How Recruitment Finance Can Help You Grow Your Agency

21 November 2023

Almost all contract or temporary recruitment companies will need to consider putting in place invoice finance arrangements.

This is because you will need to pay workers before your client pays you and this could lead to a cash flow problem.

Even if you’ve got healthy reserves from which to pay workers whilst you’re waiting for clients to honour invoices, it may be better to use invoice financing as this will mean you can use your reserves to fund other things like invest in technology, new staff or a marketing campaign which will help your business grow.

How does invoice finance for recruitment agencies work?

Where businesses buy and sell products, invoice finance helps bridge the gap between purchasing stock and getting paid by customers. In the case of recruitment it’s the supply of workers. There are recruitment specific solutions and wider solutions to solve your cash requirements.

  • 100% Recruitment Finance, pays your worker and releases your margin each week.
  • Factoring releases up to 90% of invoice values and you pay your workers.
  • Invoice Discounting releases up to 80% of invoice values and you pay your workers.

 

When you’re a service provider like a recruitment company, invoice finance helps to plug the gap between paying workers and getting paid by your clients. It means you get the funds from your client invoices upfront so you don’t have to dip into overdrafts, credit facilities or capital reserves. The benefit of this rapid access to funds helps you take advantage of new opportunities and alleviates pressure on your cash flow. In short, it can significantly contribute to your agency’s growth and success by delivering the following benefits:

Flexibility

One of the main benefits is that invoice finance can be adapted to the specific needs of your recruitment agency. Instead of a fixed business loan or line of credit, an invoice finance arrangement allows you to increase your funding requirements in line with your agency’s growth. This flexibility is crucial for your business, particularly if it’s in the start-up or growth stage, giving access to the right level of capital when it’s needed most.

Time-saving

Staff are expensive so you naturally want them focused on helping your business run smoothly and grow. 100% recruitment finance will include both pay & bill and credit control. These services are time-consuming and the 100% financier will be active in credit control.

Unfortunately, too much time can be spent chasing clients for payment to keep the cash flowing through your business. Factoring does not normally include pay & bill, but may include credit control. However, the incentive to collect money is not as strong as 100% recruitment finance. Invoice discounting does not include pay & bill or credit control, so you will need an internal or outsourced team to support this. Your choice is, therefore, to determine which parts you wish to outsource.

In each case, your agency will benefit from a steadier cash flow which, in turn, enhances the company’s stability and credibility, giving confidence to clients and prospects.

Speed & agility

Rapid access to funds is a competitive advantage for all agencies but particularly those in fast-paced industries where demand for skills goes through peaks and troughs. Sudden increases in demand for drivers, healthcare staff or teachers, for example, can be more easily met if you know you have the right funding solution in place beforehand. Bank loans can take weeks or months to process whilst invoice finance is usually very fast – you can usually access funds within 48 hours making it far easier to scale swiftly in response to new opportunities.

100% Recruitment Finance flexes with your demand in the peaks and troughs. Factoring can flex with peaks and troughs, but is subject to minimum charges. You will have concentration limits, so you’ll need a good client spread.

Invoice Discounting will need authorisation and has minimum charges. You will have concentration limits, so again, you’ll need a good client spread.

Being able to react can make all the difference to your ability to serve your clients well and achieve a competitive edge.

Choose Workwell as your recruitment invoice finance partner

Invoice financing empowers recruitment agencies to overcome cash flow challenges, streamline operations, and pursue growth opportunities with confidence. The combination of flexibility, time savings, and cash flow management means you can serve your customers well and attain a competitive edge.

Workwell can help in any situation, we have a number of recruitment finance solutions available.

  • Freedom Lite helps agencies fund occasional or small numbers of workers on a roll-on and roll-off basis. We take care of everything.
  • Freedom is 100% Recruitment Finance and gives you an insured product for paying workers and your margin up front every week. We take care of everything.
  • Invoice Discounting is for larger agencies. We have access to the best deals and can introduce you to leading banks in search for the best deal for your agency. In addition we have Pay & Bill and Credit Control outsource solutions to support this facility.

 

If you would like to consider invoice finance to support your recruitment business, let us help.

Funded Solutions
Shelagh Ward – 07715 666746 – [email protected]

Invoice Discounting & Back Office Solutions
Dan Benson – 07376 359522 – [email protected]

 

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