Gareth Pritchard
Gareth Pritchard
Head of Invoice Finance
Specialist Invoice Finance

Recruitment invoice finance: how to bridge the cash flow gap 

February 23, 2023 | 8 minutes

If you own a recruitment business, you’ll be familiar with some, or all, these common cash flow struggles:

  • You usually pay contractors weekly, while you’re paid less frequently by the companies you work with. This creates a deficit, unless you have a substantial pot of emergency cash to rely on.
  • Invoice finance companies often charge hidden fees, making it hard to budget for – particularly stressful if you’re barely breaking even.
  • Complete solutions that also take care of admin and payroll aren’t necessarily the right option if you just want invoice financing.
  • Many companies specialising in recruitment invoice finance only allow you to finance all your invoices at once, in a whole book format. Recruiters who work with both temporary and permanent recruitment may only want finance on invoices relating to temporary workers, putting them at a disadvantage.

Note: If you’re ready to jump straight in and try Satago invoice financing, along with the other cash flow tools our platform offers, get started today with your 14-day free trial.

How to get started with recruitment invoice finance

There are a few ways to get started with recruitment finance:

  1. Work with a finance broker who will find the right solution for you.
  2. Work with a recruitment invoice financing solution that also offers payroll and other admin functions.
  3. Work with an invoice financing solution like Satago.

If you’ve been shopping around for invoice finance, you’ll know that invoice factoring companies will give an indicative quote before you apply, then you’ll shortlist a couple to take forward and fill out a formal application. Typically, the application process can be a good indication of how easy the facility will be to manage day to day.

Satago is an all-in-one cashflow management platform that enables SMEs to access invoice financing with just a few clicks, set up automatic credit control and analyse risk insights before working with a customer.

To get started with Satago:

  1. You can sign up directly on the Satago platform and register your interest in invoice finance. This will automatically notify our invoice finance team so they can get in touch with you to discuss your business needs and give you a quote.
  2. Alternatively, just give us a call at a time that suits you.
  3. The third option is to go via a finance broker if you prefer.

We pride ourselves on doing invoice finance a bit differently to most lenders:

  • No hidden fees: Our pricing structure is clear and transparent, and you won’t be stung by hidden fees you weren’t expecting. The costs you’ll pay are an arrangement fee (full invoice finance only), a monthly service and annual renewal fee (full invoice finance only), and an interest fee – nothing else.
  • Get started with selective invoice financing: With Satago, you can choose to get invoice financing on just one invoice rather than all your outstanding invoices. We’re just one of two or three providers in the UK who offer both selective and full invoice financing, and we make it uniquely easy for you to switch from one to the other. This allows you to easily trial invoice financing by starting out with the selective option and seeing how you get on – there’s no contract to tie you in.
  • Invoice finance, credit control and risk insights in one: You might need to use invoice financing regularly because of the nature of recruitment, but we can also help you stay on top of your invoices with our credit control tools. Additionally, our risk insights will help you determine how creditworthy a new customer might be.
  • Easy to set up: We don’t make you jump through unnecessary hoops to get set up. If you use compatible accounting software like Xero, Sage or Quickbooks, the integration is a low-touch, 100% paperless, one-time process.

You may like: How Satago is changing the invoice financing game with embedded finance

To be eligible for Satago invoice financing you must:

  • Be in B2B trade.
  • Get paid on credit terms.
  • Be a UK limited company.
  • Trade with other UK limited companies.
  • Use accounting software that connects to the Satago platform.

If you’re confident that you understand invoice financing well (including invoice discounting and factoring), and you know exactly what you’re looking for, come directly to us to get set up.

To see this in practice, we can take the example of a recruitment agency that was providing temporary staff across the UK, specialising in the property, surveying, construction and conveyancing sectors. Because of the breadth of sectors they served, and geographical spread of their customer base, there was a lot of fluctuation in revenue, creating unwanted cash gaps.

They didn’t need full invoice financing: they needed targeted cash injections on an ad-hoc basis. With Satago’s selective invoice financing option, they could pick and choose where they needed support. Selective invoice financing worked as a great short-term fix, allowing the company to take on new clients and opportunities without worrying about cash flow gaps.

Read the full case study here: Satago Supports UK-Wide Recruitment Agency Future Growth Plans with Flexible Invoice Finance

If you’re unsure of the best solution for you, it might be best to go through a finance broker.

Brokers have knowledge of the whole market and will be able to suggest the best options for you. A good broker will make sure you have the documentation you need for your application and will manage the process from start to finish.

If you decide to go down this route, ask for recommendations to make sure you find a good broker, or check reviews online.

When to use specialist recruitment invoice finance agencies vs regular invoice finance solutions

As you research invoice financing solutions, you’ll see that some solutions offer back-office recruitment services, while others stick to invoice financing. Which one is best for you? If you choose an end-to-end solution including invoice finance specifically for the recruitment industry, you get the added service of the agency handling back-office support and payroll.

When might you choose to use a specialist recruitment factoring agency?

  • You don’t have much time, or you have a small staff: This takes the pressure off you trying to do it all and allows you to concentrate on other areas like securing clients and growing your business.
  • You’re just starting out and want to focus on working with clients rather than managing cash flow.
  • You want to outsource payroll and admin too: Some people just don’t want to do the admin and payroll, and being able to outsource that lets you work on the parts of your business that only you can do.
  • You’d like to hand over control of part of your business to a third party: If you’re working with a third party you trust, sometimes handing over control of parts of your business can be a weight off your mind and might allow your focus to be elsewhere.

