The recruitment cash flow problem
Temporary staffing is fundamentally a cash flow business. You pay your temps weekly, but your clients typically have payment terms of 30, 60 or even 90 days. For a growing agency, this gap widens rapidly as headcount increases. A single large client on 60-day terms can tie up hundreds of thousands of pounds in unpaid invoices at any given time.
Invoice finance bridges this gap, advancing funds against your outstanding invoices so you can meet your payroll obligations without drawing on expensive overdraft facilities or personal funds.
How recruitment invoice finance works
Recruitment invoice finance works in the same way as standard factoring or discounting, but with features designed for the sector. Lenders understand the high volume of low-value invoices typical of a temp desk, and the importance of advance rates being high enough to cover weekly payroll commitments.
Most specialist recruitment lenders offer same-day or next-day funding, advance rates of up to 90%, and online portals designed for rapid invoice submission. Some offer integrated payroll funding solutions that combine invoice finance with payroll management.
Permanent placement invoices
Permanent placement invoices are typically eligible for invoice finance, subject to a rebate risk assessment. Lenders will want to understand your rebate terms (the period during which a fee is repayable if a candidate leaves) and will typically discount or exclude placement fees during the rebate period.
Eligibility
- UK registered recruitment agency or staffing business
- B2B client base (invoicing UK businesses for labour supply)
- Minimum 3 to 6 months trading history with some lenders accepting earlier-stage agencies
- Documented timesheet or placement records to support invoices
Frequently Asked Questions
Can a startup recruitment agency access invoice finance?
Some specialist recruitment lenders will consider agencies from as early as 3 months of trading. The key requirement is verifiable invoices, creditworthy clients, and evidence of placed workers or completed assignments.
How quickly can I fund payroll using invoice finance?
With an established facility, funds are typically advanced within 24 hours of submitting invoices. Some specialist providers offer same-day funding for approved invoices submitted before a cut-off time.
Are rebate clauses on permanent placements a problem?
Lenders are familiar with recruitment rebate clauses. They will typically exclude fees during an active rebate period from the eligible ledger, or apply a conservative advance rate to placement invoices.