Are you considering Recruitment Invoice Finance or Recruitment Factoring for your business? Lets look at the different options that are available, the costs involved and how to apply.
Running a recruitment agency can be a lucrative and rewarding business. However its not unusual to have to wait 30, 60 or even 90 days to get invoices paid from customers, causing cash flow pressure.
Invoice Finance can be used by Recruitment agencies to relieve this cashflow pressure. By getting access upfront to cash tied up in unpaid customer invoices and timesheets.
It can also include payroll & back office support if required.
This can be for both permanent recruitment agencies and also temporary or a contractor staff agency.
Recruitment agencies use invoice finance to bridge the gap between paying contractors weekly and being paid by clients on 30 to 60 day terms. The funder advances most of each invoice as soon as timesheets are approved, so payroll is covered long before the client settles.
That gap is the whole problem. Place twenty contractors and you are funding wages every Friday while the invoices behind them sit unpaid for two months. The faster the agency grows, the wider the gap gets, which is why profitable recruitment businesses run out of cash.
| Item | Typical position |
|---|---|
| What is funded | Approved timesheet invoices for temporary and contract placements |
| Advance | Most of the invoice value, released once timesheets are verified |
| Speed once live | Same day or next day against verified timesheets |
| Time to set the facility up | Typically 1 to 3 weeks |
| What the funder assesses | The creditworthiness of your clients and the reliability of your timesheet process |
| Back office | Some funders bundle payroll, invoicing and credit control into the facility |
| Concentration | Funders cap how much of the ledger one client can represent, commonly a real constraint for young agencies |
| Recourse | Usually recourse, so you carry the bad debt risk unless you pay for cover |
Which placements fund easily and which do not
| Placement type | How readily it funds | Why |
|---|---|---|
| Temporary and contract, PAYE | Readily, this is the core market | Regular approved timesheets against work already delivered |
| Contract through an umbrella company | Readily with the right funder | Same mechanics, but the funder needs to see how the umbrella arrangement works |
| Construction and CIS | Specialist funders only | CIS deductions and gross payment status change the cash figures. See our guide to funding for construction recruitment agencies |
| Permanent placement fees | Harder, and often excluded | Rebate clauses mean the invoice can be clawed back if the candidate leaves early |
Invoice Factoring For Recruitment Agencies
- Compare Factoring Companies
- Invoices paid within 24h
- Temp Recruitment Factoring
- Up to 100% Funding of Invoices
- No Obligation Quotes
- Factoring For Recruitment Agencies
There are a number of Invoice financing options specifically for recruitment agencies.
You can get funding, whether you are placing permanent candidates or temp staff with weekly payroll.
We can also cater for specific requirements for Funding Neutral Vendors/MSPs and also Finance for RPO Invoices.
Recruitment Factoring
A factoring facility can be used to release cash tied up in unpaid customer invoices and timesheets.
There are a number of factoring companies that have products specifically designed for recruitment agencies.
- Start up recruiters accepted
- Bad credit considered
- Up to 100% of invoice value funded
- With or without payroll
- Credit Control Support
Recruitment Invoice Discounting
An invoice discounting facility is similar to factoring in that it provides funding against unpaid invoices.
However it can be done on a confidential basis, without customers being made aware of the arrangement. Also you would still do you own credit control and invoicing.
- Confidential Discounting
- Retain Credit Control In House
- Recruitment Discounting
Discounting is not usually suitable for new start businesses and usually requires an annual turnover of £200k+.
As a specialist invoice discounting broker, let us take the stress out of finding and comparing providers by getting in touch now.
Invoice Factoring For Temp Recruitment Agencies
We can provide quotes for either stand alone invoice factoring for temp agencies, in this case you keep using your existing payroll and back office function.
Alternatively you could have the same temp factoring company provide an all in one package with finance, payroll and back office administration support.
- Temp Agencies
- Contract Recruitment
- Interim Contractors
As an independent recruitment invoice finance broker, we can assess your options and arrange quotes.
Invoice Finance For Permanent Recruitment
We work with a number of providers that offer invoice finance and factoring for permanent recruitment agencies.
It can be more difficult to secure finance for perm recruitment than contractors but its is available.
- Factoring Perm Invoices
- Perm Recruitment Agencies
Funding is usually capped at 70% of the invoice value.
FAQ: Recruitment Invoice Finance Frequently Asked Questions
Here are some common questions we get asked about recruitment finance.
Recruitment factoring is type of invoice finance facility, specifically tailored to recruitment agencies. It is a revolving credit facility that allows you to access up to 100% of unpaid customer invoices. This can be for both permanent and temporary recruiters.
Yes even if you a brand new start up business doing recruitment, you can still set up an invoice finance facility. This can be approved ready for you to issue your first invoice and draw down funding,
The cost will vary depending on many factors like the size, age and risk profile of your business. Typically fees are structured in two ways, either as a single fixed fee or as two separate fees consisting of a service fee and discount rate. The overall cost can range from under 1% of the total invoice values, up to 5%. However you would need to arrange a quote to get an accurate cost.
Yes it is possible to get invoice factoring on perm invoices. However the funding amount is usually capped at 60 – 70% of the total invoice value.
Yes there is a wide range of invoice finance options for temp and contractor invoices. Typically 80 – 100% of the invoice/timesheet can be factored.
Free No Obligation Recruitment Invoice Finance Quote
As an independent recruitment invoice finance broker, we can assess your options and arrange quotes.
Call us on 0161 5469128 or fill in the form below.
One of our brokers will get in touch straight away.