Factoring for recruitment companies – the cost

We were recently approached by three different recruitment companies all looking for factoring facilities combined with a full back office payroll service.

Their circumstances were all different with the first currently using a factoring company not renowned for the quality of their service, the second was a new start recruiter whilst the third was currently using a payroll company who funded them by effectively re-factoring their invoices with a third party which is an approach fraught with potential problems.

Factoring Solutions only deal with a very small number of factoring companies for recruiters as we only deal with those that handle the payroll in house as far too many subcontract it out to a third party without the knowledge of their client.

The market for recruitment factoring is highly aggressive and we are able to source highly competitive rates from the two factoring companies that are our preferred lenders in the SME end of the market.recruitment factoring solutions

Noted below are three recent enquiries that we had in the same month with details of the rates and terms obtained.

The first was a health and social care company turning over £1m and using an independent factoring company but unhappy with the service due to poor sales ledger administration which resulted in reduced cash flow.

We recommended our preferred factoring company who operate their own payroll in house and who offered a full factoring and payroll facility on the following terms:-

Advance payment 95%

Facility limit £150,000

Service Charge – 2.5%

Minimum service charge – £0

Discount (interest) charge – £0

Minimum Period – One month

Notice period – One month

One week later we were approached by a new start IT contractor who intended to start trading within two weeks and were projecting first year’s turnover of £1m and we introduced this company to the same factoring company as the first case and they were offered a full factoring and back office facility on similar terms.

To complete the enquiries from recruitment companies we had a further call from a recruiter specializing in driver hire turning over £500,000 with just one customer and who had a facility with a well known payroll funder which again wasn’t working too well so yet again we introduced them to our preferred factoring company who offered them a facility on the following terms:-

Advance payment 90%

Facility limit £150,000

Service Charge – 2.5%

Credit insurance fee – 0.4%

Minimum service charge – £0

Discount (interest) charge – £0

Minimum Period – One month

Notice period – One month

Concentration limit – 100% if covered by credit insurance

All three facilities have now been running for over six weeks and the new start IT recruiter is very happy with the way his facility is operating whilst the two that have transferred from other funders claim that the improvement in service levels are noticeable.

Factoring Solutions has been offering an ethical broking service since 1999 and our services are completely free of charge so if you are looking for a competitive quotation without any onerous terms and conditions from one of the factoring companies renowned for the quality of their service please contact us on 01827 707680 without any obligation whatsoever.

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