Switching Invoice Finance Providers — Notice Periods & Exit Fees (Refinance)

Summary (quick answer): When you switch invoice finance providers you will commonly face a contractual notice period (typically 14–90 days depending on whether you’re on a rolling or fixed-term agreement) and potential exit costs such as administration fees, percentage-based exit charges, breakage/early repayment costs and retained reserves. The exact amounts depend entirely on your contract terms, facility type (factoring vs invoice discounting) and remaining term. To get a clear, written settlement figure and an estimate of likely exit costs, request a formal discharge statement from your current funder — or use our Free Eligibility Check to see whether switching now is likely to save you money. Free Eligibility Check

We are an introducer — not a lender. Our service is free. You are under no obligation.

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At a glance — what to expect when you switch invoice finance providers

Switching an invoice finance facility involves administrative and financial steps that can create costs and timing issues if not planned. Expect:

• A contractual notice period (commonly 14–90 days depending on your agreement).
• Exit fees: administration charges, percentage-based fees, or calculated breakage costs where applicable.
• Operational work: release of security, removal of charges, and (for factoring) customer notifications.
• Final reserve reconciliation — money held back to cover disputes may be released only after invoices are reconciled.

If you want a quick comparison and an estimate of exit costs from multiple providers, start a Free Eligibility Check — it takes under two minutes.

What counts as switching? (types of moves)

Replacing your current funder with another provider

The most common scenario. You terminate the existing facility and start a new one with a different provider. This often requires a formal discharge statement from the current funder and documentation to assign or release security.

Converting between product types (factoring ↔ invoice discounting)

Switching product type can change the operational work required. Factoring usually requires customer notification or consent; invoice discounting may be invisible to customers but can need different security arrangements. Different products may attract different exit costs.

Refinancing with the same provider

Sometimes you renegotiate terms or rates with your existing provider — typically the cheapest route because exit fees are avoided or minimal.

Contract elements that determine notices and fees

Your facility agreement is decisive. Key clauses to check:

• Term length: fixed-term (e.g. 12 months) vs rolling monthly contracts.
• Termination/notice clause: exact number of days’ notice required and how notice must be served.
• Early repayment / breakage clause: how the funder calculates losses if you end early.
• Administration/transfer fee: one-off sums for processing an exit and releasing security.
• Reserve/release mechanics: how and when the reserve is released after the last invoice is collected.
• Legal/charge removal costs: any solicitor or registration fees to remove security over assets.
• Customer notification obligations: particularly important for disclosed factoring.

Typical notice periods and exit fees — realistic UK ranges

Below are market-typical ranges (indicative only). Read your contract for exact figures.

• Notice period
  • Rolling contracts: commonly 14–30 days.
  • Fixed-term contracts: often 30–90 days once the term ends; some require payment of the full term or an agreed breakage amount if leaving mid-term.
• Administration / termination fee: typically £250 – £2,000 (often £500–£1,500).
• Percentage-based exit fee: commonly 0.5% – 3% of the outstanding advance or of final invoiced value.
• Breakage / early repayment cost: can be the most significant; often calculated as lost margin/interest over the remaining term (could represent several months’ margin).
• Reserve retention: not a fee but expect reserves to be held until all invoices are reconciled — release timing commonly 30–120 days after last payment.

How exit fees are calculated — worked examples

Understanding how providers calculate costs helps you budget.

Example 1 — Fixed administration fee

Contract states: termination fee £750. On exit, you pay £750 plus any outstanding interest. Simple and predictable.

Example 2 — Percentage-based exit fee

Clause: 1% of outstanding advances on termination. If outstanding advances at exit = £200,000 → exit fee = £2,000.

Example 3 — Breakage cost (illustrative)

12‑month contract where the funder expected to earn margin over the period. You leave after 6 months. The funder calculates lost future margin (present value) — often equivalent to 1–3 months’ typical margin depending on your volumes. For high-volume clients this can be several thousand pounds.

Step-by-step switching timeline (what to do and when)

Plan a 4–12 week process depending on complexity.

1. Day 0: Check objectives and speak to a broker/new funder for indicative terms. Get Quote Now.
2. Day 1–7: Retrieve your facility agreement. Note notice periods, breakage and reserve clauses.
3. Day 7–21: Ask current provider for a formal settlement/discharge statement (this should show advances, reserves, fees and any early termination calculations).
4. Day 21–35: Compare offers and instruct your chosen new provider. Agree a start date and a handover plan.
5. Day 30–60: Serve formal notice to your existing provider per the contract (if required).
6. Day 45–90: Complete documentation, settle any exit costs, transfer security and notify customers if factoring requires it.
7. Post-exit: Track reserve release and reconciliation (30–120 days typical). Keep records of all settlement figures.

