• Facts About Invoice Finance For Recruitment

    I think we should be talking up invoice finance, not running it down. 98% of existing users told our independent poll that they would recommend the service to other businesses, and the volume of complaints to the ABFA (now part of UK Finance) has been tiny, 0.15% of clients each year, as a proportion to the number of businesses using this type of finance.

    Specialist Recruitment Finance

    I saw a post by one of the specialists within the recruitment invoice financing sector, about what you should expect if you use a traditional invoice finance company. Whilst for most of the points you may be able to find one company for which it is true, it was really a summary of all the very worst terms that you might receive if you picked the wrong financier. Also, I don't think any one provider would be guilty of all the points that were mentioned. I thought I might correct a few of these misunderstandings by giving a more balanced view of what is available.

    Uncover The Facts

    So below I have taken some of the various points, one by one, and addressed each of them to uncover the facts:

    1. "Headline figures don't match the reality" - the rates are clearly stated by all the main providers, many of them have gone to great lengths to make sure that there are no hidden fees, in an attempt to get away from this type of criticism. There will normally be a tariff of additional charges although in some cases a single fee offering is provided, which includes everything.

    2. "There is a high churn among financiers leading the a culture of charging agencies at every possible gate to ensure profitability" - there may have been a high churn in the past but now it is very much a stable market. On average a customer uses just 2.14 different providers over the course of an average client life of 5.28 years. Any broker will tell you that it is hard work trying to move customers between providers - everyone tries hard to hold onto their existing clients.

    3. "Minimum amounts of business" - some providers do include a minimum volume requirement, but that is not the case across the board. Indeed the vast array of selective invoice funders all boast no minimums. Some whole turnover providers don't have them, particularly in the recruitment sector. Often a minimum is included with the function of ensuring that the pricing reflects the volume actually transacted. For example, any business could project £10 million turnover, achieve £200K and then reap the benefit of a £10 million style costing. Some of the charges in the selective market are ridiculously low - we recently received a monthly commission of 22 pence, yes that's right 22p, in respect of one customer, who has no minimums.

    4. You automatically pay a set up fee - again not always the case. Often these are not charged, particularly in competitive situations. Again, with some of the selective "no minimums" providers a few hundred pounds up front may be all the fee they get for setting up a new facility.

    5. "Interest on monies advanced" - charged in addition to service fee. Yes in some cases, although single all inclusive fees have become more common at the SME end of the market. Often clients get a better deal by having a separate service charge and discount charge, it means you pay for exactly what you use and there is no additional margin loaded into a single fee structure.

    6. A business plan is required - not the case in most situations. The exception might be if it was warranted e.g. seeking very high levels of funding, a financier might want to see something like that to understand the business strategy. It is very rarely a requirement.

    7. "Personal guarantees stretching to £60K+ will tie your agencies risk to you personally" - well PGs are required in most cases, but we have completed deals without them. Often the financier wants them to ensure there is no fraudulent trading, and that the prime movers assist with any collect out of the sales ledger, should it be required. Non recourse can almost remove the risk from customer failure. As for the £60K+ figure, typically PGs are set at about 20% of the level of funds used. This would typically be about £100K FIU so about £20K might be more usual.

    8. "It can take 4 to 6 weeks to secure funding" - no, many can turnaround a deal in a few days (or shorter if required). The pace tends to be led by the customer.

    9. Total funding is capped by your turnover and details from your business plan - the facility limit tends to be risk monitoring tool, rather than a restriction. In most cases, when you approach the limit the funder will review and increase it.

    10. "Traditional financiers demand that money advanced is spread across several clients" - again this is not always the case. We are at present arranging a deal for a temporary recruitment client where 80% of sales are to a single RPO debtor.

    11. "It's difficult to leave" - as mentioned above many selective providers offer no lock in whatsoever. There are 6 month trial periods available, and notice of termination is normally a few months or even less in some cases. At least one of the bank backed providers offers 1 months notice, and even 2 weeks notice in some cases. The difficulty is more likely to be replacing the benefit of the funding that you receive, as traditional forms of finance tend not to be so flexible in the amount of funding they provide.

    12. "Notice can lead to funding being capped" - again any reduction in funding during an exit situation tends to be agreed with the client. For example, if they are intending to self fund, the client and the provider may develop a plan to reduce the funding over a period of time. Reducing funding in an exit situation, for no reason, is not something that we come across.

