What is invoice financing & why is it required in the recruitment industry?

Invoice financing is the most popular method of funding for small to medium sized freelance recruitment businesses. Along with the many positive aspects of running a freelance recruitment business, one unfortunate reality is that as more temps are placed (good!) you will accrue more debt (bad!). Each invoice that you raise to your clients will most likely remain unpaid for 30-40 days, so if you were raising £10,000 invoices on a weekly basis you could be £40,000 out of pocket before you receive any payments from your clients.

As a result, most new, small and medium recruitment businesses will look to source some form of invoice financing solution or invoice factoring solution. These are two methods of funding available to a freelance recruitment business that differ markedly in how they can and will support a business.

What do invoice financing companies offer?

Invoice finance companies offer a holistic solution that combines full finance (payroll and margin) with bad debt protection and a full suite of back office services (invoicing, credit control, payroll, agency reporting, terms and conditions, online business performance etc).

What do invoice factoring companies offer?

Invoice factoring companies offer a purely financial solution that provides a proportion of the funds required, usually enough to pay your temporary workforce on a weekly basis. No back office functions are included and more often than not the debt is not protected with an insurance service, exposing the agency to bad debt.

Why is invoice financing required?

Most recruiters who start their own business are experienced hands-on consultants looking to establish and build their own brand, as such the additional support from the invoice finance company can prove a real asset.

An invoice finance company will provide the relevant contractual documentation, collect the timesheets, raise the invoices to the clients, pay the workers, pay the margin to the agency and then chase in the outstanding debt. Credit limits are provided on the debt to provide insurance to clients that fall into financial difficulty.

To summarise, an invoice finance solution will provide your agency with full funding and full back office services whilst significantly reducing the risk to your business of bad or uninsured debt.

Here at Quba Solutions, we offer a invoice finance solution that will provide your agency with full funding and back office services whilst significantly reducing the risk to your business of bad or uninsured debt. This is all provided for one competitive fee with no sign-up costs, no minimal usage costs and no additional costs full stop!

If you would like to learn more about how this solution can support your business, please feel free to call our team on: 01305 233178, email us or complete our contact form.