Client Story: Recruitment Business
Multiple weekly payrolls. Customer payments up to 60 days later. For this Irish recruitment business, the funding needed to keep pace with the contracts it was delivering.
Client snapshot
- SECTOR - Hospitality and Events Temporary Staff Recruitment
- TURNOVER - Approx. €2.5m
- OLD FACILITY - €120k overdraft
- NEW CHALLENGE - Increase in payment cycles to 60+ days
- NEW FUNDING - €500k Invoice Finance Facility
The Business
For more than a decade, this Irish hospitality and events staffing business has supplied temporary personnel to hospitality, catering and events organisations. Its services help customers respond to changing staffing requirements during busy trading periods and major events.
With approximately €2.5 million in turnover, a strong trading history and valuable long-standing customer relationships, the business was continuing to support contract activity across the sector.
Like many recruitment businesses, success created a challenge of its own. Every event or contract required people to be sourced, scheduled and paid long before the customer settled the invoice.
The Challenge
The issue was not demand. The issue was timing
Securing the contract is only one part of the commercial challenge. Staff still need to be paid every week as work is completed and events take place, even when the end customer may not settle an invoice for another 60 days.
The business was experiencing longer customer payment cycles, with average payment times moving from approximately 47 days towards 60 days or more. This meant the business could be funding multiple weekly payroll runs while increasing amounts of working capital remained tied up in unpaid invoices.
Its existing €120,000 overdraft was no longer sufficient to support the scale and seasonal nature of the business. Turning down work could have placed valuable customer relationships at risk, while accepting additional contracts without adequate working capital would have created further pressure
Why the existing funding no longer fitted
The company's strongest asset was not property or equipment. It was the value sitting in unpaid invoices.
As contract activity increased, so did the debtor book. Yet the available funding remained tied to a fixed overdraft facility. The business needed a recruitment finance solution connected to its trading activity rather than a fixed borrowing limit.
For recruitment businesses, this is a familiar challenge. Weekly payroll commitments continue regardless of when customers pay. Funding therefore needs to keep pace with the volume of eligible work completed and invoiced.
Recruitment Finance Solution
Bibby Financial Services Ireland structured a €500,000 Invoice Finance facility, making up to 80% of eligible invoice value available upfront. Bad Debt Protection was also incorporated into the facility.
Unlike the business's existing fixed funding arrangement, the Invoice Finance facility could respond to the value of eligible invoices raised. Funding availability could move more closely in step with contract activity and the operating cycle of the business.
By releasing the working capital already tied up in eligible unpaid invoices, the facility helped bridge the period between delivering the staffing service and receiving customer payment.
The Impact
The €500,000 facility provided substantially more working capital headroom than the business's previous €120,000 overdraft. More importantly, it aligned funding to the source of the pressure: unpaid customer invoices.
This gave the business greater flexibility to meet weekly payroll and operational commitments while waiting for customers to pay. It also provided additional support during busy periods and seasonal peaks, helping the business maintain important customer relationships and consider suitable contract opportunities.
The business did not need more work. It needed working capital that could keep pace with when it got paid.
