Recruitment financing: How can you alleviate cash flow pinches? 

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You might be experiencing the following funding problems as a recruitment company: 

  • You regularly experience a cash flow gap. You pay your contractors but then have to wait for the contract owner to pay you. 
  • You might find it difficult to secure a traditional term loan, or you may avoid them due to their inflexibility and long-term commitment. You may be unsure about working with a specialist recruitment company.
  • A business overdraft is becoming tricky to manage, and you’re worried about overborrowing. 
  • You need funding fast, and you don’t want to wait weeks to hear back from the banks just to find out how much they can lend you. 

This article will explain your options as a recruitment financing company, whether you should opt for a specialist recruitment financing company, and go into detail on invoice financing. 

In this article: 

What are your options as a recruitment financing company?
Invoice financing: alleviate cash flow pinches by getting an advance on your invoices
How a recruitment agency can use invoice financing to cover cash flow gaps
How to get started with Financefair
Why choose Financefair? 

Talk to our experts to find out how Financefair can grow your business 

What are your options as a recruitment financing company? 

You’ve probably already looked into getting a business loan to give your business some breathing room while you wait for unpaid invoices. Finding funding as a recruitment company can be difficult due to the stringent requirements and inflexibility inherent in traditional funding systems. 

Fortunately, there are other financing options that might be a better fit. Here’s an overview: 

Financing Option Pros Cons
Bank loan Fixed interest rates and predictable payments. Requires collateral and has strict qualification criteria
Lengthy application process
Requires a personal guarantee
Business overdraft Access funds as needed
Quick setup compared to loans
Higher interest rates than loans: fees for exceeding limit
Not suitable for long-term financing, can encourage overspending
Selective invoice financing Get an advance only on your most significant invoices: less resource intensive than full book
Funds in your account within 24 hours (with Financefair)
Doesn’t require a personal guarantee (with Financefair)
Can cost more than traditional financing, like business term loans
Less working capital than if you opted for full book
Full book invoice financing Get an advance on a large amount of working capital (from all of your invoices)
Funds in your account within 24 hours (with Financefair)
Doesn’t require a personal guarantee (with Financefair)
Can be operationally intensive, especially if you have lots of smaller contracts
Invoice factoring (including specific recruitment financing products) Outsourced credit control. The factoring company manages collections
Quick access to funds: improves cash flow
Customers deal with the factoring company, which could impact customer relationships
Fees and the percentage of invoices taken as commission can be high.

 

At Financefair, we can offer solutions directly aligned to the receivables generated when you generate your revenue (even if that’s on a recurring revenue basis). We offer invoice financing (both selective and full-book), to enable you to get an advance on funds already owed to you, so you can alleviate a cash flow pinch and take advantage of growth opportunities – without giving up equity or getting into long-term debt. 

Read on to learn more about invoice financing and why it’s an excellent fit for recruitment companies. 

Invoice financing: alleviate cash flow pinches by getting an advance on your invoice 

Invoice financing, also known as invoice discounting, is a financing facility that allows you to use your existing customer book to inject capital into your business. 

This facility enables you to get advance on existing invoices to alleviate the cash flow pinch that comes with waiting 30-60 days for your invoice to be paid. 

Invoice finance facilities are either undisclosed or disclosed: 

  • Undisclosed or confidential: Customers don’t know you’re using invoice financing. This is a discreet option, meaning you continue to handle your own invoices, payments, and collections. Financefair offers confidential invoice financing. 
  • Disclosed or non-confidential: Disclosed invoice finance means your customers will know that you’re using finance. A lender might decide to impose a disclosed facility on a company based on risk factors. One form of disclosed invoice financing is invoice factoring. With this facility, the lender takes an operational role in the business, essentially taking over credit control and payments. Financefair offers undisclosed facilities. 

You have the option to choose between full book and selective invoice financing: 

  • Full book invoice financing means raising all of your business’s invoices. While this allows you to advance more capital, it can be resource-intensive and time-consuming, so it’s best suited for a larger recruitment company. 
  • Selective invoice financing involves raising only your most significant invoices. This is a popular option for recruitment companies with a few large and many smaller invoices. It’s less operationally intensive and easier to manage than full book. Financefair is the only provider of selective invoice financing in Ireland. 

Here’s how invoice financing works in action: 

  1. You’re waiting to get paid for an outstanding invoice from the contract owner but are committed to paying your contractors weekly. As such, you’re experiencing a cash flow gap.
  2. You raise an invoice (either all of your invoices if you have a full book agreement or specific invoices if you’re on selective invoice financing). 
  3. Your facility provider will send you an advance. This will be a pre-agreed percentage (agreed upon when you set up with us). At Financefair, we can offer you up to 90% of the invoice value and deposit the money in your account within 24 hours.  
  4. Your customer will pay for your invoice in a separate account managed by your financing provider. If it’s a disclosed facility, your customers will know: if not, they’ll assume they’re paying your business directly. 
  5. Once your customer has paid the invoice, your provider will send you the remaining percentage of the invoice minus fees. 