    13. "Most factoring providers have very limited technology" - this is not the case. There are a number of comprehensive systems used by various providers, and a few exceptional ones that have won awards. App based offerings are available.

    14. The were a few more points that I could have taken issue with but the important ones are covered off above.

    High Levels Of Satisfaction

    The reality is that satisfaction is generally very high, with 98% of users willing to recommend their provider to others. In addition, there are very low levels of complaints with just 0.15% of clients complaining to the ABFA each year.

    Need Help?

    If you need help with any of the issues mentioned above, we would be pleased to introduce you to invoice finance companies that can help, and that can provide excellent rates.

    Share with:

Related articles

  • Read More

    Temporary Staff Hire Replacing Permanent Recruitment?

    Often our prospects will remain connected with us for a long period of time, before they go ahead and take out a facility. We take the opportunity to regularly "touch base" with a wide range of businesses, in order to help where we can, and to stay abreast of market developments.Each month we deliver our FundingVoice magazine to all of our subscribers, which includes a lot of prospective...

  • Read More

    Success Story - Funding Invoices To GRI At 90 Percent

    Another success story where we have been able to find one of our recruitment customers a recruitment invoice finance company that could fund their invoices to GRI at a 90% prepayment percentage.In this case, our client is a new start care staff agency that have been successful enough to win contracts to supply staff to a number of end customers.The temporary staff of these end customers all go...

  • Read More

    IR35 Changes Will Affect The Recruitment Sector

    Recruiters are commonly users of invoice finance, so we keep abreast of changes that will affect the sector.There are some changes planned to IR35 by HMRC (formerly known as the Inland Revenue from which the "IR" was derived), from 6th April 2021 (originally planned for 2020, this was extended by a year due to the Government's coronavirus measures), that need to be understood by recruitment...

  • Read More

    An RPO Debtor Has Rejected An Assignment Letter Clause

    A recruitment sector RPO debtor has apparently rejected part of a GNA or General Notice Of Assignment letter. This is a worrying development for recruitment sector financing.A "GNA" is a letter from an invoice finance user, to their customers, informing them of the invoice finance arrangement, specifically the "assignment of the book debts".Assignment is the process underpinning factoring and...

  • Read More

    Removing GRI Invoice Funding Restrictions.

    Recruitment companies that are supplying GRI, do not need to experience credit limit restrictions, or prime debtor restrictions, if they are using invoice financing. We can introduce funders that can help by removing those limitations.GRI UK (formerly called De Poel) is one of several RPOs (which are umbrella purchasing organisations) that deal with the temporary staff supply to major...

  • Read More

    Alternatives To Pay And Bill Invoice Finance Companies For Temporary Recruitment

    Temporary recruitment is an sector where invoice finance is broadly used, even new startup companies can get access to this kind of funding, which can enable recruiters to get their own company off the ground without the need for investment or investors.There are a wide variety of invoice finance companies that help recruitment companies, offering differing degrees of support (payroll and...

  • Read More

    Invoice Factoring For Recruitment Startups

    No sooner had I finished publishing our free business startup guide and we received an email from someone that is looking to launch a new startup recruitment company next year. The question asked was as follows:“. . . would like to query whether we would be eligible for invoice factoring. I acknowledge that with a lack of a trading history this may not be straightforward,”.The alternative...

  • Read More

    Invoice Finance For Sales To GRI UK - Geometric Results International formerly De Poel

    We have just had another example where we have been able to find a higher invoice finance credit limit, for sales to GRI UK (formerly called de Poel), than our client was able to find on their own.GET RECRUITMENT INVOICE FINANCEThe credit limit that we found them, with a reputable invoice finance company, was in fact 250% of the value of the limit that they had been able to find themselves by...

  • Read More

    Horror Stories About Recruitment Outsourcing

    We had an meeting with one of our funding partners that specialises in helping finance recruitment agencies, and the conversation turned to the variety of full service recruitment outsourcing companies that are in the marketplace. These companies effectively take care of just about everything for a new recruitment agency.Full service outsourcing (sometimes called “white label” or “white...

