Specialist finance

What is recruitment finance?

Recruitment is one of the most fast-paced industries in Australia. Every day, thousands of candidates are hired, fired and moved around. It's also an industry with notoriously long payment cycles. This causes a lot of stress for recruiters and can make it challenging to stay afloat financially or grow your business. Recruitment finance is a simple way recruiters can access the money they need to get back on track with work as soon as possible.

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What is recruitment finance?

Recruitment finance is a way of getting paid faster and financing your business. With recruitment finance, you borrow money by using your existing unpaid invoices as collateral. In this way, you can access cash flow in the form of outstanding invoices that will eventually pay out.

Why invoice finance is ideal for recruiters

Recruitment agencies deal with a lot of invoices, use precise timesheets, and need constant cash flow. This makes them ideal for invoice finance, which lends recruiters the money tied up in unpaid invoices (which is then paid back when your clients pay their invoices).

There are two types of recruitment agencies: temporary and permanent placement. Temporary placement has a bigger impact on cash flow because the candidate remains on the payroll of the recruiter. In order to pay salaries, an invoice must be sent to the debtor, creating a need for invoice finance. In Australia, there is a growing trend of invoice finance providers offering flexible and affordable solutions to small businesses.

Small businesses are often overlooked by banks, which generally only cater to larger businesses with a track record and financial history. This can be a considerable problem for recruiters, who often have to wait months before seeing any money from a placement or contract. Invoice finance offers a solution for this issue by providing working capital as an invoice that can be used to pay down debts or invest in new business opportunities.

Disclaimer: always refer to professional advice. The information presented here is purely indicative and not intended as advice. Always consult a legal or finance professional.

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