When a recruitment agency starts to make temporary/ contract placements, they will often require some kind of finance solution in order to bridge the funding gap between when the candidate needs to be paid and the client making payment. There are many different solutions available to recruitment agencies and if the agency decides to use invoice finance, they will go to one or more providers to get quotes and set up their facility. However, with so many providers on the market, it is hard to know which one to use and whether you are getting a good rate.
Over the many years of providing back office and accounting services to recruitment agencies, TBOS has built up good relationships with a number of invoice finance providers so that the agency gets the best possible price and facility they need for their needs. With TBOS’s involvement, the pricing provided by the invoice finance companies will often be at a reduced rate due to the following reasons:-
- TBOS Won’t Raise “Fresh-air” Invoices
One of the major concerns for any invoice finance company is the validity of the client invoices raised as these form the basis of the funding provided. Ensuring that the invoices have some form of validation, such as an authorised timesheet, provides some assurance that the invoices will be paid. Any invoices that are fraudulently raised without a valid timesheet or without a placement being made are classed as “fresh-air” invoices as they will not be paid. As TBOS looks after all of the timesheet management (online, paper-based and client-based) and invoice raising, there is no chance of any “fresh-air” invoices being raised thus reducing the risk to the invoice finance provider.
- TBOS Looks After All Credit Control
Credit control is a vital step in ensuring that the funds being lent by the invoice finance company will be repaid. Often invoice finance companies will not have the resources and time to be able to chase the debts as efficiently as possible, which will lead to additional interest charges and increase the risk to the invoice finances funds. As TBOS looks after the credit control of all of our clients, this alleviates the chasing costs of the invoice finance company and ensures the funds are collected as quickly as possible. Both of these elements ensure the agency pay lower service charges and reduced interest rates.
- TBOS Sets Up The Facility In The Best Interest Of The Agency
When setting up an invoice finance arrangement, it is important to ensure that the facility will support the agency for the long term and is at the best price. TBOS works with multiple invoice finance providers to ensure that the rates charged are competitive and also ensure that the facility will be able to manage their future requirements such as making international/ currency placements. Although TBOS does receive commission from some providers, the overriding factor is whether the agency is getting the best funding deal to meet their contract placement needs.
- TBOS Provides Monthly Management Accounts
Ensuring that the agency is remaining solvent and keeping up with its HMRC requirements is important to the invoice finance provider. The easiest way to monitor this is for the invoice finance provider to receive regular management accounts. As all our clients receive their management accounts on a monthly basis and these are provided to the invoice finance provider too, this ensures that the facility stays within the funding parameters and the provider is able to keep an eye on the performance of the agency.
- TBOS’ Processes Are The Same For All Agencies
One of the concerns by any invoice finance provider is how the back office and accounting processes will be run by the recruitment agency as each agency uses different systems, people, processes and suppliers. If the recruitment agency has no previous history of running contractors internally or they feel there are gaps in the processes then this may add further risk to the invoice finance companies funds. As all TBOS clients follow the same procedures and processes, which are documented and well-tested, this reduces the risk to the borrowed funds and makes everything transparent through the invoice raising, credit control, bookkeeping and audit trail.
- TBOS Has Many Years Experience Of Invoice Finance
There are many different invoice finance providers on the market who use different systems and processes to provide recruitment agencies finance on their contractor placements. As TBOS has worked within the recruitment back office and accountancy industry for many years, we understand the systems they use, the processes they follow and the people who work within the organisation. We have built solid relationships with several different providers which affords us advantages that other companies may not be able to access.
TBOS currently works with over 9 different invoice finance providers and manages the day-to-day operations of over 30 different facilities; most of these have been set up by TBOS. The setup process involves creating projections of the business over the next 12 months to allow the providers to generate proposals of the funding they can provide and the pricing. These proposals are collated together and presented to the agency to decide which company to use before TBOS sets up the arrangement. Once the funding is in place, TBOS manages the day-to-day tasks of uploading the invoices, drawing down funds to the company bank account, reconciling funds in and out and administering the credit control. This management of the invoice finance facility ensures the agency cash-flow remains on track and the recruitment directors can concentrate on recruiting and growing their agency.
For more information on how TBOS can help manage your invoice finance arrangement, please contact our office.