In this current depressed economic environment, recruiters are facing the difficult challenge of trying to place more candidates in fewer positions.
The fragility of the economy suggests that this pressure is unlikely to ease, with many employers hesitant about taking on new permanent, full-time staff.
While the number of contract and part-time positions is rising, recruitment agencies have to manage longer gaps between paying staff and candidates’ wages and receiving payment from their clients. Understandably, many consider recruitment agencies one of the SME sectors hardest hit by the immense credit restrictions Ireland is witnessing, with the lack of access to working capital driving many out of business.
Healthy cash flow is of course key to the survival of any business but recruitment agencies in particular need to ensure that they have a steady flow of funds. However, with the banks battening down the hatches, where can they turn to for financing? One obvious solution is invoice financing, which allows businesses to access immediate funding against the value of their client invoices.
In this way, invoice finance is an ideal fit for the majority of recruitment agencies and specifically those with a lot of temping business. The funding provided fills the cash vacuum that’s created by the time lapse between the agency paying the temp and receiving payment from the client. Moreover, outsourcing back office functions, such as credit control, as well as ensuring a regular and smooth flow of cash into the agency, also saves recruiters valuable management time, allowing them to concentrate on driving their business through theses most difficult times.
Posted on 10 October 2011