There are specialist recruitment financing solutions that will do this for your business. However, you often have to take a larger financial package – including credit control, payroll, etc. 

While this might suit some recruitment businesses, it can be expensive, and many business owners prefer to retain more control. 

Interested in a selective facility? Learn more in our selective invoice financing guide

What to consider when choosing an invoice finance provider

There are a few things to keep in mind when you’re choosing an invoice financing provider:

  1. Advance rate: With invoice financing, your lender will offer you a percentage of the invoice value. This usually depends on the lender’s risk appetite and your business circumstances. Financefair offers up to 90% of the invoice value. It’s essential to ensure you get a high enough rate so you have enough access to capital to get you through a cash flow pinch.
  2. Cost of funding: Our invoice financing costs range from 0.75% to 1.50% per 30 days. Here’s an example of what a invoice financing facility might cost you: 
Size of Facility Cost per 30 Days
€100,000 €1,000
€500,000 €5,000
€1,000,000 €10,000

Our pricing is simple. We’ll charge you an annual platform fee and monthly facility fee (on full book facilities)– minus any discount for a high credit score.

(To get a specific cost for your business, try the calculator on our invoice discounting page)

3. Full book or selective invoice financing: Full book involves financing all your raised invoices. It’s slightly more expensive than selective financing and requires more operational effort. On the other hand, selective invoicing is slightly more cost-effective and permits the financing of only the invoices you choose to raise. Financefair is the sole provider of selective invoice financing in Ireland.

Here are the invoice finance providers in Ireland, the facilities they offer, and their advance rates:

Provider Facilities Offered Invoice Value
Financefair Full book invoice financing, Selective invoice finance facility Up to 90%
Close Brothers¹ Full book and invoice factoring facilities Up to 90%
Bibby² Full book and invoice factoring 80-100%
AIB³ Full book invoice financing Up to 85%
Bank of Ireland Full book invoice financing Up to 85%

Banks tend to offer disclosed facilities, meaning that your customers will know you’re using invoice finance. Alternative providers offer a mix of disclosed and undisclosed facilities, depending on your individual circumstances. 

Financefair offers undisclosed invoice financing, so your customers aren’t aware you’re using the facility. 

Unsure if selective or full book invoice financing is right for your business? Get in touch with our team

Should you choose invoice factoring or a standalone invoice finance facility? 

Many financing companies offer a ‘recruitment finance’ product, which is usually a form of invoice factoring. This is where your financing company essentially takes over the credit control of your business.

Invoice factoring can be a good fit for your recruitment business if: 

  • You have a small team and limited time: Invoice factoring can be a good fit for small teams who need external support in managing credit control.
  • You’re willing to entrust aspects of your business to a third party: Entrusting operational aspects such as credit control to a third party can ease your workload, allowing you to dedicate attention elsewhere.

On the other hand, taking out financing through a standalone invoice financing, like Financefair, might be better for you if:   

  • You want low-commitment, flexible funding: Invoice financing is a fairly low-commitment option, especially if you choose selective invoice financing. You only need to raise invoices you choose to, so you’re not obligated to take out financing each month. Invoice factoring can require more commitment and have increased administration.
  • You have budget constraints: Invoice factoring facilities are typically more expensive than standalone invoice financing, due to the financing company managing credit control. 
  • You’d prefer to maintain business control: While some business owners are comfortable outsourcing significant business operations, others prefer to keep control in-house.

To discuss your funding needs and get the best facility for your business, get in touch with our experts

How a recruitment company can use invoice financing to cover cash flow gaps

Consider a recruitment company that supplies temporary workers: they pay contractors weekly but must wait 30 days (or longer)  for contract owners to settle invoices, leading to a significant cash flow gap. This strain on liquidity hampers daily operations, causes anxiety, and stalls potential growth opportunities.

The business initially completed an application form for Financefair, which they were able to do completely online. However, they decided to contact our expert team for personalised advice on their financing. After discussing their business and growth ambitions with our team, the business decides on invoice financing. They opt for selective invoice financing in order to improve business operations by minimising friction in obtaining working capital.

Here’s how it works in practice: 

  • The recruitment agency identifies a high-value invoice—say, €30,000—due in 30 days. 
  • They raise the invoice through Financefair selective invoice financing and receive 90% of the invoice value (€27,000) in their account within 24 hours. 
  • This capital injection alleviates the cash flow pinch, enabling the recruitment company to meet payroll, invest in marketing, and take on additional contracts without waiting for the payment cycle to complete.

