How is debtor finance the hero in disguise for recruitment agencies?

March 7th, 2016

It can be intensely frustrating when clients wait weeks and weeks to pay what they owe.

When you have spent time and resources by providing employees to a company in need and they don't pay the required amount for more than a month, it can take a toll on your recruitment agency.

But what can be done to combat this?

Debtor finance: The hero you need

When searching for ways around unpaid invoices, don't go past debtor finance.

As the accountant of a recruitment firm, you will always be looking for ways to increase the cash flow and thus working capital for your employer. Dun and Bradstreet reported in December 2015 that invoice payment times have fallen to a record-low 44.1 days. A far cry from the first quarter rate in 2009 of 57 days, 44.1 is still well over a month of waiting for the money your agency is owed.

When searching for ways around that, don't go past debtor finance.

Taking on the invoices that your clients are yet to pay, experts in the field such as the team at Earlypay will pay you a percentage of the total amount owed to your recruitment agency. This injection of capital allows you to move in the market without waiting for clients to be compliant.

Taking advantage of market conditions

When there is an opportunity for your recruitment agency to grow, as the accountant, you will be expected to have a solution to cash flow problems. Such an opportunity presenting itself will potentially cost money, and having the required working capital to take the next step in the evolution of your company could be very advantageous.

Looking towards the market at the moment, debtor financing has made leaps and bounds in popularity as more and more businesses realise the benefits of having instantly available cash. The Debtor and Invoice Finance Association reported that the total turnover for 2015 was $64.4 billion - a 2.8 per cent increase over the 2014 figure.

The Australian government Department of Employment predicts that the employment rate in Australia is set to fall over the coming months. A February 2016 monthly leading indicator continues a seven-month trend of drops, which shows that in July 2015 there was a noticeable peak in the rate of employment. As the indicator drops, the rate of employment is also projected to fall.

In order to capitalise on the falling market and provide businesses in need with workers, getting ahead with temporary labour finance is a great option. Talk to Earlypay and see how its solutions could help your firm balance the books.

 

NSW & ACT
Level 11, 201 Miller St.
North Sydney NSW 2060
VIC, SA, TAS & WA
Level 13, 390 St Kilda Road
Melbourne VIC 3004
QLD & NT
Level 10, 410 Queen St.
Brisbane QLD 4000

© 2021 All rights reserved.