Starting any new business can be a nerve-wracking experience, and cash flow will always need to be a serious consideration to start-up business owners. For recruiters dealing with temporary placements, these considerations must go that one step further, as they will often be paying candidates on a weekly basis, but invoicing clients monthly.
As a result of this, ensuring cash flow is in the best possible shape month in month out is critical, and credit control is a significant part of achieving this.
Choose the right finance
The majority of start-up businesses will require some form of finance, and choosing the most appropriate finance deal for your circumstances could mean the difference between success and failure. Recruitment companies often opt for invoice financing or discounting, this allows the business to release a certain percentage of funds from an invoice (up to 100%), as soon as it is raised. This means that the business will no longer need to wait the typical 30 days or more for the invoice to be paid, ideal when paying candidates weekly.
Ensure your client knows and agrees to their credit terms
At the outset of any client relationship, a recruiter must agree contract and credit terms, to ensure that both parties understand their obligations under said contract. Whether your terms are 30, 60, 90 days or longer, the client must be made aware, agree to abide by these terms and understand the consequences should they fail to do so.
Ensure you have the right details
Two of the most common excuses a business will receive for the late payment of an invoice will be that it was never received or the invoice contained incorrect information. Before sending any invoices, double check that the information reflects the agreed costs, that it is addressed to the correct person within the business and that it is sent to the appropriate place.
Let your client know how you wish to be paid
Making it as easy as possible for a client to pay you is essential to timely payment. The majority of businesses will be paid by BACS, therefore clear bank statements should be on each and every invoice sent.
Proactively chase for payment
Many recruiters, particularly start-ups, may find credit control tricky, but it is an essential component to getting paid in a timely manner. This is a customer facing task therefore the right credit controller or credit control team should add to a business relationship rather than detract from it, as many businesses fear chasing for payment will.
Get the right support
Expert support is out there for recruitment start-ups. Finding the right support will reduce the burden on new business owners in those key first years, allowing them to focus on their core recruitment responsibilities, without the added pressure of administrative tasks such as credit control.
The team at Zodeq has been supporting recruitment businesses with their financing and credit control needs for many years, and with fantastic results. Are you considering setting up a recruitment business? Contact us today to find out how we can help you to make your start-up a success.