There are many different invoice finance providers in the UK that offer funding for contract and temporary placements, including banks, factoring companies, and pay-and-bill providers.
Each provider has its own risk policy that determines which debts they can fund, how much funding they will offer, and how they charge for funds in use.
This means that if a recruitment agency’s client base shifts, for example, to overseas placements, working through RPOs, or securing a large PSL agreement with a single debtor, it can affect both the level of funding available and the associated charges.
Switching invoice finance facilities does require time, planning, and, in most cases, additional fees.
However, doing so can provide access to more suitable funding to support the agency’s growth and may also result in long-term cost savings.
Below are some scenarios that may indicate it’s time to consider switching to another invoice finance provider:
INCREASE IN TURNOVER
Pricing for invoice finance is typically based on the level of invoicing processed through the facility. Therefore, if there has been a significant increase in turnover, or if a substantial increase is projected over the next 6–9 months, it would be worth discussing this with the current provider to ensure they can support the required funding and to review the current rates.
LACK OF ANNUAL REVIEW OF CHARGES
Most invoice finance companies review facilities annually and may charge a renewal fee. If the provider conducts this review without consulting the agency or assessing whether the facility still meets the agency’s needs, it may be time to explore other options.
LACK OF FUNDING ON CURRENCY DEBT
Not all invoice finance providers offer funding in foreign currencies. Some are limited to major currencies such as euros or US dollars. If your agency plans to expand into international markets, your current provider may be unable to fund new clients in those regions. Ideally, the debt should be funded in the same currency as the charge rate and pay rate to avoid currency losses on placements.
RESTRICTIONS ON FUNDING
If the debt exceeds the approved funding limit or if unreasonable restrictions are placed on debtors, another provider may be able to fund those invoices without issue. These restrictions may stem from changes in credit policy, funding ceilings, or the appetite of the credit insurer—all of which can vary between funders.
MAYACHI works closely with several invoice finance providers to ensure that the agency gets the maximum funding from their facility by looking at their current and future needs as a business. MAYACHI can provide an analysis of the current facility against another provider to ensure that the costs and service meet the agencies growth needs.
