When a working capital solution, such as invoice or debtor finance, starts it will generally have a minimum term, usually 12 months, sometimes 2 or 3 years.
After that term is served, you’ll find that some lenders will come back to you and look to sign you up for another minimum term without any material benefit.
Don’t agree to this kind of recontracting ‘offer’.
If you have a lender that is seeking to lock you in with threats of price rises, rather than providing you and your business a benefit, see this as a red flag and do not agree to recontract.
All relationships work best when there is a benefit to all parties – your lending relationship should be no different.
If your lender is behaving in a manner that only progresses their interests it might be a sign that it’s time to look to a better solution in the market.
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