What is recruitment invoice finance?
Recruitment invoice finance is utilized by a huge number of temporary recruitment companies to manage their cash flow. It is natural that as more placements are obtained cash flow is stretched which means in order to grow you need a flexible funding solution. Due to the timesheet nature of recruitment it is the perfect fit for invoice finance and therefore lenders are very competitive. At Beacon Finance not a week goes by where we do not assist a recruitment company. Most of our recruitment clients are able to borrow 90% of an invoice value.
What services do I need from a funder?
This really depends on your circumstances and what you would like assistance with. For some companies we organise invoice discounting, this is where the only part you use a funder for is borrowing. This is typically established firms with good controls that employ a credit controller to manage the invoicing.
For newer or smaller businesses there are other options. Factoring is where a funder lends you up to 90% of your outstanding debtors and also performs the role of your credit control. They will send out statements and chase invoices for payment. In addition to this you may opt to have bad debt protection given you comfort that you are protected against bad debts.
Alternatively we see a big growing part of the market as a fully outsourced provider that can not only provide funding but a fully outsourced administration and payroll function. This enables new entrants to the recruitment market the ability to set up a business incredibly quickly with little other resource required other than your industry contacts. When you fully outsource this enables a lender to fund 100% of each invoice. These lenders are also seeing many recruitment companies moving to them as they are incredibly flexible with credit limits, no concentration issues, no personal guarantees and often no lengthy contract.
Can I fund permanent placements?
This really is lender dependent. Many lenders chose not to provide funding against permanent placements whilst others will at a reduced level. If you are looking to fund your permanents we will discuss this importance of this and either assist finding a funder willing to do both or alternatively we can find you a funder to do the temporary side and another that may fund the permanent placements.
What is this likely to cost me?
Every finance package we organise at Beacon Finance is bespoke depending on individual circumstances. We have funding large invoice discounting lines at 0.1% service fee and on the other end we have organised a fully outsourced offering at 4%. It is really important for us to discuss your business and what you are looking to achieve. From this we can set realistic expectations based on many of our experience of assisting many recruitment companies.
What additional finance can I get?
In addition to a typical funding advance of 90% we have various options with different funders. We have some mainstream lenders that can offer loans in addition to invoice finance, these usually mean a total advance between 100% – 110% of your debtors.
At Beacon Finance we always discuss the option of a loan to boost cash flow also. This works best when the business has been trading at least two years and we can look to organise a loan against personal guarantees. Maximum loan is usually the equivalent of between 2 and 3 months business turnover and can be organised in as little as a week.
Why use Beacon?
As a leading commercial finance brokerage we are fully up to date on our lenders various offerings. We can quickly establish suitable lenders and ensure you are working with the right company. We regularly receive feedback from all lenders in the market and pride ourselves on finding you the best long term deal.
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