You’re being funded, the relationship is in place and you know how the process works. However, change occurs and there may come a time where you are looking to move to a different recruitment funder. Here are some of the reasons why businesses may move recruitment funders:
It’s no secret that you need to pay your invoice finance provider for their services, but do you know if the deal that you originally signed up to is cost effective? With a percentage of invoice value going to the provider, some of the bigger invoice finance providers only give you an agreed percentage of your invoice value in advance, typically 75% – 90%. The consequences of this will be a shortcoming of profit where your margins are squeezed with some of your clients.
If you are not getting 100% of your profit on a small margin client it could still have serious cash-flow consequences on your business. This means your business has to wait until your client pay’s the invoice finance provider to receive their outstanding profit from invoices. For those that are on a percentage deal, the remaining outstanding profit is working capital that your competitors are using to scale and grow.
Agencies are often tied to concentration restrictions which limit the amount of business you can have with any one client. Too many contractors with a single client and your funding will be restricted as it can be seen by traditional financiers as a risk.
Over-trading and overdue invoices are a massive issue for the invoice finance provider and everyone likes debtor days to be low and clients to trade within limits. However, some invoices may be paid late due to resolvable issues like missing purchase order numbers or site addresses. Having profit held on these is common place but wouldn’t it be refreshing for your provider to take a landscape view of an account concerning payment history, client financial health and relationship.
As discussed, late invoices happen. However, if it’s not the fault of your business then why should you be required to pay additional costs with interest charges? On top of that your profit margin and available funds may be reduced. Other hidden costs you may be harbouring including: a set up fee for the facility, fees for checking the creditworthiness of your clients prior to engagement, auditing fees and extra fees for processing same-day payments.
If your invoice finance provider is not recruitment-specific, chances are you’ll need extra software to cope with payroll and the associated back office procedures required to pay temps and file your responsibilities with HMRC. Also, you’ll have no visibility on the state of your funding. Can you see your sales ledger? Do you know or can you access up to date credit limits agreed for your clients? How are your workers being paid?
Here at Quba Solutions have one simple fee, unlimited support, a recruitment background so we understand your business and crucially we will pay you 100% of your profit weekly, straight into your business bank account. We have an online portal – DynamiQ which stores all the client, worker and assignment data in a secure and accessible environment. All management information is stored, your gross profit report, sales ledger, payroll reports plus all invoices and time-sheets are accessible at any time.