Cash flow will always be an essential part of starting your recruitment business. This becomes one step further for recruiters when dealing with temporary placements; they are often paid weekly, whereas clients will be invoiced monthly. A significant part in ensuring cash flow is in the best shape every month is credit control.
Select the appropriate financing option
Most startup recruitment businesses will require some finance, and selecting the most appropriate one can be the difference between success and failure. The primary way recruitment businesses operate is invoice financing. This is where they can release a certain percentage of the funds from an invoice (up to 100%) when it is raised. This means that the typical 30 days wait no longer applies, which is ideal when paying candidates weekly.
Credit term agreements
Making sure that both parties understand their obligations under the contract is essential. The client and recruiter must agree on contract and credit terms, where both parties are happy, it becomes a very positive relationship/ business. Whether the terms are 30, 60, 90 days or longer, both parties must agree on the terms and understand the steps to take should they fail to do so.
Make sure you have all of the necessary information
Two of the most common reasons a payment will be late is that it was never received or information is incorrect. Therefore, when sending any invoice, make sure all the information on it is correct. This will include the correct agreed cost, addressed to the correct person, and sent to the appropriate place.
How do you want to be paid?
It is critical to make it as simple as possible for a client to pay you on time. Because most companies will be paid via BACS, each invoice should include correct and clear payment instructions. Don’t forget to provide clients with detail/instruction for a payment reference, so you can efficiently allocate your payments.
Pursue payment proactively
Credit control is an aspect that many recruiters, especially startups, may find tricky; however, it is necessary to get paid on time. Many businesses fear that chasing for payment can detract from building good business relationships. As it is a customer-facing role, you need to have the proper credit control team to stop this from happening.
Obtain the necessary assistance
Having the right support will reduce the pressure on new business owners in the first vital years. Finding the proper expert support allows them to focus on core recruitment responsibilities without the added stress of admin tasks such a credit control.
Simplicity’s integrated solution is effective and efficient. We provide an end-to-end service; finance, payroll, invoicing and matching timesheets, and debt collection. Our market-leading team and processes not only take away the burden of your back-office but reduces debtor days and improve your cash flow.
Read our previous blog here: Secrets to recruiting a niche.