UK recruitment agencies are owed £6billion in outstanding invoices, according to contract finance provider, Sonovate.
Therefore, in order to keep a healthy cash flow, many agencies use invoice finance to ease the financial pressure caused by late payments. The process of which and the benefits can be read in my last blog – Why not Recruit Invoice Finance.
With so many providers on the market, even if you already use Invoice Finance, it is important to shop around to ensure you are getting the best deal.
Here are the three things you should consider:
What are the hidden costs?
When choosing your finance provider you should obviously expect to pay a minimum amount, often a percentage of the invoice, to the contractor. However, you should also check the contractor’s conditions as some will also expect you to pay for:
- A service fee
- Insurance (if factoring)
- To leave
Be careful not to fall for headline figures and consider all of the costs involved before choosing your provider.
What are the terms and conditions?
Before you enter into a contract with a provider, make sure that you are aware of their terms and conditions.
It is best to avoid entering into lengthy contracts where you are penalised for leaving.
Check what the notice policy is and whether charges are applied to renew, review or increase the size of your funding option. Many providers do not do this, but a few do so do not get caught out.
Will the finance provider save you time?
Traditionally, the processing of contractors was cumbersome and time consuming for agencies, but with the advancement in technology there are now modern finance providers that make the process simple. They are even able to link with your other financial software to save you time and the headache of:
- Credit control
There are now many examples of finance providers that can achieve the above, such as Sonovate and Market Invoice. For example, Market Invoice links with Cloud Accounting software, such as Xero. In this way, you are able to keep everything in one place, save time on processing invoices and have a greater handle on your whole finance operation.
For further advice or information on the best finance provider for you, contact our Corporate Finance specialist, Roy Butcher at firstname.lastname@example.org.