Why Not Recruit Invoice Finance?
The importance of making sure that employees are paid correctly and on time cannot be overemphasised. We also understand that your staff will need to pay prior to the standard 30 days generally extended to your clients to pay you. Invoice Financing helps you to bridge this gap.
Now as a recruitment agency employing and supplying permanent or temporary staff, you have an obligation to meet your payment deadlines. If you are an agency supplying temporary staff, to businesses, for instance, you may be experiencing issues caused by timings of cash flow. Clients may have extended periods of credit, say on a 30-90 day basis, yet your temporary contractors expect to be paid on a weekly basis.
As well as affecting the day-to-day operations of your business, a shortfall in cash flow can put real pressure on any potential growth and expansion plans that your business may have or is committed to. Cash flow management is fundamental.
In the UK, invoice financing is a method of providing funds that can benefit the recruitment sector by easing these financial pressures, so that you can trade without the added burden of cash flow shortfalls. Invoice finance can essentially work like an overdraft. You simply notify a lender of the value of your invoices and they will provide an advance on the basis of the agreed terms. They can simply provide a finance facility against the strength of the client invoices raised. Invoice discounting and factoring are solutions that are able to provide a full range of flexible working capital facilities and funding solutions for growing businesses.
If you run a permanent recruitment business or simply have a permanent book, while you may not have the same cash flow pressures as a contractor’s book, an invoice discounting facility can be of benefit. Historically, many invoice finance providers avoided permanent recruitment altogether. This was mainly due to the rebates offered if a candidate did not start their position, or left within a certain period of time. However, as a better understanding of the permanent recruitment sector has developed, some lenders have started providing facilities at an ever-increasing prepayment.