When you’ve made the decision to set up your own recruitment agency there are many things to consider. However at the forefront for all new business owners the question remains; how do I fund my recruitment start up? Finding funding for recruitment agencies can sometimes be challenging, especially when you’re a new business.
To be confident when developing a new business, you need the security of having an established financier supporting your financial requirements. Most likely, your back office requirements too. There are two main routes of securing recruitment startup funding. These are readily available to new recruitment agencies which are as follows:
This route of recruitment startup funding is typically provided by well-known banks or alternatively, a factoring company. Usually, traditional factoring involves an agreed draw down amount ranging anywhere from 70-90%. Meaning if you had an invoice value per week of £10,000, an agreed draw down of 80%, you would receive £8,000 each week. You’ll receive the remaining £2,000 once your end client pays the invoice. This approach supports cash flow, but it also means your margin won’t be paid until that payment comes through. Therefore, it delays you from reaping the rewards of your hard work.
Alongside this, traditional factoring rarely provides a full back office facility for the agency. Sometimes this comes with additional fees, such as interest charged on the amounts you’ve drawn down. Also, having to look at paying additional costs for debt protection. Based on our personal experience, traditional factoring works best for larger recruitment agencies because they have stronger cash flow and more robust back-office support. This form of funding for recruitment agencies has its clear limitations.
Invoice Financiers will typically provide 100% finance. The £10,000 mentioned previously would be processed in full each week and you would receive your profit every Friday. No waiting on the invoice being paid. Alongside this, they typically offer their agency partners some form of back office platforms for you to use. However, this does vary massively from business to business, it’s always worth asking for a demonstration of the IT platform on offer before signing an agreement. It’s worthwhile making sure the partner you choose to finance your business is one that offers the most to your newly formed recruitment start up.
Funding for recruitment agencies can take the form of invoice factoring, from companies such as QUBA. QUBA Solutions are an industry leading, well-established invoice financier set up and run by recruitment professionals. We provide all agency partners with 100% finance, comprehensive debt protection and a full suite of back office requirements. All of this is provided at one set percentage with no additional costs such as interest rates or monthly minimums meaning you know exactly what you’re paying and when.
Back office solutions at QUBA include our DynamiQ Dashboard, designed ourselves and made purely for the use of those in the recruitment industry. It provides real time information regarding profit, turnover, debt levels and credit limits from which detailed reports can be run. It also houses our eTimesheet functionality which links in with our newly developed e-Timesheet app which is available for your candidates and end clients to download in the app store.
By partnering with QUBA Solutions you would be fully equipped to run your new business whilst we take care of the funding and your back office. Leaving you to focus on your agency with the confidence of having a knowledgeable financier supporting you.
To discuss how QUBA Solutions can assist you with recruitment startup funding please get in touch with one of our finance professionals on 01305 233178.
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