may not be optimal now that working capital management has become more strategic.
The UK market includes over 80 active invoice finance providers 
, ranging from high street banks to specialist independents. Different lenders have different sector appetites, risk appetites, and pricing models. What one provider considers standard, another may view as low-risk and price accordingly.
Most major lenders do not publish rates. Pricing is agreed facility by facility, based on turnover, debtor quality, sector, and a range of other factors . That means the only way to know whether your facility is competitively priced is to test it.
The Value of Independence
One of the challenges businesses face when reviewing their facility is access to the market.
Invoice finance providers do not typically lend directly to businesses approaching them cold. Applications are complex, lender criteria vary significantly, and without understanding which providers are likely to have appetite for your specific business profile, the process can become time-consuming and frustrating.
That’s where an independent broker provides value – not just in arranging funding, but in understanding which lenders will view your business favourably, what terms are realistic, and how your current arrangement compares to market norms.
Because brokers are remunerated by lenders rather than clients, there is no cost to the business for a review. If the conclusion is that your current facility remains competitive, nothing changes. If moving provider makes sense, the broker manages the transition and is paid by the new lender.
It’s also worth recognising that brokers have access to products and pricing that are not available directly. Many lenders work exclusively through intermediaries, and those that do accept direct applications often reserve their most competitive terms for broker-introduced business.
The Lancashire recruitment business we mentioned earlier came to us not because they were unhappy with their provider, but because someone suggested it might be worth checking. The saving was £32,000 over four years. Not all reviews result in that level of difference, but enough do that it’s worth asking the question.
What We Offer
At Shadowfax, we provide confidential invoice finance reviews for businesses that want to understand whether their current facility remains competitive.
The review covers pricing, availability, facility structure, and alternative lender appetite. If your current arrangement is working well and remains appropriately priced, we’ll tell you. If there are better options available, we’ll explain what they are and why they might make sense.
We do not charge for reviews. If you decide to move provider, we are paid by the new lender. If you decide to stay where you are, we do not get paid. You are under no obligation either way.
The objective is simply to give you the information needed to make an informed decision about something that directly affects your working capital, cashflow, and ultimately, your ability to operate and grow.
If you have not reviewed your invoice finance facility in the last two or three years – or if you have never reviewed it – it is probably worth finding out where you stand.
The “Comfortable Provider” Trap
Most invoice finance facilities are not arranged at the worst possible terms. They’re arranged at market rate – or close to it – at the time the facility is put in place.
The issue is what happens three, four, five years later.
Lenders change their risk appetite. New entrants come into the market with more competitive pricing. Your business changes – turnover increases, customer concentration improves, debtor quality strengthens. The facility that was appropriate in 2021 may not reflect your business in 2026.
But if no conversation happens, the terms don’t change either.
The Lancashire recruitment business we mentioned earlier had been with their provider for four years. The relationship was good. No complaints about service. No issues with availability. When they needed something, their account manager was responsive.
So why would they look elsewhere?
The answer: because the market had moved, and their pricing hadn’t.
When we benchmarked their facility against current market rates, both the discount margin and the service fee were higher than what was now available to a business of their size, sector, and debtor quality. Not marginally higher. Enough that over the life of the facility, it had cost them £32,000.
That’s not money lost to a problem. It’s money paid unnecessarily for something that remained – on the surface – perfectly functional.
What Changes Over Time
There are several factors that can make a facility less competitive over time, even when the service itself remains consistent.
Market Competition
The invoice finance market is competitive. New lenders enter. Existing lenders adjust pricing to win business in target sectors. Funding costs change. A facility arranged five years ago reflected the market conditions and lender appetite at that time. Those conditions shift.
Most businesses would not accept a quote for insurance, telecommunications, or utilities and assume it would remain the best available rate indefinitely. Yet with invoice finance, that’s often what happens.
Business Growth and Quality Improvement
A business turning over £3 million with 60% of sales concentrated in three customers presents a different risk profile to the same business three years later turning over £6 million with sales spread across 15 customers.
