What is Invoice Financing?
Invoice financing is a simple way for businesses to improve their cash flow by selling their invoices and getting cash right away. For the recruitment industry in particular, having reliable cash flow is crucial. This is because much of the time candidates are paid on a weekly basis, but a recruiter will only invoice monthly. So, depending on payment terms, this could leave an agency waiting for payment anywhere between 30 to 60 days, or longer!
Good cash flow, when the going is good, can help agencies grow but it is vital during rough periods too. The pandemic has been really difficult for small businesses and many recruitment firms are thankful for invoice financing options in the era of Covid-19.
If you are new to invoice finance or even if you are thinking of changing your provider, how do you choose? What are the things you need to look out for? Well, here are 7 qualities any competent invoice finance provider should possess.
Things change- 2020 has taught us that the world can be unpredictable. To deal with that, you need to have the ability to be flexible. So even if things are a little rough or something unexpected comes up, then you can get hold of your cash quickly. Invoice finance should provide your business with the cash it needs to get things done. It should also be flexible to support business growth or enable you to survive the more difficult periods.
1PS make sure the finance offered is as flexible as possible- we do this by providing 100% profit from your invoices.
With fees and hidden costs invoice financing can mean companies will lose profit from the orders or services they provide. This can be a financial hit many agencies have to take if they can’t afford to self-fund or wait for the cash to be collected.
Key things you’ll need to know when choosing a provider are- How you’re billed? When you’re billed? What you’re billed for? And are there any additional or hidden costs?
With 1PS there are no set up fees, service fees or hidden costs.
3. Hassle Free
Invoice finance should make your life easier and simpler. You shouldn’t have to worry about restrictive credit checks and guarantees, long contracts and prolonged notice periods. You do not want barriers when applying for funding.
No need for credit checks or guarantees to use 1PS.
As we mentioned above simplicity is the name of the game, and this applies to more than just the finance side of things. Simple processes are essential too. You don’t want to end up putting more time and effort into the workload than before! If the system is difficult to understand and impractical to use, it’s a complete waste of time.
1PS have created an easy-to-use online portal which removes the admin burden of timesheets and invoicing and manages placements from beginning to end.
Many recruitment firms look to use an invoice finance provider to enable them to establish or grow their client base. The idea is that they provide you with the financial freedom and support you need. If a solution is too rigid and restrictive an agency will not be able to scale. Make sure that fees, charges and additional costs don’t limit your businesses growth.
At 1PS we make sure our fee structure doesn’t hold you back and, simply put, there are no additional fees.
6. Customer Support
You need to investigate and be sure of the customer support you’re getting. You’ll need to know what support is provided as standard and what will incur additional costs.
It’s also useful, but not critical, to note if the provider has any experience in your particular industry or sector. This will help them to quickly identify issues that are specific to your industry or pre-empt issues they know may arise.
1PS prides itself on excellent customer service. We bring together highly experienced professionals from the finance and recruitment industries. We offer a unique understanding and perspective of the support services required by a recruitment agency.
7. No Long-Term Commitments
Agencies can often get locked into extensive minimum contract periods when signing up for invoice funding. If a company wants or needs to exit the agreement early there will often be a high cancellation cost. Make sure you know what you’re getting into before you sign up.
1PS has no minimum contract period and we do not charge leaving fees.
Hopefully, you’ve found this a useful guide to choosing an invoice finance provider. However, if you’d like more information on what to look for when choosing a provider, or you want to know more about 1PS, our own leading funding solution, please get in touch.