Temporary recruitment agencies face an ongoing cash flow challenge: how to pay their temp staff while waiting for clients to settle their bills.

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The problem facing recruitment agencies is that their structure and payroll are unique, which can present problems when it comes to ensuring temps are paid on time. Clients, to whom the agency supplies temp staff, are usually on 30+ payment terms, but temp staff are often paid weekly on submission of a timesheet. This disparity means that the recruitment agency needs to pay its staff before the client settles their invoice and, with large numbers of temps on the payroll and without ready access to a cash reserve, this could prove challenging.

An invoice finance company can provide much-needed cash flow support when it is most needed. 

What Do Invoice Finance Providers Do?

Invoice finance providers give you quick access – usually within 24 hours - to up to 95 per cent of an outstanding invoice’s value, depending on the terms of the arrangement. The provider uses the invoice as security for what is effectively a short-term loan to the value of the invoice, so you can access the funds quickly. In return, you pay a small fee for the service and daily interest until the client settles the invoice in full.

Invoice Finance Helps You To Pay Your Temp Staff On Time

Payment terms for clients are often 30 days, so invoice finance means you won’t have to wait for invoices to be settled before you can pay your staff. Because you have quick access to the money that you are owed, you will be able to pay your temp staff on time as you will have available funds in your business account. Invoice finance gives you excellent visibility of your cashflow and enables you to accurately forecast how much money will be coming into your business.

The details of invoice finance agreements vary widely between lenders, and it’s important to note that invoice finance isn’t suitable for every agency. Many lenders have minimum turnover thresholds of £150-£500k PA before they extend credit, so it isn’t usually an option for smaller agencies and start-ups.  However, TBOS does have options available for smaller and new start recruitment agencies using our TBOS Freedom model.

At TBOS, we have extensive experience of arranging competitive invoice finance for recruitment agencies. We can talk you through your options and help you find the best cash flow management strategy for your agency.

Find Out More

To find out more, please send us a message and our team will respond promptly.

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