  • Read More

    Care Staff Recruitment Invoice Finance

    We have been successful in finding invoice finance for a number of companies operating within the UK care sector.REQUEST A FREE QUOTEOften the provision of care workers is funded by local authorities, but there can be delays in receiving payments for services already rendered. See our free credit control guide for tips about chasing local authority debts.We have introduced many care staff...

  • Read More

    Startup Invoice Finance For A Driver Hire Recruitment Agency

    It is not always easy for a new start recruitment agency to find an invoice finance company that is prepared to deal with new start-up businesses. The risk involved with the potential failure of new ventures means that some funders choose not to deal with newly formed companies. Once established however, just about every funder will be happy to assist, but in the initial stages the choice is...

  • Read More

    De Poel Rebrands As GRI Following Acquisition

    According to Global Banking & Finance, de Poel - the neutral - vendor managed service provider (MSP) for non-permanent hires and contingent workforces has rebranded as GRI. This follows de Poels acquisition in January 2018 by GRI, a US based independent extended workforce solutions provider.We have had a number of successes in helping clients find funding against invoices to GRI (formerly de...

  • Read More

    Have De Poel Stopped Offering Early Settlement Discounts?

    We had an enquiry recently from a prospect that suggested that de Poel may have stopped offering their early settlement discounts to suppliers. Does anyone know if this is true?It may be that it was specific to this prospect, or a change for future customers but we would be interested to know if it has affected any other recruitment suppliers.Contact us about De Poel early settlement...

  • Read More

    Solving 5 Problems For Recruiters

    This article sets out 5 common problems that we can solve for a recruitment company.Most recruiters would like to have more time to work on placing candidates or temps. We can help solve this by outsourcing a number of your back office functions for you, freeing up time that you can spend recruiting candidates, or temporary staff, and placing them with customers. After all that is the core...

  • Read More

    Recruitment Startups Building Up Enough Trade For Receivables Financing

    We have recently spoken to a few new start recruitment companies recently that have taken the approach of waiting to set up their receivables financing arrangements, until they have what they consider to be a sufficient amount of work in the pipeline.This may sound logical, but there are several reasons why it may not serve your best interests as a recruiter.There are a couple of things to...

  • Read More

    Invoice Finance For 100 Percent Permanent Placements

    An interesting recent case where one of the invoice finance companies passed a client to us, that they were unable to assist.This particular case was a specialist recruitment company, dealing with the education sector - staff such as nursery teachers. The agency dealt with 100% permanent placements, that is recruiting for permanent roles, rather than temporary staff.Temporary staff recruitment is...

  • Read More

    Payroll Services For Recruitment

    Running your own payroll can be time-consuming so many businesses prefer to use a payroll services company in order to undertake all aspects of the function on their behalf, and so use a payroll services company.Many of the invoice finance and factoring companies provide payroll services in addition to their financing services. Even if you don’t want to have the benefit of any finance, you can...

  • Read More

    Solving A Pay When Paid Concentration Limit Problem On Hays Recruitment

    Another success story regarding a client that we were able to help overcome an invoice finance funding restriction.We have seen many issues with debtor concentrations, within the recruitment sector, that can be relaxed by comparing the funding levels between different providers. We had a case where a client needed help with the concentration limit on Hays Recruitment, with whom they wanted to...

  • Read More

    Is It A Good Time To Enter The Recruitment Business?

    Is it a good time to enter the recruitment business? We can't make the decision for you but here are a few facts and figures that might help you in making your decision about starting a temporary staff agency.OK, so the level of economic growth predicted for the UK has just been slightly adjusted down, however the economy is still predicted to grow - which means more production, hence more...

  • Read More

    Recruitment RPO Narrow Profit Margins

    We help find recruitment invoice finance for a lot of UK companies within the recruitment sector, so we are very familiar with the issues that they can face when dealing with RPOs, not least of which is how to source services such as finance when they have very narrow profit margins, that are being continually squeezed.When I worked at Barclays, in their factoring division, we never came across...

  • Read More

    Recruiters Using Invoice Finance Have Less Late Payment Concerns

    Recruiters that use invoice finance have fewer issues with customers paying late.In our study of the attitudes of East Sussex & Kent based recruiters to late payments problems and the use of various finance options, we previously reported that 52% of the recruitment companies that we surveyed told us that they wanted to see late payments by customers improve.Further analysis of the results of our...



Examples of just a few of our finance partners:

funding invoice
ultimate finance group
pulse cashflow finance