When it comes to paying staff wages, many businesses share one logistical problem in common: you receive payments and tally your accounts monthly, but you have staff members that need to be paid weekly. In some industries, things are made even trickier by a lack of clarity concerning the exact date that invoices will be settled. In these instances, you know that you will have the money to pay your staff members; you just don’t know when you’ll have access to it.
For many businesses, this poses some serious HR issues and some major headaches for those in charge of fixing them. If you can sympathise, then recruitment finance offered by companies like Touch Financial might just be the perfect solution for you.
But what exactly is recruitment finance? The answer is simple. Recruitment finance is a branch of invoice financing. Quite simply, a third party lender awards you the capital you need as soon as you receive an invoice, meaning that you don’t have to wait for outstanding debts to be settled by your customers. Typically, you’ll receive 90-95 per cent of the total value of the debt within just one day of its creation, meaning that you always have the money you require to cover your employees’ wages.
So how, exactly, could recruitment financing benefit your enterprise? Read on to find out…
It’s a Low Risk Borrowing Option
Employee wages have to be paid; it’s a simple fact. What’s less simple is how, exactly, you’ll raise the capital you need to cover them. There are lots of borrowing options available to businesses, but recruitment finance is arguably one of the least risky as it’s secured against money that you’ve already earned. This means you won’t have to risk any high value assets, or stake a bet on money that you hope to make but can’t guarantee will actually appear.
It Offers Immediate Access to Large Amounts of Capital
As we already stated, recruitment financing is only one borrowing option for businesses. Luckily, however, it’s one with many benefits, chief amongst them is the amount of capital that you can access. For large businesses, it’s estimated that providers will usually be able to offer you around four times more upfront than a bank loan or overdraft. Additionally, the higher your turnover becomes, the more you’ll have access to, making it perfectly tailored to your monetary needs.
You’ll Receive Administrative Assistance
An additional boon of invoice financing, and one that you won’t receive from any other financing alternative, is that recruitment financing offers practical assistance as well as monetary help. Assuming that you choose a factoring service over discounting options, your provider will take control of your invoice ledger, performing debt collection and accounting on your behalf. This means less work for you, reduced responsibility, and a decrease in overheads thanks to a smaller workload for you and your employees.
Could recruitment finance be just what your business needs?