Factoring for Recruitment Companies including back office and payroll services
Factoring solutions for recruitment companies including payroll & back office. Top quality service at highly competitive cost from the recruitment experts
Factoring for recruitment companies and agencies has been the fastest growing industry sector for factoring companies as well as the favourite sector for quite a few years as the business is tailor made for invoice finance as invariably most recruitment companies have no other significant assets apart from the outstanding debts owing to them.
Banks didn’t have an appetite to fund fast growing recruitment companies satisfactorily even before the Brumark ruling in 2001 reduced the security offered by their floating charges and what little appetite they had worsened considerably by the more recent credit crunch and since then they haven’t even bothered to try, with most recruitment companies now look straight to factoring or some other form of payroll funding for their financial requirements
An interesting development in recent years is the added value that some factoring companies are offering to recruitment agencies 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. This shouldn’t be confused with other companies that offer back office payroll services and tack on a rudimentary factoring type facility as not only are these companies comparatively expensive to use but they can be a little risky as often they obtain the funding by re-factoring the debts and if they have any sort of problems of their own with their factor this will trickle down the line.
Comparison of factoring costs
We believe that it is pointless and risky using a company to handle both the back office and funding aspects of the business if that same company is just outsourcing the funding to a third party (with or without your knowledge). It also tends to be the most expensive option available with typical charges of 5% or 6% of turnover being levied.
Surely it’s more logical to either factor the invoices directly with a factoring company that will also handle the payroll and back office functions or else 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.
A recruitment contractor turning over £750,000pa can often be paying 5% from a payroll funder but Factoring Solutions who specialize in the recruitment industry would be looking to place this size company with one of two factoring companies whose recruitment finance packages include the actual operation of the payrolls in house and could typically offer rates of half those available from the high profile recruitment finance companies. Additional benefits are no minimum fees and just one month’s notice required which compares very favourably with one of the major names in the industry who incorporate hefty financial penalties in their agreements making it difficult to move away from them without having to pay substantial early termination fees
It is an unfortunate fact of life that many factoring and payroll companies do not deliver the fast, flexible and personal service that they promise and as one of the UK’s oldest established specialist factoring brokers we know which ones actually deliver and we refuse to deal with the rest.
Why not contact us on 01827 707680 for an informal chat on which factoring companies can offer what service to recruitment consultants and the recruitment industry generally. Our services are completely free of charge and come with no obligation at all.