Recruitment companies often use invoice discounting however very few have optimised their facilities in the market place.

Invoice discounting is an ideal solution for temporary recruitment companies that are on monthly payment terms but have to pay wages weekly. The invoice discounting facility can be confidential which means customers are unaware and in comparison to factoring the facility is typically cheaper.

In terms of a recruitment company optimising an invoice discounting facility for both costs and cash generation they should consider the following:

• use the invoice finance market to your advantage and look to see which lenders are hungry for new clients.
• look beyond the headline rates and consider total costs over a 12 month period.
• remember you are part of a preferred sector so don’t be shy to negotiate strongly to reduce rates.
• when looking at cash generation ensure that limits are available at least for your top debtors.
• look at how a concentration limit could limit your funding – this is very important if you have a customer that makes up a large part of your turnover.
• consider raising finance against your perms – some lenders will offer a 70% prepayment against perms.