Cash flow is a vital component to the survival of all businesses, and therefore ensuring cash flow is maintained month in month out is key.
For the recruitment industry in particular, having well maintained cash flow is all the more important, due to the fact that much of the time candidates are paid on a weekly basis, but a recruiter will only invoice monthly. Depending on payment terms, this could leave an agency waiting for payment anywhere between 30 to 60 (or longer) days.
There are a variety of options available to recruiters in order to resolve this cash flow deficit, however one of the most popular solutions that countless agencies choose is invoicing discounting.
What is invoice discounting?
Invoice discounting allows a business to release a particular percentage of cash tied up in an invoice, as soon as it has been raised (up to 100%). The business will then chase for payment, and upon receipt, the remaining percentage of an invoice is released.
From our experience, we have seen invoice discounting work for countless businesses across a wide range of industries, with particular success for recruiters. We have a compiled a list of the top five benefits that invoice discounting will bring recruitment companies.
Benefits of invoice discounting
Improved cash flow
Of course, as cash is immediately released after an invoice has been raised, and businesses are no longer waiting the length of their payment terms (if not longer) to receive payment for works carried out, then cash flow is ultimately improved.
Where invoice discounting differs from other invoice finance offerings, is that it is entirely confidential, and therefore clients will be unaware that a recruiter uses a finance facility, and the company will be responsible for the chasing of invoices.
More control over payment collections
Many recruiters prefer to have more control over their credit control activity, as this allows them to maintain vital customer contact at all times, without relying on a third party to do so.
Less late payment stress
Maintaining cash flow is a tricky task at the best of times, but when your clients are late in paying you, even if only by a few days, this can put significant stress on your existing cash flow; it is at these times that tensions between client and recruiter may occur. An invoice discounting facility ultimately removes this stress, as cash flow is maintained consistently.
No assets required
Unlike other business finance options such as a bank loan, a recruiter is not required to own any assets to be used as security. This is a much more favourable option for many who do not necessarily own any property or valuable assets.
Are you a recruiter looking to find the right finance solution? Contact the team at Zodeq today for more information on how we can help your business to thrive.