Invoice Finance for Recruitment

Financial challenges in the recruitment industry

Rise in contractors

With businesses reducing their financial commitments, more are turning to temporary workers or contractors rather than permanent hires.

Contractors or temporary workers can often be on a different payment schedule, such as weekly or fortnightly payments. These often don’t match with your recruitment agency’s cash flow or working capital cycle.

Available funds for staff wages

Varying payment cycles (like contractors as mentioned above) can make it tough to pay staff wages whilst keeping the company’s cash flow uninterrupted.

Filling the skills gap

One of the biggest challenges facing recruiters at the moment is the very specific criteria that employers are looking for. This emphasis on employers getting the correct person for the job creates a mismatch between required skills and available candidates.

This can mean that those who do most match those skills push the wage brackets higher.

Invoice finance products available for recruiters

The most viable finance solution for recruiters is often invoice finance. Within the industry, this is sometimes referred to as payroll finance. This means that you’d be using the financing specifically to fund payroll obligations rather than wider company cash flow.

There are two key forms of invoice finance available, which can be further tailored to suit your specific needs:

Invoice factoring for recruitment agencies

Factoring provides you with a cash advance against your invoices, often within 24 hours of being issued. Factoring may be the invoice finance product suited for your business if you don’t already have an established credit control facility. With invoice factoring, the provider takes charge of receiving and chasing payments from your customers.

The minimum turnover requirement for invoice factoring for a recruitment agency is typically around £25,000 plus VAT.

Invoice discounting for recruitment firms

This is similar to invoice factoring, but with one major difference – you are left in charge of the credit control facility.

This is typically used by larger companies who have already established effective credit collection administration processes.

Turnover requirements for invoice discounting is around £100,000 plus VAT.

Benefits of invoice finance for recruitment companies

Some of the main advantages to using invoice finance are:

• No need for high value assets
• Viable alternative to bank loan
• Tailored packages personalised to your business needs
• Credit collection can fall to the lender to save you valuable time
• Expert guidance from Touch’s consultants throughout the whole process

Get in touch

As specialised invoice finance brokers, Touch has close relationships with over 35 lenders in the UK, and can put you in touch with those that have a focus in the recruitment industry.

After a quick no-obligation consultation to understand your requirements, our expert consultants will match you with up to three potential lenders to help you get the finance you deserve.