£250,000 Invoice Finance Facility for a Recruitment Business
A growing UK recruitment business required additional working capital to support increasing placement volumes and provide greater flexibility between paying its workforce and receiving payment from clients.
With revenue increasing, the business wanted a funding structure that could grow alongside its sales rather than relying on repeated applications for short-term borrowing.
The Business
The company operates within the recruitment sector, providing temporary and contract staffing solutions to businesses across the UK.
As the company secured additional clients and increased the number of workers it supplied, its turnover continued to grow. However, this also increased the amount of working capital required to support day-to-day operations.
The Requirement
The nature of temporary recruitment meant that workers needed to be paid regularly, while commercial customers could operate on considerably longer payment terms.
As placement volumes increased, so did the gap between the company’s outgoing payroll commitments and incoming customer payments.
The business required a facility capable of providing up to £250,000 of additional working capital while giving management the flexibility to continue pursuing new contracts.
The Challenge
The company’s growth was creating the funding requirement.
Taking on additional contracts increased revenue, but each new placement could also increase the amount of capital tied up in unpaid invoices.
A conventional fixed-term loan could provide an immediate injection of capital, but it would not necessarily increase in line with the company’s future sales.
The objective was therefore to identify a funding structure better aligned with the company’s debtor book and ongoing growth.
The Funding Solution
An invoice finance facility with funding availability of up to £250,000 was structured around the company’s eligible customer invoices.
Rather than waiting for customers to settle invoices according to their normal payment terms, the facility enabled the business to access an agreed proportion of eligible invoice values earlier.
This provided additional liquidity to support payroll and other operating requirements while allowing available funding to move more closely with the company’s sales activity.
The Outcome
The facility strengthened the company’s working capital position and reduced the pressure created by the timing difference between payroll commitments and customer payments.
With greater liquidity available, management could continue pursuing new contracts without the same requirement to fund increasing placement volumes entirely from existing cash reserves.
The structure also provided a funding solution capable of supporting further growth as the company’s eligible debtor book increased.
