Admin Can Make or Break an Agency – the DANGERS of using traditional finance vs Quba Solutions

“Know your Apples from your Onions!”

What can go wrong for your agency from using a traditional factoring solution?

We are asked all the time, what do we do that factoring doesn’t? What are the differences?

Well strap in, because here are some pretty important things to consider, all of them pointing to the age-old lesson of ‘cheaper isn’t better!’

  1. Percentage of invoice value can be anywhere between 70-90%; even 95% of invoice value. This can cause issues particularly when you are using an umbrella company, paying a VAT registered limited company, and even more so when working with international clients. 

    For example, an invoice of £1000 + VAT = £1200 factored at 80% would mean a drawdown of £960. You could be paying the worker anywhere between £800 to £900 which is a huge bite into your margin/cashflow – agencies on tighter margins (especially those signing up to Master and Neutral vendors) may find it untenable. In the event of disputes all cash can be frozen.

    Quba pay 100% of your profit weekly, shouldering the administration and the cash flow timeline.

  2. The fee is complex.The actual fee is usually cheap – it can be less than 1% (although remember they always charge on gross, so it is actually 1.2% net).

    But that’s not the whole picture; you pay interest on borrowing, and this is usually high and will only increase as the base rate does. Fees are payable every time you drawdown money and there may well be a monthly service charge.

    Our fee is simple to work out. It’s a percentage on invoice value and nothing else, you know exactly where you stand, we designed the product to make finance and back office simple, with the busy recruiter in mind.

  3. Reserves. This can be a real issue – 90 day debt has usually some kind of issue around it, therefore the word issue would trigger an immediate reserve of the value of that invoice or invoices related to the end client

    After 120 days the debt would immediately be reserved and any legal dispute would be the same.

    Quba on the other hand are totally involved in the debt, we see it and breathe it. We can freeze one invoice rather than everything because we know on a granular level where the problem is.

  4. Credit Controller. Most traditional factoring solutions require you to have your own Credit controller or indeed payroll manager / internal clerk.

    Obviously, other than having to pay for that – what happens when they are away on holiday? Or leaves the business for whatever reason and you need to re-recruit?

    Using Quba Solutions covers this of course, with no potential downtime and no extra expense.

  5. The Technology. One of the biggest differences is the tech used – traditional finance generally utilises Dancerace as a platform – a generic and complicated finance platform designed to cover ALL sectors and is certainly not niche to recruitment. It really is designed for finance professionals and assumes a lot of knowledge.

    The Quba tech – the DynamiQ dash provides everything you need to know in an easy to digest, user-friendly, recruiter-friendly, clearly laid out way.

We’ve seen it happen again and again, agencies failing because the foundations they’ve built themselves on are unsuitable. Cheap? Yes. Flexible and reliable enough? Well, no. Basically.

Banks are cheap, but they don’t help the agency out – it’s not their job; they assume you know. The intricacies and differentiators between your end-clients and what sector-specific guidance you might need such as gross status – the banks don’t care. It’s not their place to teach you how to run a business! They provide finance, if it doesn’t work out, it’s your problem.

Quba is designed inside and out as the exact solution to all the problems caused by traditional finance for recruitment companies.

Don’t make the mistake – admin, particularly on the side of finance, can make or break an agency. As our very own Ashley Lyas says “know your apples from your onions!”

If you would like to see what the platform can do and how Quba can support your recruitment business, you can reach one of our professionals any time on 01305 233178 or contact us here and we can book you in for a demo.