Cut in base rate probably of no help to factoring clients

Today’s 1% cut in base rate to 2% will probably have negligible effect on SME factoring and invoice discounting clients as firstly many of the providers have already moved over to LIBOR as a charging rate and secondly many of those who have remained on base rate will have minimum base rates included in their agreements and these could well be 4% or 5% so any factoring client on 3% over base could still be paying 8% pa

Time to dust off those factoring agreements and check the wording

1 thought on “Cut in base rate probably of no help to factoring clients”

  1. The recent drop in interest rates does not make sense and simply panders to the media. It demonstrates a politician doing something with little or no knowledge of economic implications. Economically it will not help the UK come out of recession, there are as many people penalised by a drop as helped. To businesses unable to cope with borrowing at a sensible margin over base rate at, say, 5%, then they probably shouldn’t be in business in the first place.

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