The recruitment industry is fast paced, and to get ahead of your competitors, you need to keep up! So, what can you do when you’re waiting for yet another late paying client to settle their invoice? Clients who don’t pay on time can cause cashflow issues that make meeting your financial commitments – like paying contractors or temps – a challenge for recruitment agencies of all sizes. But there’s no need to worry; that’s where recruitment factoring can help.
What Exactly is Recruitment Factoring?
It might sound daunting to the uninitiated, but recruitment factoring is actually a low-risk way of borrowing money to boost your company’s cashflow. Also known as invoice factoring, it’s designed to release funds tied up in your unpaid client invoices. You could get up to 90% of the invoice value paid into your bank account within 24 hours. Sounds pretty good to us!
Recruitment factoring is a great long-term solution to cashflow issues and is suitable for companies both large and small. It’s especially useful for start-ups or smaller companies undergoing rapid growth, as you may find you’re unable to access bank funding or funding from other sources due to your limited credit history.
How Does it Work?
You provide your outstanding invoices to the funder and they release up to 90% of the value of them to you, almost instantly. Even better, they’ll also handle the collection of funds from clients on your behalf, so no more chasing late paying clients – and no need for an accounts receivable department.
If you prefer to stay in charge of your customer relationships yourself, you could always opt for invoice discounting. This means you’ll experience all the benefits of recruitment factoring but stay in control of those all-important customer/client relationships and remain responsible for collecting payments on invoices.
For anybody concerned about confidentiality, there’s even confidential invoice discounting, which means the funder will chase clients for payment while acting as a representative of your company – it’s completely discreet, so nobody will know you’re working with a third party.
What Are the Benefits of Recruitment Factoring?
Invoice financing for recruitment agencies offers a range of benefits, some of which include:
- Quick access to funds tied up in your unpaid invoices.
- A low-risk way to borrow and boost your cashflow – the amount you borrow is based solely on your unpaid invoices, so you’ll never borrow more than you can afford.
- Plenty of flexibility.
- Helps you to stay on top of paying temps and contractors, particularly during the busy summer temp season.
- Outsource your accounts receivable/credit control which can help you reduce overheads, saving you money as well as time that you can spend focusing on other aspects of your business.
That’s not all though – there are a whole host of other benefits. Every company is different, which means it’s important to tailor an invoice financing solution to suit your business’s unique needs. For example, perhaps you’re looking for a short-term solution to cashflow problems. If this is the case, then spot factoring or single invoice factoring may be a better choice for your recruitment agency than signing a contract and committing to traditional recruitment factoring, which is designed for long-term use. If confidentiality is a concern, then confidential invoice discounting could be the best option for you – your clients will never know you are working with a funder.
Recruitment factoring has benefits for agencies of any size, so if you’re a recruitment agency and would like some more information on invoice factoring and its benefits for your business, why not get in touch with us today? You can call us on 0330 134 2826 or if you’d prefer, drop us an email at online@simplyfactoringbrokers.co.uk.
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