Why would a recruitment consultancy have their permanent invoices funded?
It is a good question and one that we do get asked every now and again. There are several benefits to having your perm invoices funded, it won’t be needed by all recruitment businesses and it may be dependent on certain circumstances but it can be a very useful and sometimes a crucial solution to have. The main benefits are as follows;
Cashflow – this is probably the main reason that agencies will look to have their perm invoices funded. The ability to be able to access the funds from an invoice before the client has paid it. The financier will normally advance a percentage of the invoice once the candidate has started in their new position and then the remaining amount once the invoice has been paid by the client.
If you have 30-day payment terms with your client, you could receive 75% of that invoice, for example, the week that the candidate starts, meaning you don’t have to wait those long 30 days to receive your profit! You will then get the remaining 25% once the client has paid.
Invoicing and credit control – the administration around perm invoicing is always more than you expect. You must remember to draw up the invoice, send it to the client, confirm they have received the invoice and when they will pay it. If the invoice is then not paid to terms you will need to remember to chase on time. Consider the fact there are rebates in play which may determine your entitlement to a percentage of the invoice.
Some financiers that provide permanent funding will also carry out invoice and credit control on your behalf, meaning you can just focus on growing your business, placing more candidates, picking up more roles and not have to worry about chasing that client!
Risk – running a business is all about managing risk. What happens if a client goes bust before paying that perm invoice that you had worked so hard to fill? Yes, that’s right, you don’t get paid! Another benefit of recruitment funding is that some financiers include bad debt protection so essentially you still get paid if the client is unable to.
Flexibility – you may not want or need to have all of your invoices funded and that’s OK. You may just have clients that you know well, they are solid and they will pay without too many issues, send an invoice, job done. Where there are others that you’re not too sure on, or you know they always pay late or they are nightmare to get hold of, etc, etc. It may also just be that you have had a great month, you have a load of invoices going out and you need to access the funds and don’t have time for the admin.
At QUBA Solutions we allow flexibility with perm invoices so you can pick and choose which invoices you have funded, simple.
If you would like any more information on QUBA Solutions permanent invoice finance solution, please get in contact on 07876 805 128 or email@example.com.