Invoice Finance for Pay When Paid


If you are invoicing an RPO that has a ‘Pay When Paid’ clause in their agreement you may have problems obtaining funding from an invoice finance company. The good news is that Funding Solutions can help.



So what is a “Pay When Paid Clause”?


RPO’s often put these clauses in their agreements and what it means is that they don’t have to pay their creditors until the specific debtor has paid them. To be fair to the RPO’s from a cash flow management perspective and also from a risk management perspective these clauses do make sense. So if you are a recruitment agency doing work for the NHS but submitting invoices via an RPO like GRI, when you raise your invoice to GRI they don’t have to pay you until the NHS pay them for the specific work.


Why don’t invoice finance companies like “Pay When Paid”?


Let’s assume we have a recruitment company that uses invoice finance like many do. Let’s also assume that they are supplying staff to the local council via an RPO. As such invoices are submitted to the RPO who in turn invoice the council. The clause makes it difficult for an invoice finance company, or a recruitment agency, to enforce the debt. In the event of non payment by the council, who do you enforce the debt with? The council have not been invoiced directly by the recruitment agency so neither the agency nor the invoice finance company who have assigned the debt can go after the end customer. The RPO can hide behind the Pay When Paid clause. You can see how this is a cause for concern.


What is the solution?


As we said at the start, the good news is that we can help. RPO’s have been around for some time and are here to stay. They are an integral part of the recruitment industry. The invoice finance market is also and integral part of the recruitment sector. Some lenders have embraced the new way of working and have formed close working relationships with the RPO’s so they have more comfort in providing funding.


If you are facing cash flow issues due to a lack of funding against invoices issued to an RPO where there is a “pay when paid” clause in the contract please get in touch with us on 0845 251 4040 or e-mail