Metro Bank SME Finance have announced two significant changes to the way they levy charges. They have that abolished both value dating and termination fees.
Value days means that once a customer has reduced their borrowing balance, interest is still charged on the higher balance for a specified number of days. This adds significant cost to a customer's borrowing but is generally a hidden charge. These charges can add considerable additional profits to the factoring company and some have been known to add up to 5 days to the normal clearing days.
The change to termination fees is a really a major change. Most factoring companies will require a 12 month notice period if a client leaves and if they leave early they will be required to pay upto 12 months minimum charge before they leave. I understand Metro will only require 28 days notice. They also intend to charge reduced collect out fees when a client fails.
Traditionally both these charges have added considerable profits to a factor so it will be interesting what impact it haves on the profits of Metro Bank SME Invoice. It will be interesting to see whether other factoring companies follow.
Traditionally both these charges have added considerable profits to a factor so it will be interesting what impact it haves on the profits of Metro Bank SME Invoice. It will be interesting to see whether other factoring companies follow.
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