- 13 Sep
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 labelling” services) sounds like a great idea, and there are some great providers out there, but very quickly a number of recruitment outsourcing horror stories emerged, about customers that found themselves trapped in such arrangements. I have to stress at this point that this problem does not apply to all providers, but it would be worth speaking to us about the alternatives, before you commit to a service.
Recruitment Outsourcing Horror Stories
We asked the question of our funding partner, how do you sell your hybrid invoice finance and payroll management service against a full service recruitment outsourcing offering? On the face of it, the full service package sounds more attractive, especially if you are a recruiter that just wants to get on with selling placements, without all the other hassles of running a business.
Our partner replied that such discussions often focus around how much control over their business the recruiter wanted to give up, and how much they want to pay to an agency. For example, they mentioned having to use the outsourcers own contracts, website design etc. They said they often ask the recruiter - do you want to give up that much control?
Then the horror stories started to flow. They said that they had seen cases of:
- Fixed percentage fees, that may have been acceptable for a startup, continuing to be applied as the business grew and became more established.
- Cases of customers complaining that the service is awful, with misallocation of cash and funds being withheld leading to the client being charged for overpayments due to unallocated cash that they were unable to access.
- The profit margin (which was paid by the outsourcer in question, to the client), being withheld as the client wanted to leave the outsourcing service. This potentially left the client in question with no income for several months.
- A company turning over several hundred thousand pounds a year, paying £1K per week in disbursements (charges for overpayments etc.).
- One customer commenting about his outsourcer "they make more money than me!".
We had come across some examples ourselves, for example a small business which owed tens of thousands in fees to an outsourcer, being unable to leave the service until they paid the fees.
Leaving Full Service Recruitment Outsourcing
The common theme seemed to be that customers need to check how easy it is going to be for them to leave the outsourcing service if they subsequently change their mind. Our funding partner, and others like them, offer hybrid services whereby invoice finance, with credit control and payroll management are provided to their clients, alleviating them from many of the headaches of running a recruitment agency.
However, their clients still retain control of how they run their business e.g. which contract to use etc.
Also, with invoice finance companies that are part of UK Finance, there is a standard set of rules which define how customers should be fairly treated, and how they should be handled if they want to leave the service. These are backed up by a robust complaints process supported by an Ombudsman service.
If you are considering full service outsourcing, speak to Sean on 03330 113622 before you commit, to understand the alternatives that may be available to you.
- 01 Nov
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...
- 19 Sep
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...
- 10 Aug
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...
- 25 Jul
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...
- 21 Jun
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...
- 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...
- 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...
- 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...