Recruitment companies are one of the largest factoring industry sectors as the business is tailor made for factoring with most recruitment companies having no other assets other than the money owed to them.
Banks didn’t have an appetite to fund fast growing recruitment companies satisfactorily even before the Brumark ruling in 2001 but since then they haven’t even bothered to try and most recruitment companies look to factoring to fill this gap.
A development in recent years is the added value that some factoring companies are offering recruitment companies in the form of a complete payroll and back office service in addition to the normal factoring finance as several are now offering a complete solution covering all aspects.
There are payroll and back office companies that claim to offer funding but this isn’t a route that we recommend as most of them obtain their own funding by “re-factoring” your invoices with a proper factoring company.
The big disadvantages of this route are firstly that many will require you to invoice in their name so you end up losing your own identity and secondly if the back office company has any problems with their own factoring facility it could affect your own cash flow.
We believe that it is both pointless and risky using a company to handle both the backroom and funding aspects of the business if that same company are just outsourcing the funding to someone else. It is also the most expensive option available with typically charges of 5% of turnover being levied.
It would seem more logical to either factor the invoices directly with a factoring company that will also handle the payroll and back office functions or to keep the factoring and back office functions separate by firstly selecting the most appropriate factoring company and then outsourcing the payroll side to a specialist bureau or handling it in house (or use the services of your accountant) as either of these methods should be cheaper as well as less risky.
It is an unfortunate fact of life that many factoring companies do not deliver the fast, flexible and personal service that they promise but as the UK’s leading specialist factoring broker we know which ones actually deliver and we refuse to deal with the rest so why not contact us for an informal chat as our services are free of charge and come with no obligation at all.
Factoring Invoices UK
5 Torridge, Hockley, Tamworth, Staffordshire B77 5QL
Tel: 01827 707680