Incurring financial costs is inevitable in most businesses. However, small and medium enterprises are often unaware of all the financial expenses they are incurring as fee structures with banks and factoring firms can be complicated and difficult to understand.
This article aims to help these businesses realise what they are actually paying in terms of financial expenses and to see whether they could be paying less.
Follow our tips below and find out whether you could be saving on your financial expenses!
Many firms are unaware of the finance options available to them, especially SMEs tend to stay with their banks for any form of finance, even when alternative financing might suit them better.
Make sure to do in-depth research on all of the options available to you, otherwise you might be missing out on a better deal.
Many banks charge fees that you may not be aware of. Check with your bank whether you are paying fees such as opening or annual fees, transaction or operation fees, consulting fees or fees for not using your facility.
Being aware of what you are paying is essential to your ability to compare effectively.
Make sure to be aware of all the fees you are paying and compare your current contract to new players in the market who may be able to offer you lower or fewer fees, especially if they are using technology to increase their efficiency.
Compare the annual fees of all your offers, do not let them fool you by giving some fees in pounds and others in percentage terms!
To calculate the real annual fee you are paying, you can do an example calculation. Calculate all the fees you would pay over the course of a year in real terms and then divide the total cost by the finance obtained. This allows you to estimate the real cost of financing and you will be able to compare better.
When looking for a financial product, ease and speed of access are decisive. Any time you spend acquiring finance is money your company loses. Same goes for managing and maintaining finance – it should be easy and not eating away your time.
Many finance providers who integrate well developed technology into their operations or who are fully based on technology (“Fintech companies”) allow you to rapidly obtain finance online, make use of those opportunities!
Don’t just stay with your bank because that is what you have always been doing, explore all options available. Alternative finance has many advantages such as fast processes that allow you to receive finance in a matter of days, transparent pricing without hidden fees and great flexibility so you can get finance when and how you need it. Also, many alternative finance providers do not require debentures or personal guarantees.
Often companies are unsure about how alternative finance works and thus do not make use of it which is a crucial mistake. Inform yourself and get better financing for your company!
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