Everybody avoids the nitty-gritty details of invoice finance until they have to, then they just wish there was a TED talk out there that had all the answers.

Agencies are too often saddled with unsuitable finance because they don’t actually know what a better offer looks like, that and the rest of the industry has “managed” for the last thirty years or so by going down the same avenue.

However, just because something works doesn’t mean it couldn’t be done better.

What does it actually cost you?

Bear in mind that the low service charge financiers often wave in your face, will mask a financial reality that looks entirely different.

  • Is the amount you can drawdown against your invoices restricted? If it is, why and how is this going to impact the cash flow you need to scale your book?
  • Does it limit the amount you can fund through a single client, regardless of them being your biggest cash cow?
  • Are the minimum thresholds you need to meet beyond what you’re placing?
  • Will you have to pay a renewal fee to extend your contract?
  • Do you need to pay to increase your funding facility and do you have control over the amount it’s increased by?

What would you improve?

Consider all the setbacks and problems that were born from a difficulty with your financier, then think of all that could have been achieved if they hadn’t been there.

If you were advanced all the profit from your invoices immediately, think of the financial headroom you’d have to grow, invest, and place more contractors.

Is the credit control and processing behind the scenes up-to-scratch? Could you be making more money if you didn’t need to dedicate time to admin?

Are the communications your financier has with your clients damaging your business relationships?

Is there a better offer?

Whether it’s squeezing the missing information from a brief or seeing through the tall tales of candidates, recruiters tend to pride themselves on their ability to sniff out a good deal.

Yet, when it comes to their own agency and one of the most important decisions they’ll make with it – its finance, they tend to accept what they’re given.

It’s business acumen to shop around for the best deal. You wouldn’t place a contractor without knowing the market so before you commit to a lengthy contract, see how it measures up.

What would it cost to leave?

Financiers have a habit of bolting the door shut once you’ve signed, which is why you need to clarify the exit terms before you sign.

They might forget to mention that there’s a three-month notice period that needs to be given, and during this limbo they’ll withhold your margin.

Bear in mind that there are ways around this if you want to transfer to another financier and it’s not a reason to stifle your agency with the wrong service.

When it comes to choosing your financier, “It works” doesn’t cut it in a competitive landscape. So before you tie yourself into a year-long contract, ask who Sonovate are.