Financefair’s solution uniquely suits the recruitment sector, offering local expertise and the flexibility to increase funding as your customer base expands and revenue grows. 

This means the recruitment agency is not locked into a one-size-fits-all approach but has access to a range of solutions, including revenue based finance and business line of credit, ensuring they can adapt their financial strategy to match their evolving needs.

How to get started with Financefair

We can work with Irish recruitment companies who meet the following eligibility criteria:

  • Limited company with at least two directors
  • Trading for at least three years
  • Minimum annual turnover of €300,000
  • Average debtor book of €500,000

Getting started is easy:

  1. To apply:
    1. Contact our team, who can discuss your company’s funding requirements. We can let you know if your company is eligible and our recommended facility for your needs. Call +35315252486, email busdev@financefair.com, or book an appointment with an expert. 
    2. Complete a funding application form. This takes less than 5 minutes. 
  2. Offer: We’ll send over an indicative offer within 24 hours. 
  3. Onboard: If you’re happy with the offer and wish to accept it, we’ll onboard you onto our online platform and run KYC and AML identity checks.
  4. Funding: Once we’ve set your facility up, we can get funds into your bank account within 24 hours. 

Ready to get funding? Apply today 

Why choose Financefair for invoice financing?

Invoice finance solutions are becoming an increasingly popular option for recruitment companies. It allows you to alleviate a cash flow pinch without getting tied into long-term debt or giving up equity. But why should you use Financefair? Here are a few reasons:

We offer selective invoice financing, so you don’t have to finance your whole debtor book

At the time of writing, we’re the only provider of selective invoice financing in Ireland. While we offer full book financing, selective financing can be a good choice for recruitment companies with a few significant contracts and many smaller ones who want to limit operational resources. 

Here’s an example of where selective invoice financing could be a good fit: 

  • You currently have three large contracts and seven smaller ones. 
  • You pay your contractors but have to wait 30-60 days to get paid by the contract owner.  
  • The three large contracts cause the cash flow pinch, and you’re happy to wait for the smaller ones. 
  • Selective invoice financing allows you to get an advance only on the three large contracts, without the admin and operational costs of raising all ten.

Financefair can advance invoices from €30,000 and provide a facility of up to €5m (if your company meets our criteria). 

Since we’re a standalone invoice financing solution, you won’t have to pay the additional fees that come with a specialist recruitment agency.

We can alter your funding solution as your business grows 

Whether you choose selective or full book invoice financing, you won’t be trapped in a long-term commitment. We regularly check in with your business to ensure you get the best possible funding solution to grow your business.

For instance, you might decide to start with selective invoice financing, but soon have many larger contracts and a bigger team. In that case, we can simply move you from a selective to full book invoice financing facility. We also offer two other forms of financing: 

  • Revenue based finance: Where you use your projected revenue to inject capital into your business. 
  • Line of credit: A pre-approved funding line, where you can access instant working capital and draw on it when needed. You only pay for what you use. 

The Financefair team has decades of financial services experience. When you reach out, we’ll take the time to understand your business needs. We’ll use data analytics to assess your funding requirements, to get you the best growth option possible for your business.

Our platform is seamless, and won’t take up your teams time and resources 

Many invoice discounting providers require you to upload financial information on a specific day of the week (sometimes even at a specific time). If you don’t, you could be subject to fees. This manual process can be time-consuming and eat up a lot of your team’s resources. It can be hard to focus on your company growth when you’re bogged down by frustrating admin.

But with Financefair, our platform accesses your financial information seamlessly through secure data analytics so we can automatically get the data we need. This means you don’t have to worry about checking in each morning to update your financials, and saves you and your team valuable time and resources.

The seamlessness of the Financefair platform enables us to provide your business with an indicative offer in just 24 hours. And once we have all of the necessary documentation and you’re onboarded to the platform, we can disperse funds in 24 hours. 

Use invoice financing from Financefair to cover cash flow pinches and grow your recruitment business 

As a growing recruitment business, a cash flow pinch can seriously harm the health of your business. 

With invoice financing from Financefair, you can get an advance on up to 90% of your future invoices. This gives you the peace of mind that you have the capital you need to get through a cash flow gap and grow your business – without getting into long-term debt. 

Ready to get started? Apply today

Sources:

¹https://www.closeinvoice.co.uk/

²https://www.bibbyfinancialservices.com/funding/invoice-finance-products

³https://aib.ie/business/loans-and-finance/finance/invoice-finance

⁴https://businessbanking.bankofireland.com/credit/finance/invoice-finance



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