One of the more popular ways to fund contract placements, indisputably, is invoice finance. Finding the right provider can be a challenge, all the same – balancing the right price against manageable daily processes and deadlines.
Keeping the costs down means understanding why they charge what they charge; you have to remember that they balance their charge against the risk of providing you with funds ahead of your payment. This affects set up fees, the type of facility offered, and ongoing pricing.
Most of the recruitment agencies we work with have their invoice finance arrangements handled on a day-to-day basis here. We apply a whole range of techniques to cut the cost to you without reducing your funding below what you need.
Here are some of them:
Fresh Air Invoicing Banned
We won’t put our agency clients at risk – or jeopardise our relationship with the invoice finance companies – by raising a ‘fresh air’ invoice, one where the timesheet has yet to be authorised or the placement hasn’t gone through. Being known to have raised one of these can severely affect your charges.
An invoice finance company assessing a new agency has to remember that invoicing, credit control, and accounting processes may not run smoothly – which can hurt the finance provider in the long run. We’re a known quantity and we follow the same processes with the same reporting for all our agencies; this allows the provider to be confident this won’t be a problem.
Monthly Management Reporting
Invoice finance providers want to be sure their funds are being used appropriately and that the agencies they service aren’t at risk of going under.
One of the few ways they have to achieve this is through the medium of management accounts – and TBOS’ monthly management accounts make it simple for them to assess the state of the agency and to provide additional funding if needed.
Full Internal Credit Control
Often credit control and dunning cycles are left in the hands of the invoice finance company, but they needn’t be – and as they charge interest on outstanding funds, they have less incentive than your agency to run an efficient dunning cycle.
By managing credit control for all the agencies on our books we free our clients up to focus on growth, and we work with a 7-day cycle from raising the invoice to ensure the process is continuing appropriately.
Invoice Discounting, Not Factoring
Typically, a start-up agency will be required to use a factoring arrangement rather than an invoice discounting facility. This allows the invoice finance company to control invoice raising and credit control, reducing their risk – but because of the increased work, it costs more for the agencies.
TBOS is established and trusted, allowing these providers to go straight to invoice discounting facilities, cutting service costs from the off.
Audits at TBOS Offices
As well as management reporting, invoice finance companies use audits at client offices to check on their funds – reviewing remittances, invoices, and credit nots. This requires time set aside to explain processes to the auditor and can cost you up to two days of work.
By using TBOS, you ensure audits are handled at our offices, thoroughly documented, and the same processes our auditors are already familiar with. This reduces delay and cuts out a time cost to you.
Flexibility in Funding Providers
We’ve built up strong relationships with many different invoice finance companies, allowing us to compare prices and capabilities in helping our clients get the best option for them.
We’ve helped many of our client agencies to pay reduced fees and charges on their facilities, as well as setting up new arrangements that startups could not otherwise have achieved.
TBOS have many case studies where we have helped recruitment agencies with their invoice finance needs so if you would like TBOS to provide a free, no-obligation review of your invoice finance arrangements or to see the pricing TBOS can achieve by looking after your back office and invoice finance needs, please contact our office.