Recruitment agencies and the cashflow challenge
‘Cash is king’ may be an overused phrase, but it certainly rings true for recruitment businesses.
Many agencies, whether start-up or established firms, placing perms or temps, face a cashflow challenge.

Perm workers
With perm hires, there’s usually a gap of several weeks between sourcing the worker and getting paid. Eight weeks or more is not uncommon, depending on the notice period the worker must serve.

Temp workers
With temps or contractors, there’s usually a time lag between payments being due to workers and invoice payments being received from end clients, plus the complexity of tax and VAT payments to calculate and process in many instances too.

The invoice funding myth
Recruitment invoicing issues can be quite simply addressed with a funding solution. Unfortunately, too many good recruitment businesses avoid using funding because they think it’s too expensive. Or they give an equity stake to a third party and relinquish control and revenue, simply because agencies aren’t aware of all the recruitment funding options available to them.

What recruitment funding options are available for agencies?

All funding options help to release funds that are tied up in unpaid invoices. However, each option works slightly differently depending on whether you’re hiring temps or perms, and what stage of growth your company is in.

Funding options broadly include:

• 100% recruitment finance with back office
• Fund placement by placement
• Factoring
• Invoice discounting
• Equity release

Let’s look at each option and how it works.

How to decide

We hope we have provided some clarity on recruitment funding options to help you think about what would suit your business best.

We can facilitate all funding options, so before you choose please do consult with our experienced team who will help you make the right choice.

Get in touch to find out more.