Recruitment company factoring
Recruitment companies have long been one of the largest factoring industry sectors as the business is tailor made for factoring with invariably the recruitment company having no other assets except debtors. Banks were unable to fund fast growing companies satisfactorily even before the Brumark ruling in 2001 but since then they haven't even bothered to try and a host of alternative finance companies have sprung up to fill this gap.
One of the interesting developments in recent years is the added value that some factoring companies are offering to recruitment companies in the form of a complete payroll and back office service in addition to the normal funding available by factoring.
There are other companies that offer a back office payroll service and some of them even tack on a rudimentary factoring type facility but these can be a little risky as often they obtain the funding by factoring their own debts and if they have any sort of problems of their own with their factor this will trickle down the line.
Not only can it be risky to use 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% or more of turnover being levied
It would seem more logical as well as cheaper to either factor the invoices directly with a factoring company and outsource the payroll side to a specialist bureau or to handle the payroll in house (or use the services of your accountant) as either of these methods should be cheaper.
Typical costs for a recruitment company turning over £750,000 would be as follows and show how expensive the “All in one” route can be :-
| All in One Bureau Fee at 5% | £37,500 | ||||
| Factoring Commission at 1% | £7,500 | ||||
| Factoring Interest at 7.5% pa | £6,550 | ||||
| Specialist Payroll Bureau at 1% | £7,500 | £21,550 | |||
| Saving | £15,950 |
We have relationships with back office companies as well as the major factoring companies so why not contact us for an informal chat on which companies can offer the most appropriate service for your individual requirements. Our services are free of charge and come with no obligation at all.