Challenge: Create a business based on paying and managing contractors without any liquidity.
Solution: Specialist recruitment funding and tech.
Result: Successful business created with revenue set to double from year one.
Nathan and Duncan started CAPU Search in March 2021. The company is a specialist in permanent and contract recruitment in the medical technology and diagnostics industries.
The two friends knew they were launching a recruitment company in the midst of a pandemic and were a little hesitant to take on contract work.
“Some in the industry know there are payment challenges with contract work, so stick to permanent recruitment. They can’t handle the finance.”
The pair were also wary of software used by most recruitment companies. They’d previously worked together for a blue chip recruiter, and experienced a nightmarish timesheet and finance package. “It was chaos!” recalls Nathan. “I worked as IT support for two days a week. The other three days there were issues with contractors. They couldn’t log in, passwords weren’t sent.”
The solution – specialist recruitment funding and tech
They wanted CAPU to be different. From day one they partnered with Sonovate for invoice finance and timesheet management.
So what do they think?
“Sonovate kick-started our company,” says Nathan. “Rule one of our industry is contractors must get paid on time, and as a startup we had no liquidity. Sonovate makes sure our contractors get paid on time, no matter how fast the client pays.”
Most invoices are settled early. Nathan explains: “If contractors get their timesheet approved by Tuesday morning they are paid by the end of the week. They’re not used to getting paid so quickly, so it’s like we are giving them a bonus. They say, ‘Oh wow! You guys do that?’ It’s a great retention tool for us as they know they are working with a reliable company that always pays on or ahead of time.”
Time normally spent chasing invoices is reduced:
“We knew from the outset we didn’t want to be spending our week looking after finance. Banks couldn’t help, they just don’t offer the same sort of flexibility and responsiveness as Sonovate. Working with Sonovate takes away all the fear of running contracts.”
The relationship is more than finance. Placements are managed by CAPU using the Sonovate portal. It’s a complete package for handling contractors. “We log onto the portal to see all our placements,” says Duncan. “It tells us the timesheets that have been submitted, what status each is at, approved or not approved, and the end dates for placements finishing so we can see which jobs may need extending.”
The pair believe the Sonovate platform is a gamechanger compared to any package they’ve seen in the recruitment world:
“In my previous company it would take a week or ten days for internal compliance to release a contract,” recalls Nathan. “With our current system, if it’s a company we’ve worked with before and credit is approved, we can process a contract the same day. That reduces the risk of losing people to other contracts. We get a reputation for being able to act quickly, which is really valuable.”
Sonovate integrates with all major accounting packages. CAPU uses Xero to manage invoices and finance, and the outsourced accountants find it a powerful combination. “Our accountants have access to Sonovate,and are able to pull-off reports. An invoice in Xero is generated for each timesheet. For us too, managing finances is easier. I pull-off quarterly intermediary reports from Sonovate that we have to submit to HMRC. That is usually a time-intensive task made much easier by Sonovate, as we get the right information, without needing to format it. I’ll be honest, I didn’t even know that existed before we started!”
The partnership with Sonovate has gone from strength to strength. “We like the customer support,” says Nathan. “When you have a query you call and within two rings you are talking to the same three or four people who you normally talk to. And they solve it in an instant.”
The result is a company able to grow long-term relationships with clients and contractors:
“Paying on time is so important in our industry,” says Nathan. “Contractors are now accustomed to our speed. Sometimes we’ll have a contractor who files a timesheet after the Tuesday deadline and mentions they won’t get paid at the end of the week. We say ‘Hang on, everyone else pays in a month.’ That’s the impact we’re having.”
The result – Successful business created with revenue expected to double from year one
CAPU is now looking to double its revenue year-on-year, and can place more contractors safe in the knowledge that late-paying clients can’t disrupt cash-flow.
“Sonovate is so easy to use,” concludes Nathan. “We work with companies from two-person university spin-outs to blue chips, and we’re seen as decision makers, we are agile, and we do what we say. Right now we are in a position to grow as much as we want.”
Want to find out how Sonovate can support your recruitment business with its revenue and growth objectives?