While this business finance option is perfect for some recruitment companies, it doesn’t work for others. When does it make more sense to choose a regular invoice funding solution?

  • You just want to test how invoice finance might work for your business, and you don’t want all the additional services an end-to-end finance provider offers.
  • You’re on a tight budget: Specialist recruitment firms are often expensive, taking 4-5% of your invoices to take care of the additional services.
  • You do both permanent and temporary recruitment: Companies offering just invoice financing often prefer recruiters who do both permanent and temporary recruitment. This is because permanent recruitment is generally considered more reliable and stable to lend against.
  • You don’t want to pass over a lot more of your business: Some business owners are happy to allow third parties to control large portions of their business, but others prefer to retain control.

What else can you do with Satago?

While Satago isn’t tailored specifically to recruiters, it’s still a great solution for recruitment companies that offers other useful tools alongside invoice finance, to really help boost your business.

When you join Satago, you get access to a suite of tools including time-saving and fully customisable automated credit control emails, plus risk insight reports that can give you valuable insights into your current and prospective customers and their creditworthiness.

Get paid faster with an efficient credit control system

When you’re a recruiter offering your clients credit terms, getting paid as quickly as possible is vital. People often have very genuine but avoidable reasons for paying late – perhaps they were busy and forgot or were simply disorganised – an invoice reminder sent at the right time can make both of your lives easier.

The Satago platform features a range of automated and fully customisable emails, which are available on all packages:

  • Invoice reminder emails before the payment is due.
  • Thank you emails for clients who pay early.
  • Late payment invoice reminders that automatically include late payment fees.
  • Grouped reminder emails.
  • Monthly statements.

Not only can you customise the email content, but you can tailor the sending schedule and frequency to suit your purposes. While some accounting software provides invoice reminder templates, Satago offers increased customisation options to build more detailed payment reminders.

Automating your credit control emails is so much easier than sending them manually, even if you do use templated email content. This is especially true if you have no dedicated credit control department, or there’s just one person manually sending emails and acknowledging receipt of payments.

A grouped reminder email is ideal if a client has multiple unpaid invoices due, as it combines all the invoices into one email reminder. This means your client isn’t bombarded with emails reminding them about individual invoices.

Read more: Debtor Days Calculator: How to Reduce the Time it Takes to Get Paid

Learn more about new and existing clients using risk insights reports

When you’re starting a new client relationship, it’s useful to have as much information about them as possible up front so you can plan how to approach their credit terms and credit control.

With Satago risk insights you have access to:

  • Credit search: Here you can view reports on existing or prospective clients. You can view an unlimited number of snapshot summaries of clients, but you’ll also have access to a certain number of complete credit reports each year, depending on the plan you choose (Standard = 3, Plus = 25, Premium = unlimited).

    The full credit report includes detailed information on directors and shareholders, financials, mortgages, CCJs, and can also be printed or saved as PDF.
  • Analysis: This dashboard shows:
    • Aged debtors: How overdue your invoices are in increments of 30 days. You can download a CSV or PDF report showing a breakdown of customers and how overdue they are, hyperlinked so you can easily navigate the system and send reminder emails or set yourself a reminder to call or follow up with them at a particular time.
    • Risk segments: How many customers fit into which risk band.
    • Risk concentration: This combines aged debtors and risk segments, so you could look at how many very high-risk customers have invoices 90+ days overdue for example.
    • Largest and oldest open invoices
    • Customer credit summary: How many customers fit into each risk band.
    • Top industry segment concentrations: This shows which clients are in which sector.
    • Highest risk active customers
  • Credit limit breaches: We give each client a recommended credit limit based on the data held, and on this screen you can see if they’ve gone over this limit in overdue invoices. You’re also able to amend this to a custom limit.

Having this information available to you helps you make data-based decisions about how you work with your clients – for example in the credit terms you offer, and the wording and schedule of your reminder emails.

Take control of your cash flow with the valuable tools in the Satago platform

The Satago platform will help your customers pay on time, which in turn helps you to get back in control of your cash flow. And it does all this inside one tool, so there’s no need to juggle multiple pieces of software to manage your business accounts, cash flow and credit control.

You can use Satago to:

  • Learn how risky each client is and get free credit reports in just a few clicks, to help you decide on credit terms and how to plan your approach to credit control.
  • Set up automated invoice reminder emails, customised to your clients in language, schedule and frequency, as well as templating thank you emails and grouping your clients in a way that makes sense.
  • Use recruitment funding whenever you need a cash boost throughout the month.

Get started with Satago recruitment invoice finance

In this article we’ve covered how important invoice finance can be for recruitment companies, to help you bridge the cash flow gap between paying your contractors and being paid by your clients. We’ve also looked at the different options available to you.

If you’re on a tight budget, you want to stay in full control of your business, or you just want to test how invoice finance would work for you, Satago could be a great option, and the extra tools that come as part of the platform will allow you to streamline and improve your cash flow.

Get started with Satago today with a 14-day free trial and see how our invoice finance and cash flow tools can benefit your recruitment company.

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