Lenders price risk. As your business grows, matures, and improves its customer base, the risk reduces. If that change isn’t reflected in your pricing, you’re paying for a risk profile you no longer represent.
Availability Restrictions
Even if pricing remains acceptable, the structure of the facility can become restrictive over time.
Concentration limits – which cap the amount that can be advanced against any single customer – may have been appropriate when the facility was arranged but now restrict funding availability as your largest customers grow.
Debtor exclusions – customers the lender won’t fund against – may have expanded without formal notification, reducing the effective advance rate.
Prepayment reserves, retention amounts, and funding caps can all restrict the amount of working capital available, even when the headline advance rate suggests you should have access to more.
Fee Structures
Many facilities include ancillary charges that accumulate over time. Audit fees, ledger administration fees, charges for same-day transfers, fees for exceeding facility limits temporarily – probably sounds like I’m listing every possible charge you could imagine, but these are the ones that actually appear on statements, and individually they seem minor enough not to question.
Across a year, they add up. And if they were never clearly explained at the outset, they often go unchallenged.
Changing Business Needs
The facility that worked when your priority was simply accessing cash quickly may not be the right structure now that working capital management has become more strategic.
A factoring facility – where the lender manages your sales ledger – might have made sense when administrative resource was limited. But if you’ve since built internal credit control capability, confidential invoice discounting may now be more appropriate and often more cost-effective.
Sounds obvious, but unless someone asks the question, the structure remains unchanged.
Why Reviews Don’t Happen
If the case for reviewing is clear, why do so many businesses go years without doing it?
The most common reason is simply this: it works. The facility delivers cash when needed. There’s no crisis forcing a decision. No immediate problem creating urgency.
From a business owner’s perspective, that’s entirely rational. Time is limited. Reviewing something that isn’t broken feels like low-priority administrative work compared to winning new business, managing operations, or dealing with the dozen other things demanding attention that day.
There’s also an element of relationship inertia. If you’ve worked with the same account manager for years, the relationship is comfortable, queries are handled efficiently, and there’s mutual familiarity, the idea of moving to a new provider can feel like unnecessary disruption.
And then there’s the assumption – often unspoken – that all invoice finance providers are broadly similar. That pricing is standardised. That if there were a better deal available, your current provider would have mentioned it.
None of those assumptions are correct, but without actively testing the market, there’s no way to know.
Frequently Asked Questions
Q: How often should I review my invoice finance facility?
A: As a matter of routine, every 2-3 years makes sense. Beyond that, it’s worth reviewing after significant business growth, changes in your customer base, or when you notice availability restrictions that weren’t there before. The key is reviewing before you need to, not when circumstances force a decision.
Q: Will reviewing my facility damage my relationship with my current provider?
A: No. Reviewing your facility is a normal part of managing your business finances, much like reviewing insurance or other business services. Most lenders expect clients to periodically assess whether their arrangements remain competitive. If your provider is delivering good service at market rates, a review simply confirms that. If they’re not, you’ve identified something worth addressing.
Q: What information do I need to provide for a review?
A: Typically, you’ll need your current facility agreement (showing advance rates, service fees, and discount margins), a recent availability statement, an aged debtor report, and recent management accounts. Most businesses already have these to hand. The process is straightforward – the objective is to benchmark what you currently have against current market conditions.
Q: Does it cost anything to review my invoice finance facility?
A: No. Independent brokers are paid by lenders, not by clients. If the review confirms your current facility remains competitive, nothing changes and there’s no charge. If you decide to move provider, the new lender pays the broker’s fee. You’re not charged either way, and there’s no obligation to proceed if better options are identified.
Q: How long does it take to switch invoice finance providers?
A: The timeframe varies depending on business complexity and how readily management information is available. Generally, expect 4-8 weeks from decision to completion. Planning ahead means transitions can be managed smoothly without disrupting cashflow. Most businesses find the process less complicated than anticipated once the decision is made.