Recruitment finance is a way of paying for permanent staff in instalments over a period of time. It’s not an uncommon practice, with many recruitment agencies using the process to fund the salaries they take from their clients. However, not many businesses understand how this type of financing works and why it’s such a good idea for them.
- What is recruitment finance, and how does it work
Recruitment finance, also known as invoice finance and factoring, is a way for companies to pay their suppliers in instalments.
How does it work?
The company provides its invoices to the bank or funder, who agrees to buy them at a discount. The buyer pays the supplier directly from this discount, which reduces the amount of cash needed upfront by the business. This means they can continue trading while waiting for payment from their clients.
- The benefits of using recruitment finance to pay for your permanent staff
- The benefits of using recruitment finance to pay for your permanent staff
Using recruitment finance to pay for permanent staff can help you grow your business in a number of ways:
- It provides the option to hire more staff, which will lead to increased revenue and profit growth.
- It allows you to invest in training programmes that improve employee productivity, thereby increasing overall efficiency and reducing costs.
- It gives flexibility on how much money is spent on other areas such as benefits and incentives or rewards.
- How to choose the right recruitment finance company for your business
You should choose a recruitment finance company that is regulated by the FCA. It’s important to know that the FCA sets out rules for all financial services companies in the UK, including recruitment finance.
You can find out if a company is regulated by looking at its website or asking them directly.
Next, check their track record. Find out how long they’ve been in business and what their client base looks like. If you’re not sure about anything on their website, ask them directly in an email or phone call – but try to avoid cold calling someone on LinkedIn as this could get awkward!
Finally, ask yourself if you’d be happy working with this person if they were your colleague? Would they be fun to have around while working through problems and making decisions together? Or would they bring down morale with negative comments or poor behaviour?
- Things to watch out for when choosing a recruitment finance company
When choosing a recruitment finance company, there are several things to look out for. Firstly, make sure that the company is authorised and regulated by the Financial Conduct Authority (FCA). Secondly, check whether the company is authorised by the National Credit Register (NCR). And thirdly, check whether it’s been authorised by HM Revenue & Customs (HMRC).
- How to make the most of your recruitment finance agreement
- Make sure you use the money to pay for permanent staff
- Make sure you’re getting a good deal
- Make sure you’re paying the right amount
- Make sure you’re paying the right people
- Make sure you aren’t paying the wrong people
Conclusion
Hopefully, you now have a better understanding of recruitment finance and how it can benefit your business. If you’re still not sure about what type of recruitment finance is right for your business, then contact us today! We have years of experience helping companies like yours make the most out of their recruitment finance agreements. Contact us today to find out more.
