Cash flow is the life blood of any business therefore it stands to reason that poor cash flow will ultimately threaten a business’ survival. For recruitment companies in particular having healthy and consistent cash flow is vital, here we explore the importance of cash flow to recruiters and what they can do to ensure their business thrives.
Why is cash flow important to recruiters?
For recruiters, particularly those offering temporary placements, ensuring consistent cash flow throughout the month is essential. This is due to the fact that recruiters tend to pay candidates on a weekly basis, but only invoice employers monthly. Recruiters subsequently must find this working capital whilst awaiting payment of invoice, which realistically could be 30-60 days.
How does invoice finance benefit recruiters?
Recruiters across the UK choose invoice finance as a viable way to keep their cash flowing and provide further working capital to grow their business.
Invoice finance and invoice discounting allow recruiters to release a percentage of money tied up in an invoice, as soon as it is raised. This means that companies no longer have to wait the typical 30-60 days for a client to pay their invoice.
Which option a recruiter chooses, invoice finance or invoice discounting depends entirely on their situation and requirements. Both options are very similar, the only differences are:
- Chasing payment of an invoice is taken care of by the invoice finance provider with invoicing financing, whereas your business is responsible for chasing with invoice discounting.
- Invoice discounting is confidential, and therefore clients will not know that you use this service, which is not the case with invoice finance.
Just some of the benefits that recruiters can enjoy with either of these services include improved cash flow, it is flexible, there is no long-term loan agreement, recruiters will no longer have to wait for payments and it will not impact a business’ credit rating.
Where can you find a reliable invoice finance provider?
There are many invoice finance providers out there, but only a select few that have real experience in working with recruiters. We would highly recommend any recruitment company to work with an invoice finance provider that has a great deal of experience in working within the recruitment industry as they are much more likely to understand the requirements of the business and can therefore provide the most suitable service.
In addition to this, identifying a compliant finance company is vital, look out for companies with memberships and accreditations with relevant trade bodies such as the NACFB, as this indicates that they are regulated and audited regularly to ensure they are offering a high quality service to clients.
Are you a recruiter looking to benefit from invoice finance? Get in touch with our expert team today to discuss.