Settlement figure

Definition

A settlement figure is the lender’s quote of everything owed to clear a facility on a specific date: the outstanding balance, interest accrued to that day, and any early repayment charge or exit fee.

In plain terms

It is the "close the account today" price, and it expires — pay a day late and the interest recalculates.

Why it matters for your company

Always request a settlement figure before refinancing so you compare like with like. Check whether early settlement saves money with the early repayment savings calculator.

In practice

Picture a UK limited company part-way through a facility that decides to refinance with a new lender. Before anything else, the finance director requests a settlement figure from the existing lender rather than relying on the last statement balance, because the statement will not reflect interest that has continued to accrue since it was issued, nor any early repayment charge that becomes payable on exit.

The new lender typically wants sight of that settlement figure as part of underwriting, since it determines how much of the incoming facility is needed simply to clear the old one before any funds are freed up for working capital. Timing matters: if completion slips past the date the figure was quoted to, the director should expect to request an updated figure rather than assume the original number still holds.

Common pitfalls

A frequent mistake is confusing the settlement figure with the outstanding balance shown on a portal or statement. The two are rarely identical, since the settlement figure is a forward-looking, date-specific quote that layers on accrued interest and any exit charge, whereas the balance is simply a snapshot as at the last reporting date.

Another pitfall is treating a settlement figure as open-ended. Directors sometimes plan a repayment around a figure obtained early in a process, only to find it has lapsed by the time funds are actually sent, because the quote is only valid to the date stated. Building in a short buffer and reconfirming the figure close to the payment date avoids an unwelcome shortfall, and is worth checking against the early repayment savings calculator alongside a comparison with the outstanding balance already on record.