Paying weekly,
invoiced monthly
Recruitment has the cleanest cash flow problem of any sector, and the clearest answer — which is not usually business loans at all. You pay contractors weekly. You invoice clients monthly and wait thirty to sixty days. Every new placement makes the gap bigger, which means growth is the thing that empties the account.
No credit check to enquire.
The mechanics, and what funds them
- The faster you grow, the worse it gets
Place ten more contractors and you have ten more weekly payrolls to fund before a single extra invoice is paid. A profitable desk can run out of cash purely by succeeding, which is why so many agencies stall at the same size.
- Your ledger is the asset
You are owed money by other businesses on agreed terms, which is exactly what invoice finance is designed for. It typically advances 80% to 90% of each invoice as you raise it, and the facility grows as you place more, which a fixed loan cannot do.
- Temp and perm are different problems
Temp and contract is a weekly payroll gap and fits invoice finance. Permanent placement is a one-off fee, often with a rebate period, and lenders treat it more cautiously because the invoice can be credited back.
- Factoring may actually suit you
Most sectors prefer confidential discounting. In recruitment, letting the provider run collections can be the point, because chasing timesheet-driven invoices across dozens of clients is a job in itself.
Questions from this sector
How quickly can a facility be in place?
Longer than a loan. The provider is underwriting your debtor book and usually takes a debenture, so expect weeks rather than days for a first facility. Worth starting before you need it.
Will my clients know?
With factoring, yes, because they pay the provider. With confidential discounting, no. Discounting costs more and providers set a higher bar for it.
What if a contractor is paid but the client disputes the invoice?
You have still paid out. Most facilities are with recourse, so the advance comes back to you if the debt goes bad. This is the single most important clause in the agreement.
Can a new agency get this?
Harder, but the ledger matters more than your trading history, so a young agency with good-quality clients is a better proposition than its filed accounts suggest.
Fund the payroll gap
Tell us roughly what you invoice and on what terms, and we will tell you what fits.
Get my options