Recruitment
Get paid sooner so you can fund payroll for your temps
Invoice Finance for Recruitment Agencies
The majority of temporary recruitment businesses use invoice finance as they have to pay temps wages on a weekly basis. It might take you 14, 30 or even 60 days to get paid by your clients, but you need to pay your temps every week. In order to be a successful recruitment agency, it is crucial to pay wages on time and keep your contractors happy.
Whether you are an established recruitment agency or a new start, it is important to know what invoice finance options you have. There are facilities available that also offer payroll, back office, timesheet portals and credit insurance.
Temp Recruitment Agency
- Keep temps paid on time.
- Ability to grow.
- Offer extended payment terms.
- Assist with cashflow.
- Save time.
- Focus on what you do best.
Permanent Recruitment Agency
- Offer extended payment terms.
- Win more work.
- Release cash from outstanding invoices.
- Open a temp desk.
- Improve credit control.
- Grow your agency.
How does Invoice Finance work for a Recruitment Agency?
This depends on what type of invoice facility you go with. However, they all serve the same purpose in the world of recruitment – to keep temps and other bills paid on time.
This is done by releasing cash against your sales invoices straight away. Rather than waiting 14,30,60 or even 90 days to get paid by your client, you can raise finance against your sales invoice the day you raise it.
That way, you can meet payroll deadlines and ensure that temps turn up to work the following week.
In recruitment, the basic process looks like this:
What type of Invoice Finance facility is best for my Recruitment Agency?
There are various types of invoice finance facility that you can choose on depending on what you want out of the facility. For example, you can keep the facility confidential, so you client does not have to know that you are even using a lender. On the other hand, you might want the lender to do credit control, therefore the facility will be disclosed to the client.
In recruitment, there are lenders that can also often recruitment specific additional services such as:
- Payroll
- Back office support
- Credit control
- Timesheet portal
- HMRC reserves
- Third party payments to payroll or umbrella companies
- Credit protection
- CRM systems
- Websites
- Margin only funding
- Principle model
- Funding RPO’s and Neutral Vendors
Please contact us to find out more about recruitment specific additional services and whether the pay and bill model would be a good fit for your recruitment agency.
Why do Invoice Finance lenders like Recruitment?
Most invoice finance lenders like the recruitment industry because of many reasons.
The job sign off (timesheet)
is a very good form of proof of delivery to say the work has been carried out, the client has signed the hours off and the invoice is more likely to get paid.
Invoice finance facilities grow in line with your sales
Unlike a business loan, where you can simply run out of cash. An invoice finance facility provides you as much funding as you want, as long as you have the work available with your clients.
In recruitment you can be one phone call away
from a client that needs XYZ more temps. Invoice finance can grow as much as you like with the right clients as the funding is constantly available.
Invoice Finance is typically fast paced
just like the world of recruitment and lenders know how important flexibility is.
How do I get an Invoice Finance facility?
This is where Contact Business Finance comes in! We have a wealth of knowledge in the world of Invoice Finance and can put you in touch with the most suitable lender. We only work with lenders that understand the world of recruitment. Within our free-of-charge service, we will compare the market for you to find a lender that is the best fit for you and your agency.
And it’s not just Invoice Finance we can help with – we can look at business loans, asset finance, property finance and much more. We often help our recruitment clients purchase the office they are currently renting.
Frequently Asked Questions
How can Invoice Finance benefit a Temporary Recruitment Agency?
- Keep temporary workers paid on time by receiving funding against your sales invoices, so you don’t have to wait to get paid by your client
- Ability to grow, take on more work and place more temps
- Offer extended payment terms to clients to win more work and compete
- Have the option to receive funding only or get further support with payroll, back office, timesheet processing, invoicing, HMRC reserves, credit control and so much more
- Assist with cashflow but also save time so you can focus on what you do best – which is recruitment
How can Invoice Finance benefit a Permanent Recruitment Agency?
- Offer extended payment terms to your clients to win more work which can sometimes give you the edge against your competitors that are also filling jobs
- Release cash from outstanding invoices the day you raise the invoice. As a perm agency, you might not have to pay temporary workers, but you still have internal staff to pay and the ongoing costs of running a permanent recruitment agency.
- You might want to open a temp desk and need the funding so you can afford to keep temps paid on a weekly basis
Reduce the need for an overdraft or a business loan. With invoice finance you are only borrowing against money you have already billed for. - Improve client payments as a lender can help with credit control and also assist your agency going legal on a client if they refuse to pay a perm fee.
Can I still outsource Payroll?
Yes, invoice finance lenders can just provide funding only solutions. This is actually the most cost efficient way as you are not asking for the lender to provide additional services. Not all invoice finance lenders insist on doing the payroll and back office. You can choose a funding only product that will fund your invoices and you can then use funds to either forward to a payroll provider or conduct payroll in house.
Will Invoice Finance lenders fund RPOs / Neutral Vendors?
Yes, however not all lenders like this type of client because of the clauses associated within their contracts. At Contact Business Finance we work very closely with lenders that like Master Vendors, Neutral Vendors, RPOs and can fund up to 100% exposure with such clients.
Are there lenders that will fund perm only recruitment agencies?
Yes, although the majority of lenders do not like perm recruitment because of the rebates associated within the industry. We work closely with lenders that can fund perm only recruitment agencies to a very high level.
Can we get credit insurance on our invoices?
Yes, we can either source this with the lender you go with or assist you with your own credit protection policy. This will give you peace of mind if any of your clients go through any form of insolvency and cover you for bad debts. As long as you get suitable cover. Find out more about credit protection / bad debt protection
How quickly can I get an Invoice Finance facility?
Invoice finance can be implemented within days. However, this depends on many factors such as, if you are moving facilities, how quickly information can be gathered and the lenders timelines. Please get in touch with us today to find out more information.
How much faster can I grow my recruitment agency using Invoice Finance?
Having an invoice finance facility allows your business to grow by simply being able to take on as much work as possible. Simply because you are able to pay temps weekly wages on time. The level of funding grows inline with your sales and increases as you grow as a business. Therefore, if you have option to take on more work you have the ability to fund it.
What is the difference between Invoice Finance and a Business Loan?
With a business loan you can get a quick cash injection to your company that you will have to repay over an agreed term. However, you have to repay the loan whether you are busy or not. Having an invoice finance facility allows you to release cash against your outstanding invoices, so it’s a more secure way of funding as you can only borrow against what you are owed. So you are less likely to default. It is more reliable than a business loan and more suited to cash hungry businesses that need funding for cashflow purposes.
How quickly do lenders fund invoices?
Most lenders fund invoices the same day. We will only work with lenders that understand the fast paced nature of the recruitment industry.
Can I choose which invoices to finance?
Yes, there are selective options. Please find out more about selective invoice finance here
What are the typical fees involved with Invoice Finance?
The cost of an invoice finance facility does depend on many factors such as turnover, how long it takes your clients to pay, how much you need to borrow and the risk associated with the facility. Typically, we see facilities cost anything from 0.5-3% per invoice. To have more of an idea on this, please visit our calculator or call us.
What finance facility is best for my recruitment agency
Factoring, Invoice Discounting, CHOCCS, Pay & Bill – there are so many options for recruitment agencies to choose from. At Contact Business Finance we have helped 100s of recruitment agency owners choose the right facility for their needs. You simply just need to speak to us.