How Do I Support a Client Who Is Looking to Replace Their Invoice Finance Facility?

Invoice Finance is a fantastic way to support business cash flow. However, circumstances change, and sometimes moving to a new Invoice Finance provider becomes necessary. Whether due to business growth, a breakdown in relationship, or the pursuit of better pricing, replacing your existing provider is possible—and relatively straightforward.

Understanding the Inter Member Transfer Process (IMTP)

Members of the Invoice Finance and Asset Based Lending (IFABL) association, part of UK Finance, must follow the Inter Member Transfer Process (IMTP). This process includes several commitments and set timescales to ensure a smooth transition. Here’s what you need to know:

Managing Customer Communication

One of the primary concerns for businesses during this transition is minimising disruption and effectively communicating changes to customers, particularly regarding new bank details.

1. For Factoring Facilities:
   • The transition process is collaborative between your old and new providers, allowing for full disclosure.
   • Your old provider will notify your customers about the transfer date, while your new provider will inform them of the new bank details.
   • While your providers will handle most communications, it can be beneficial for you to reach out to your customers personally to expedite the process.
2. For Confidential Invoice Discounting:
   • Because these facilities operate under confidentiality, you are required to inform your customers about the changes.
   • This communication can take any form that suits your relationship with them, but it’s essential to update the bank details shown on your invoices to reflect those of your new Invoice Finance provider.

Transition Period: A Safety Net for Payments

After the transfer, any payments made by your customers to your old provider will be redirected to your new provider for a period of three months. This grace period is designed to ensure that your customers are fully informed about the changes and helps prevent any potential cash flow disruption during the transition.

Choosing the Right Provider: A Crucial Step

While the actual process of switching providers is relatively easy, the most challenging part can be selecting a new lender that aligns with your business needs and growth plans. Consider the following factors when choosing your new Invoice Finance provider:

• Pricing and Terms: Compare rates and fees to ensure you’re getting the best deal.
• Flexibility: Look for a provider that offers adaptable financing solutions that can grow with your business.
• Customer Support: A provider with excellent customer service can make the transition smoother and provide ongoing support.
• Reputation and Reliability: Research potential providers and consider their reputation within the industry.

We’re Here to Help!

While replacing your Invoice Finance provider might seem daunting, it is a manageable process that can significantly benefit your business. With the right preparation and communication, you can ensure a seamless transition that enhances your cash flow management.

If you need assistance in choosing the best Invoice Finance provider for your needs or guidance on the transition process, we are here to help. Let us support you in finding the right solution to fuel your business growth.