How to reduce or avoid exit fees — negotiation & tactics

Practical tactics to lower costs:

• Time your move: switch at or after the end of a fixed term where possible.
• Negotiate: many funders prefer retaining good customers and may reduce or waive fees rather than lose the relationship.
• Request a full written settlement figure: compare it to your contract and challenge ambiguous charges.
• Partial transfer: transferring a portion of invoices can limit breakage calculations in some facilities.
• Use an experienced broker: a specialist can negotiate handover mechanics, challenge unreasonable breakage, and speed the process.
• Agree a coordinated handover: reduce admin costs by presenting a clear plan for customer notification and documentation.

Common pitfalls & red flags to watch for

• Vague breakage clauses with no transparent calculation method.
• Hidden legal or registration fees for removing charges from Companies House.
• Incorrectly served notice extending your contract unintentionally — follow contractual notice requirements exactly.
• Unclear reserve release timing leading to short-term cashflow gaps after exit.
• Providers who won’t provide a written settlement figure — always insist on one.

How UK Business Loans helps — match with lenders & brokers

UK Business Loans does not lend. We introduce businesses to lenders and brokers who can help you with invoice finance refinancing and switching.

• We can connect you to brokers who will obtain a formal settlement figure from your current funder and explain likely exit fees.
• We help you compare refinance options (e.g. different funders, factoring vs discounting) so you can weigh costs vs benefits.
• We introduce negotiators who can try to reduce breakage and administration fees and coordinate handovers.

Ready to check if switching makes sense? — Get Quote Now. It takes under two minutes. Our service is free and there’s no obligation.

For background on the product, see invoice finance explained or learn more about our refinance options.

If you are specifically looking at refinancing your current facility, our page on /refinance-loans outlines common refinance structures and how exit costs compare to potential savings.

FAQs

Will switching always cost me money?

Not always. Some providers charge only a small administrative fee; others may apply breakage if you leave mid-term. The only way to know for sure is to request a written settlement/discharge figure from your current funder.

How long will my reserve take to be released after exit?

Reserve release timings vary — commonly 30–120 days from the last invoice collection and reconciliation. Confirm the schedule with your funder and get it in writing.

Can I move before serving contractual notice?

You can attempt to negotiate an early exit, but expect potential breakage or early repayment costs. Co-ordinate between both providers to agree a handover that limits disruption.

Who pays customer notification costs on factoring transfers?

Contract terms differ. Sometimes the outgoing funder covers notification administration, sometimes the client or incoming funder does. Confirm in writing.

Is refinancing with the same provider better than switching?

Refinancing with the same provider usually avoids exit fees and is operationally simpler. However, a new provider may offer materially better pricing or service — weigh the exit costs against the long-term savings.

Important notes & compliance

UK Business Loans is an introducer, not a lender. We do not provide regulated financial advice. Contract terms, notice periods and exit fees vary by provider — always obtain a written settlement figure from your existing funder and written terms from any new provider before proceeding. Typical facility sizes we help arrange start from £10,000 and upwards.

Quick action: If you want an estimate of exit costs and a side‑by‑side view of refinance savings, start a short enquiry now: Free Eligibility Check.

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Next step: Get a no-obligation estimate and lender/broker matches — Get Quote Now.

1. How do I switch invoice finance providers?
Request a written settlement/discharge figure from your current funder, compare new offers (factoring vs invoice discounting) with a broker, and coordinate a formal handover to minimise admin and exit costs.

2. What notice period should I expect when exiting invoice finance?
Typical notice periods range from 14–30 days for rolling contracts to 30–90 days (or longer if mid‑term) for fixed‑term agreements — always check your contract.

3. What exit fees will I likely face when refinancing invoice finance?
Exit costs commonly include administration/termination fees (£250–£2,000), percentage‑based charges (0.5–3%), breakage/early repayment costs and any outstanding interest or legal/registration fees.

4. How are breakage or early repayment costs calculated?
Breakage is usually calculated as the funder’s lost margin or expected interest over the remaining term (often equivalent to 1–3 months’ margin, depending on volumes and contract wording).

5. How long will my reserve take to be released after I exit?
Reserve release timing varies but is commonly between 30–120 days after the last invoice is collected and fully reconciled.

6. Can I switch from factoring to invoice discounting without notifying my customers?
No — moving from disclosed factoring typically requires customer notification or consent, whereas invoice discounting can often remain invisible to customers, subject to contract terms.

7. Will switching invoice finance save my business money?
Potential savings depend on whether the long‑term rate and service improvements from a new provider outweigh any notice, breakage or transfer costs shown on your settlement figure.

8. How long does the switching process usually take?
Expect a 4–12 week timeline for obtaining settlement figures, serving notice, completing documentation, transferring security and reconciling reserves.

9. Can UK Business Loans help me switch or refinance my invoice finance facility?
Yes — UK Business Loans offers a free, no‑obligation introducer service that matches you with FCA‑regulated brokers and lenders who can obtain settlement figures and assist with refinancing (we do not lend or give regulated advice).

10. Will submitting an enquiry with UK Business Loans affect my credit score?
No — making a free eligibility enquiry via UK Business Loans won’t impact your credit score; any credit checks occur later and only if you progress with a lender.