- 01 Sep
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 increase their trading levels. However, they were being held back by their existing invoice finance company, who were not prepared to offer a sufficiently relaxed concentration limit, due to the presence of a "pay when paid" clause within the terms of the arrangement with Hays. There was no problem with the credit standing of Hays Recruitment, it was only the presence of this clause that was causing the financier to take a cautious approach to setting the debtor concentration limit.
Pay When Paid Clauses
A "pay when paid" clause means that the debtor (in this case Hays) is only obliged to pay their supplier, after they have been paid by their own end customer who sits up the supply chain. The problem with these clauses for invoice financiers, is that they complicate the simplistic nature of the invoice by introducing an additional requirement, that must be satisfied, prior to getting paid.
Debtor Concentration Limits
The effect of a debtor concentration limit is to restrict the level of funding against a specific debtor, or the largest debtor (or debtors) on the sales ledger. The approach differs between invoice finance companies. For example, if you are receiving say a 90% prepayment against your invoices, you might expect to received £90 when you raise an invoice for £100. This is not the case if the invoice is to a customer that is subject to a debtor concentration limit. If you had a limit of say 40%, the invoices that attract funding in respect of that customer are limited to 40% of the total value of sales invoices outstanding (on a sales ledger of £180, this would be £72). Therefore, if the balance on that customer amounted to say 50% of your sales ledger, the remaining 10% of invoicing (the portion above the concentration limit - £18 in our example - the difference between £90 and £72) would not attract any funding. In this way, funders can limit their exposure to funding prime debtor situations.
More Flexible Funding
In the case of our client, we were able to find them an alternative invoice finance company that were able to relax the debtor concentration limit, and release c. 35% more flexible funding than their existing provider.
If you are having a problem with a debtor concentration limit, please call Sean on 03330 113622, and let us see what we can do to help you find a more flexible alternative.
- 15 May
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...
- 09 Apr
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...
- 31 Mar
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...
- 16 Mar
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...
- 14 Nov
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.I saw a post by one of the specialists...
- 27 Oct
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...
- 21 Aug
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...
- 29 Jul
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...
- 07 Jun
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...