The secret to selling more invoice
Flexible contracts – customers are often put off by extended contract periods and long periods of notice of termination. They respond to very short termination periods, so that they are not tied in if they choose to leave. In practice they rarely leave anyway, but if they do, they want an easy, simplified transfer process to support them in moving providers.
Reduced cost version of invoice discounting – many customers are comparing the cost of invoice discounting with an overdraft or loan. A low cost version of invoice discounting would enable invoice discounters to recruit huge numbers of customers that might otherwise use an overdraft or loan. Whilst the argument that “invoice discounting releases more funding than overdraft” is often true, the price premium often makes it unattractive to the customer.
Widen the pricing differential between factoring & invoice discounting – it often doesn’t sufficiently reflect the significantly lower workload for the invoice discounter that the customer perceives invoice discounting to involve.
Separate funding from credit limits – increasingly the funding given against debtors has become linked to the credit limit (for bad debt protection limit) that can be written on the debtor. This prohibits many customers from using invoice
Small business pricing – for the smallest of businesses i.e. those turning over less than £150K pa, even minimum service charges of £3K per annum are hard to afford. A lower cost model for the smallest businesses would open up a large segment of the market.
No premium for selective products – some customers are interested in selective invoice
Modular pricing – customers appear to like the idea that they pay for a core service e.g. funding and then they can bolt on further services, in some cases for just the short term, for example collections support.
Remove hidden charges – customers are often put off by the perception that there will be unexpected “hidden charges” – this could be addressed by simplifying the pricing approach. Many customers find an “all inclusive” rate attractive.
These are some of the issues that are barriers to customers buying factoring and invoice discounting products. Hence they are partially responsible for the overall contraction of invoice
Some of these ideas may not be palatable from an invoice