What costs should I expect when switching?

Typical costs include exit or break fees, solicitor and bank charges, potential reconciliation of reserves, and internal administrative resources. The incoming provider may offer support to cover some transition costs.

How long does a switch usually take?

A typical switch can take 4–12 weeks depending on due diligence, legal novation, and operational handover. Complex cases can take longer.

Can I switch invoice finance providers later, and what costs or steps are involved?

Q: Can I switch invoice finance providers later?

Yes. Switching is generally possible but involves reviewing your contract for notice periods and exit fees, arranging novation or discharge of security, and coordinating operational transfers such as debtor notifications and reserve reconciliations.

Short answer — yes, but plan carefully

You can normally switch invoice finance providers later, but the ease, timing and cost depend on your current contract type, facility structure and the new provider’s onboarding process.

Switching often involves legal, operational and commercial steps including exit fees, debtor notifications and transfer of security arrangements.

Why businesses switch invoice finance providers

Common reasons to change provider

Businesses switch to access better pricing, improved service levels, faster funding or broader product features such as non-recourse/factoring or integrated debtor management.

Growth, changes to debtor mix, or dissatisfaction with holdbacks and reporting can also prompt a move.

Types of invoice finance that affect switching

How easy it is to switch depends on whether you use factoring, invoice discounting, selective invoice finance, or a hybrid facility.

Factoring typically involves more operational transfer (debtor management and notifications), while invoice discounting can be more discreet but still has legal and security tie-ins.

Key contractual and legal steps to switching

1. Review your existing agreement

Start by checking the small print: notice periods, early termination fees, assignment clauses and continuing guarantees.

You should also confirm any reserves, outstanding fees and the treatment of partially funded invoices.

2. Choose and complete due diligence with a new provider

The new provider will request financial statements, aged debtor listings, copies of your existing finance agreement and often live banking and accounting system access.

Expect credit checks and a formal underwriting process that may take several days to a few weeks.

3. Agree commercial and legal documentation

Switching requires new facility documents from the incoming provider and legal steps to assign, novate or discharge security held by the outgoing provider.

A solicitor usually handles the novation or subordination of charges, and this paperwork needs careful coordination between both providers and your lawyers.

4. Transfer operational arrangements

For factoring, you will transfer debtor book management, redirect collections, and possibly issue debtor notification letters.

For invoice discounting, you must arrange the release/transfer of reserve balances and ensure continuity of cashflow during the handover.

Typical costs involved when switching providers

Exit and early termination fees

Many facilities include an exit fee or early termination charge, often a fixed sum or a percentage of the facility size.

These fees compensate the outgoing lender for setup and administration costs and are common in medium- to long-term agreements.

Operational and administrative costs

Expect solicitor fees for novation (often several hundred to a few thousand pounds), bank fees for transfers and internal staff time to coordinate the change.

There may also be costs to update accounting systems or integrate the new provider’s portal.

Funding and reconciliation costs

If a reserve or client balance needs reconciling, you may face reconciliation fees or temporary reductions in liquidity until accounts are cleared.

In some cases indemnities, contingent liabilities or guarantee releases (for directors’ guarantees) attract additional legal or administrative charges.

Potential hidden or indirect costs

Timing risks can cause short-term cashflow gaps if funding is interrupted during the transfer, and small businesses can suffer from late supplier or payroll payments as a result.

Also consider potential increases in effective cost if the new provider requires higher fees, lower advance rates, or larger reserves.

Practical step-by-step switching checklist and timeline

Pre-switch checks (Week 0–1)

Confirm notice periods, outstanding fees, guarantees, and whether any invoices are subject to litigation or disputes.

Prepare your aged debtor report, management accounts and recent bank statements for potential new lenders.

Selecting and onboarding the new provider (Week 1–4)

Obtain formal offers and compare APR-equivalent costs, advance rates, reserve policies, contract length and service-level details.

Seek clarity on debtor notification requirements, IT integration and collections approach — these materially affect disruption risk.

Legal transfer and operational handover (Week 3–8)

Arrange novation, discharge of existing security or subordination agreements through lawyers and sign new facility documents.

Issue debtor notification letters if required and validate bank mandates and payment instruction changes to ensure funds flow to the new facility.

Post-switch reconciliation and monitoring (Week 8–12)

Reconcile reserves, pay any outstanding charges to the outgoing provider and confirm release of guarantees or charges via Companies House searches if necessary.

Monitor the new facility closely for the first 2–3 months to confirm agreed advance rates and reporting cadence are met.

Quick timeline summary

Initial review and quotes: 1–2 weeks.
Due diligence and underwriting: 1–4 weeks.
Legal novation and transfer: 2–6 weeks.
Full operational handover: typically 4–12 weeks in total.

How to reduce switching risk and how Best Business Loans can help

Tips to lower costs and disruption

Negotiate exit fees where possible and ask the incoming provider to contribute to transition costs as part of the commercial offer.

Arrange an overlapping period where both providers coordinate collections and payments to avoid funding gaps.

Questions to ask a prospective provider

Ask about advance rates, reserve policies, fee structure, debtor notification templates, integration times and experience with similar businesses.

Also confirm whether they accept existing security structures, and how they handle personal guarantees and legal charge releases.

Why use Best Business Loans to manage a switch

Best Business Loans does not supply loans but helps UK SMEs identify compatible lenders or brokers and compare invoice finance options quickly.

We can save time by matching your business with providers experienced in your sector and by highlighting potential switching costs up front.

For a practical guide on different invoice finance products and to check which type fits your business, see our detailed invoice finance page: invoice finance.

Next steps — get a Quick Quote

If you’re considering a switch, submit a Quick Quote to get an eligibility check and tailored introductions to suitable providers.

Our service is free, independent and designed to help you compare options before committing to provider-specific legal or exit costs.

Compliance and clarity

Best Business Loans is an introducer that helps businesses find finance providers and does not provide credit or regulated financial advice.

We recommend seeking independent legal or regulated financial advice for contract novation, guarantees or complex facility structures.

Key takeaways

Yes — you can switch invoice finance providers, but expect legal steps, debtor transfer actions and possible exit costs.
Costs include exit fees, solicitor fees, reconciliation of reserves and potential short-term cashflow disruption.
Plan the switch, get formal offers, and coordinate novation and debtor notifications to minimise downtime.
Use an introducer like Best Business Loans to compare providers quickly and to understand likely switching costs before you commit.