Invoice Discounting For Temporary Recruitment Businesses
Invoice discounting can be a great solution for temporary recruitment companies. Most temp recruitment businesses will use a form of invoice finance to ensure that cash flow can meet the weekly demand of contractors wages. However, for many businesses a confidential invoice discounting facility is their preference as it is cost effective and can be confidential if required.
The advantages for a temporary recruitment company
Let’s take a look at the benefits for a company and in particular a temp’ recruitment business where contractor’s wages need paying weekly:
- An invoice discounting facility can provide the business with much needed working capital by releasing the cash tied up in unpaid invoices.
- With improved cash flow the business can ensure that the weekly wage bill can be paid on time and without the stress of wondering if clients will pay on time.
- Safe in the knowledge that the working capital for the business is taken care of you can push on and grow the business by taking on new and larger contracts.
- Invoice discounting can be a confidential facility so your clients need not know that you are in fact financing your invoices. This may improve their perception of your business over others however it is fair to say most large businesses are used to seeing their suppliers finance their invoices.
- It is also the most cost effective of all the recruitment finance facilities. As invoice discounting simply provides finance against the invoices with no additional services the charges tend to be the lowest. As with all invoice finance facilities it is imperative you look at total costs and not just headline rates when making a comparison.
What should you do before applying for an invoice discounting facility?
In the first instance speak to the team at Funding Solutions as we can ensure that your business stands the best chance of obtaining an invoice discounting facility rather than being forced to take a factoring facility. Let’s look at the areas we would focus on:
- Your audit to invoice cycle or audit trail: this in effect provides the security to the invoices that you issue. A typical temporary recruitment business will have timesheets signed by the clients as the contractors complete the agreed work. You need to make sure that each invoice is supported by a purchase order ideally in writing and a signed timesheet or a series of timesheets. This will provide a lender with comfort that administration is in order, disputes are unlikely and invoices will be settled in a timely manner.
- Your credit control procedures need to be robust and methodical. Ideally you will have a standardised procedure in place with staff focussing on collecting in your outstanding invoices. This provides a lender with comfort that the debts they are funding will be collected efficiently to repay what they are lending to you.
It would be important to review these two areas of your business prior to any application for an invoice discounting facility. If either area is lacking there is a good chance you will be forced on to factoring with a promise of an invoice discounting facility if things improve. At Funding Solutions we have the ability to review and test your processes prior to application. If need be we can work with you to bolster any areas that need attention prior to any formal application.
Speak to the team at Funding Solutions
If you are looking for an invoice discounting facility for your recruitment business call us today on 0845 251 4040. We can help with the following:
- By understanding your business and it’s requirement we can ensure any facility is structured properly and costed accordingly. This means you have a facility that will work as it should for your business in a cost effective manner.
- We can ensure you end up with the lender best suited to your needs.
- We will work with you to ensure your business and it’s processes are suitable for invoice discounting prior to any formal application.