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 it is 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 and back office support if required.
This can be for both permanent recruitment agencies and also temporary or a contractor staff agency.
Written by Marcus Wright, owner and founder of Bolton Business Finance Ltd, in financial services since 2008 and a commercial finance broker since 2019. Last reviewed September 2026.
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
What we can arrange
- 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 and 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
As a specialist invoice factoring broker, let us take the stress out of finding and comparing providers by getting in touch now.
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 your 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 or more.
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 it is available.
- Factoring Perm Invoices
- Perm Recruitment Agencies
Funding is usually capped at 70% of the invoice value.
Pay And Bill, Payroll Funding And Back Office
Funders use three terms that overlap and get mixed up constantly. They are separate things and you can buy them separately, which matters because you may only need one of them.
| Term | What it covers |
|---|---|
| Payroll funding | The money. Cash released against approved timesheets so you can run the pay run before your client pays you. |
| Back office | The admin. Collecting timesheets, processing payroll, RTI submissions, auto enrolment, raising client invoices and chasing them. |
| Pay and bill | Both together as one service. The funder pays your contractors and bills your clients, and you place candidates. |
Which one do you need?
If you already have a payroll function and someone chasing invoices, you need payroll funding only. The facility sits behind what you already do and nothing about your process changes.
If you are a new agency, or a small team where the director is doing the payroll on a Thursday night, full pay and bill removes that entirely. It costs more, but the comparison is not against the funding only fee. It is against the cost of the person you would otherwise have to employ.
Most agencies start on full pay and bill and move to funding only as they grow and bring the administration in house. That is a normal progression and funders expect it.
What pay and bill providers actually do each week
- Timesheets come in. Submitted by contractors and approved by the client, usually through the provider’s portal.
- Contractors are paid. The pay run goes out on your normal day, funded by the facility rather than your bank balance.
- Clients are invoiced. The provider raises the invoice from the approved timesheet, so the invoice and the timesheet always reconcile.
- Statutory filing is handled. RTI submissions to HMRC, pension auto enrolment, holiday pay accrual and payslips.
- Payment is collected. Credit control chases the client and the balance is released to you once they pay.
A Worked Example
An agency with 25 contractors out, billing clients weekly, on 45 day payment terms.
| Item | Figure |
|---|---|
| Contractors placed | 25 |
| Billed to clients each week | £17,500 |
| Paid to contractors each week | £14,000 |
| Client payment terms | 45 days |
| Working capital needed with no facility | Around £90,000 |
| Advance at 90% on approved timesheets | £15,750 a week |
| Position each week | Pay run covered, £1,750 left over |
That £90,000 figure is the point. It is roughly six and a half weeks of contractor wages that has to come from somewhere before a single client invoice is paid, and it grows every time you place someone. It is the reason recruitment agencies fail while profitable.
| Item | Figure |
|---|---|
| Monthly billing | £75,800 |
| Service fee at 1% of turnover | £758 |
| Discount fee, base plus 2.5% on the average balance drawn | £526 |
| Total monthly cost | £1,284 |
| Cost as a percentage of turnover | 1.69% |
The discount fee runs on the Bank of England base rate, 3.75% as at September 2026, plus a margin, and is charged only on money actually drawn and only for the days it is out. Adding full back office to the above would typically increase the service fee rather than the discount fee.
Figures are illustrative. Pricing in recruitment depends heavily on your client spread, how reliable your timesheet approval process is and whether you want funding only or full pay and bill.
Friday payroll deadlines. Recruitment is one of the few sectors where the funding deadline is genuinely immovable. Contractors expect to be paid on the same day every week and will walk if they are not. When comparing providers, ask what time their cut off is for same day release against approved timesheets, and what happens if a client approves late on a Thursday. That answer matters more in practice than a small difference in the service fee.
FAQ: Recruitment Invoice Finance Frequently Asked Questions
Here are some common questions we get asked about recruitment finance.
What Is Recruitment Factoring?
Recruitment factoring is a 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.
Can Start Up Recruitment Companies Get Invoice Finance?
Yes, even if you are 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.
How Much Does Recruitment Invoice Finance Cost?
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.
Can you factor perm invoices?
Yes it is possible to get invoice factoring on perm invoices. However the funding amount is usually capped at 60 to 70% of the total invoice value.
Can you factor temp and contractor invoices?
Yes there is a wide range of invoice finance options for temp and contractor invoices. Typically 80 to 100% of the invoice or timesheet can be factored.
What is the difference between payroll funding and pay and bill?
Payroll funding is the money only. Pay and bill is the money plus the administration, so the provider processes your payroll, raises your client invoices and chases payment. If you already have someone doing that work, you only need the funding.
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 546 9128 or fill in the form below. One of our brokers will get in touch straight away.
Tell us how many contractors you have out
That number, your weekly billing, your client payment terms and whether you want funding only or full pay and bill. That is enough for us to come back with realistic options across our panel. We do not charge broker fees on invoice finance.
Related reading
About the author
Marcus Wright is the owner and founder of Bolton Business Finance Ltd. He has worked in financial services since 2008, beginning his career at Santander, and spent time on the lender side at an independent invoice finance provider before becoming a commercial finance broker in March 2019.
He founded Bolton Business Finance in 2020 to give businesses access to the whole lending market rather than one bank’s own product range. The firm is a member of the National Association of Commercial Finance Brokers and works with a panel of 135+ lenders.
Call 0161 546 9128.
Marcus is also the author of UK Commercial Finance (2026), a commercial finance book for UK business owners and property investors.
Bolton Business Finance Ltd is an independent commercial finance brokerage, not a lender. We are not authorised by the Financial Conduct Authority and can only complete non-regulated introductions. All lending is for business purposes only. Figures on this page are illustrative, describe general market practice as at September 2026 and are not a quote. The Bank of England base rate referenced is 3.75%, held on 17 September 2026. Advance rates, pricing and eligibility vary between lenders and every application is assessed on its own merits. Registered address: Westgate House, 1 Westgate Avenue, Bolton, Greater Manchester, BL1 4RF. Company number 12495909.