Financial challenges in the recruitment industry
Rise in contractors
It has been reported that there has been a rise in preferences for temporary workers or contractors, as this allows less financial commitment for businesses and potentially saves them money in the long run.
Contractors or temporary workers can often be on a different payment schedule, such as weekly or fortnightly payments which don’t match with a recruitment company’s cash flow.
Available funds for staff wages
With invoices outstanding, and many on varying payment terms (like contractors as mentioned above), it can be a tough turnaround 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 heightened concentration on ensuring employers get who they perceive to be the most specifically correct person for the job contributes to a mismatch between the skills sought out and the candidates that are available. This can mean that those who do most match those skills push the wage brackets higher.
Financial products for available for recruiters
The most viable finance solution for recruiters is invoice finance. Within the industry, this is sometimes referred to as payroll finance, which only means that you’d be using the financing specifically to fund your 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:
This provides you with a cash advance against the invoices you are yet to receive payment for, often within 24 hours. Factoring may be the invoice finance product suited for your business if you do not already have an established credit control facility as the lender will take charge of receiving and chasing payments from your customer. So if your turnover is more than £25,000 plus VAT annually.
Similar to a factoring facility, as described above, but with one major difference – you are left in charge of the credit control facility. This further tailors invoice finance towards larger companies who have already established effective credit collection administration processes. Turnover requirements for invoice discounting is around £100,000 plus VAT.
To skip straight to our comparison guide on the differences between invoice discounting and factoring, click here.
Benefits of invoice finance for recruitment companies
Some of the main advantages to using invoice finance are:
- No need for high value assets
- 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.