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Retro commission - what is it?

Whether you’re a private citizen or a small business owner, it’s always unpleasant when fees sneak up on you. Egregious charges, fines, and penalties can disrupt your cash flow and upset the delicate balance of your finances – and conventional and traditional lenders alike are guilty of surprising their customers with these hidden fees.

People don’t trust financial institutions anymore because they lack transparency: whether it’s a sudden overdraft charge, a missold swap, or Libor fraud, the mechanics are unknown to ordinary men, women, and businesses – and so naturally, they grow suspicious. At Nucleus, we’re not afraid to show our work and justify our charges. We will never charge you spurious admin fees, impose disproportionate penalties, or behave dishonourably towards you: we treat our relationships as partnerships, and maximum visibility is essential to every healthy partnership. 

The retro commission fee can often be confusing for customers, and in the latest in our series of blogs on hidden charges, we’ve explained the precise circumstances in which it should apply. If any organisation ever tries to charge it to you for any reason other than those we’ve outlined below, regard it with caution.  

What is the retro commission fee? 

The retro commission fee is a one-off invoice finance charge, taken on the first day of the invoice assignment, designed to cover the lender’s costs in servicing the ongoing debts. This fee covers credit control and management of your assigned invoices on a day-to-day basis.

The retro commission fee forms an important part of most invoice finance services, which enable you to carry on running your business and pursuing your operational goals – without worrying unduly about non-payment and the potential impact it might have on your cash flow. 
 
How much does the retro commission fee cost? 

The retro commission fee is usually set at around 2% of the total value of invoices assigned, so obviously, the higher the value of your invoices, the larger it is. You should also note that if you decide to transfer to another lender, you might end up paying this fee twice!

Whatever you choose to do, don’t be taken by surprise. The problem with hidden fees is less to do with the fees themselves – most are industry standard – and more to do with the lack of openness and visibility. If you agree a deal on the assumption that you’ll be paying a certain amount, and budget accordingly, any variation from the plan can blindside you and sting your business’ finances.

If we’re going to charge you, we want you to know why. We’ll explain our reasoning, we’ll offer alternatives, and if it costs us the deal, it costs us the deal – we respect our clients too much to provide finance under false pretenses.  

Our specialists will be happy to talk to you about any of this on request, but if you’re interested in finding out more, we’ve made it really easy to do your financial homework. Download our free hidden fees eBook today to find out more. 

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