Invoice-based financing solutions for SMEs
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Calling all recruitment agencies: why you should be using invoice finance

The recruitment sector has seen record growth in recent years and has continued to boom with an 11 per cent rise in total industry turnover recorded in 2017/2018, reaching a record £35.7 billion according to the Recruitment & Employment Confederation (REC).

Of that, REC reports that £30.85 billion was generated through temp and contract recruitment firms. In such a fast-paced and competitive industry, employment agencies working in the temp sector face a particular range of challenges when developing their businesses.

They tend to be asset poor, meaning they don’t have plant and machinery, vehicles or other property assets to offer to lenders if they need to borrow money using an overdraft or traditional business loan.

They also need to pay agency staff on a frequent basis – often weekly. Given that they will be invoicing their clients for the combined totals of all agency staff costs this means they need to pay out long before they see the cash in the bank from their clients.

This cash gap means that unless agencies have access to outside investment or readily available funding sources they can often find their businesses fail to thrive as they cannot invest or plan for growth.

As a result, working capital tools such as invoice finance have become increasingly more relevant to the companies in this sector as a means to access monies due and effectively plug the gap.

An invoice finance solution is particularly beneficial to the temporary and contract recruitment sector as it means firms can access flexible funding ensuring a healthy cash flow, enabling them to fulfil their payroll obligations without putting undue pressure on the business.

We’ve seen how this works in practice and can change the fortunes of companies almost overnight having established a number of strong working relationships with recruitment agencies.

In 2018, we partnered with Darcy Associates which had not previously received the financial and business support from other lenders to empower them to grow and scale.

Darcy Associates is a construction recruitment agency based in Bristol which works with main contractors, subcontractors and specialists in certain fields. It mainly supplies temporary labour, but the firm has also recently started moving into the permanent market.

We have worked with the Darcy Associates’ management team to provide a tailored invoice finance solution that has enabled the agency to access the credit limits it needs to ensure a healthy cash flow and promote the growth of the business.

As a fast growth, ambitious company the next step for them is expansion into different sectors. This is made possible by less pressure on cash flow. We will be supporting the agency’s development by providing the credit facilities it requires to grow and scale.

We know the industry well and the specific challenges faced by recruitment agency owners and we can offer our clients a range of tailored solutions.

Optimum CASH is our dedicated facility for temporary recruitment and other labour hire agencies where we provide cash flow funding up to 100 per cent, sales ledger administration, payroll management and debtor protection combined – making it a compelling package to clients who are focused on commercial growth.

Our solutions are flexible, quick to access, supported by easy-to-use digital platforms and a highly professional team at the end of the phone.

For an informal chat about growing your own business – get in touch, call us on 0117 403 7225.

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