How to Solve Late Payments in Recruitment?
Earlier this year we exposed the scale to which outstanding payments from invoices are clipping the wings of agencies running contractors.
Research from Sonovate revealed that the average agency in its first year of business alone was already owed in excess of £50,000 with that rising to over £100,000 after four years.
Despite promises, not enough has been done by the government to clamp down on larger businesses in particular, who freely abuse the agreed payment terms in the knowledge that agencies depend on business returning to their door.
The finance available to bridge the deficit between paying contractors weekly and receiving the balancing payment at a later date continues to be severely restrictive and limiting for agencies.
Financiers still pigeon-hole smaller agencies and start-ups, or even those with fast growth plans or lots of business concentrated with a single client as high-risk, and place limitations on the finance their willing to give.
Cashflow is the lifeblood of all agencies placing contractors and is vulnerable regardless of agency size as the bridge needed grows in-line with the contract book.
Which is why any financier that can’t guarantee its continuity or even restricts it, is needlessly preventing the growth of recruitment.
Simply because invoice finance products have been the accepted avenue for three decades does not mean they’re effective. Agencies placing contractors need finance to fit not finance they have to fit to.
Removing cashflow worries
After spending over two decades in the field as recruiters and experiencing the frustrations first hand, Richard Prime and Damon Chapple founded Sonovate as a solution to the difficulties of financing and managing contractors.
“We know how limited invoice finance solutions can be and that the reality of being offered cashflow of up-to 90% of the invoice amount is rarely real.”
Sonovate’s finance is unique in that it guarantees fluid cashflow with 100% of the invoice being paid the week after an invoice is raised and uses technology to process the whole contractor management cycle.