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Why commission is important

hsbc-epa_1716870aAcross the invoice finance industry, commission is paid to brokers at a near identical rate by nearly all the lenders. There are slight differences between the rates paid by the online portals and single invoice providers compared to conventional facilities but it is not so significant to deter a truly professional broker from seeking the best arrangement for the client regardless. In other areas of commercial finance, rates do vary considerably but invoice finance is keen to be self regulating.

Some may question why commission should be paid at all and whether it is simply a cost for the borrower. This is clearly an argument I would comfortably counter with the fact that there are over 40 active lenders in the market and also that competition as well as keen advice will keep the bidding competitive

Commission is paid monthly or quarterly for the full length of the deal. This is a sensible arrangement because it incentivises the broker to ensure that the borrower is content. I have not lost a client to another lender

I believe it is an arrangement that benefits all sides. I have never had a client complain about my time being rewarded and frankly nor should they. Unfortunately one bank disagrees

Aside from Yorkshire bank, who are reviewing their policy and are small players in the market, only HSBC refuse to pay commission. As much as I respect HSBC,I find this perverse. Their view is that the broker should charge a fee to the client directly

Simply put this is never going to work. It is frustrating because HSBC do have their place in the market and some particular strengths but whilst it would be possible to obtain a fee from a client at the outset. charging them a commission rate for the length of the deal is not going to be straightforward at all. Frankly, unlike a lender, the borrower has no real incentive to continue to pay

And it is the ongoing incentive on all sides which brings about the best solution for all parties

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