It’s hardly surprising that there’s such a big market for invoice finance for recruitment agencies – after all, according to one estimate, the average agency has to wait almost two months before being paid. Often, despite the greatest efforts of your credit control team, clients will drag their heels when it comes to making payments.
That’s not a situation your agency should have to accept. After all, in theory, the process of being paid for your services should be a simple one. Once you have paid your contractor for their work, you should be able to swiftly collect payment from the client with which they were placed.
So, where does it all go wrong?
Given the typical difference in payment terms between the contractor and the client, it falls to your recruitment agency to use its own funds to bridge the gap.
As a recruitment agency, you probably pay your contractors on a weekly, bi-weekly or monthly basis. Yet, as we established above, agencies often can’t depend on their clients paying them so reliably.
Why are recruitment agencies so often paid last?
The answer is simple: because businesses can treat them that way. No recruitment agency wants to hassle clients about late payments for fear of damaging their relationships with them, thereby missing out on the repeat business on which they depend.
Large businesses are especially bad at paying in a timely fashion – but much younger, smaller firms can be problematic as well. These are the businesses that often realise that it benefits their cash flow not to make payments straight away – because when such payments are delayed, they have the same effect as a short-term interest-free loan.
Where TBOS Complete can help
Late payments aren’t just inconvenient for recruitment agencies – they are an existential threat. Your agency is the middleman, caught in a cycle of having to pay your contractors and then wait for your clients to pay you.
When there are a lot of contractors on your books or you have big growth ambitions for your recruitment agency, this situation just won’t do – you will have to increase how much you are advancing.
This helps to make clear the considerable importance of invoice finance for recruitment agencies – and why so many of those agencies appreciate the invoice finance set-up that we can provide as part of our TBOS Complete package.
While we do not provide agencies with any funding ourselves as part of this model, we can help to manage your agency’s cash flow and if necessary, set up invoice finance arrangements that match your agency’s requirements.
In the process, we draw upon our relationships with many different invoice finance providers to ensure that your agency receives the best possible quotation and service.
Contact the TBOS office today to learn more about how we help to facilitate invoice finance for recruitment agencies through our highly regarded TBOS Complete plan.