Factoring and invoice discounting contracts are often difficult to understand and not balanced from a customer's perspective. Proposals from invoice finance providers usually are quite lengthy with a long list of different fees, such as "arrangement fee", "service fee" or "audit fee".
If you'd like our help understanding a quote, please feel free to contact us and we can send you a comparison against IX very quickly.
Remember- "up to" 85-90% often translates into a lower advance rate than advertised.
GST: You might be given an advance rate on the net-of-GST amount of your invoice. So if, for example, you sell an invoice worth $100k (including GST) and your advance rate is 50% of the net of GST amount, you end up receiving 50% of $90k, not of the full $100k. That's only $45k in your account, equivalent of 45% advance rate.
Facility limit, or Prepayment Review Level: If you're quoted a facility limit of, say, $100k (with an advance rate of 80%), and then want to sell an invoice worth $200k, bear in mind that the maximum you'll drawdown will be $100k (your limit), giving you a real advance rate of 50%.
Discount fees: we have seen many factoring agreements where the client is charged a discount fee and a "Purchase Cost" on every invoice but not every invoice is eligible for funding!
Lock-ins: it is rarely clear how much is payable to the factoring company if you want to break the contract.
At IX we never give you a 'teaser' rate.
On our website you'll see what our average advance rate is, not the best case scenario. We also make sure you fully understand our simple fees before you make any commitment to use IX.