The Best Invoice Factoring Services for Recruitment in 2020

By Rob Binns | Senior Writer | Updated: 3 November 2020

The invoice factoring services bringing the X factor to your recruitment agency


Invoice factoring service Best for Star rating
Hitachi Capital Flexibility and innovation Hitachi Capital review
Optimum Finance Bespoke invoice finance solutions Optimum Finance review
Funding Options Small businesses Funding Options review
Touch Financial Support Personalised service Touch Financial review
Bibby Financial Services Business support Bibby Financial Services review

Running a recruitment agency is a balancing act. You need to manage your in-house teams, make sure contractors get paid on time, and keep on top of the competition, all while juggling the growth of your business. So when you have to worry about chasing up unpaid invoices, you’re bound to start dropping a few balls.

Invoice factoring gets rid of the hassle and guesswork of following up late payments. You can get 85–100% of the value of your outstanding invoices paid up front, almost as soon as you raise them. This means you can free up time to grow your business, and get a quick cash injection when you need it.

Struggling to free up funds to implement your next strategy? Can’t wait weeks for that big client payout? Invoice factoring puts your funds back in your hands, and helps kickstart the growth of your business.

Luckily, there are several invoice factoring services that specialise in financing for UK-based recruitment agencies. Here are the five we think do it best.


Best invoice factoring for recruitment

We compared a huge range of invoice factoring services in the UK. Our criteria took in each company’s key offerings, level of professionalism, and online customer approval ratings.

Above all, though, the companies below are here because they’re the best at catering to the specific needs of the recruitment industry.

Our best invoice factoring services for recruitment are Hitachi Capital, Optimum Finance, Funding Options, Touch Financial, and Bibby Financial Services.

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Hitachi Capital

Best for flexibility and innovation

Hitachi Capital comes with a big name, big ideas, and over 35 years of experience financing recruitment agencies. It offers optional credit protection to safeguard your cash, meaning you’re protected in case your clients go bust and can’t pay up.

More of a ‘hands-on’ type? You can handle your own credit control. And if you’ve still got doubts, there’s a six month, no-obligation trial period to dip your toes in. When you factor all this in, Hitachi Capital comes out as one of the most flexible invoice factoring services on the market.

And to top it all off, it even has its own cloud-based admin solution, ‘Inspired Payroll.’ This is a dynamic payroll management and invoicing software that helps streamline your workload. Not only is it inspired, it’s tailor-made for recruitment agencies, and will set you back just one transparent fee.

Pros:

  • Offers up to 100% (NET) or 90% (GROSS) of the invoice value
  • Full back office administration system available
  • Innovative approach specific to recruitment businesses

X Cons:

  • Not suitable for small businesses or startups with lower annual turnover
Did You Know?

There are around 40,000 recruitment agencies in the UK.


Optimum Finance

Best for bespoke solutions

Whether you want to handle your own debt collection or have an experienced team do it for you, Optimum Finance has you covered. Optimum offers a range of services on top of factoring: this includes invoice discounting, a ‘Client Handles Own Collections’ (CHOC) feature, plus extra options to protect you from (brace yourself!) bad debt. Optimum Finance can also mix and match these features to create a package that’s as unique as your business.

With Optimum Finance, you’ll also get ‘E3.’ Nope, that’s not the postcode in London’s East End – it’s Optimum’s advanced online system. From there, you can manage your account in real-time; 24 hours a day, all year round.

Are Optimum’s custom solutions up your alley? Find out if your recruitment agency could benefit from invoice factoring. Click here to compare quotes from leading providers.

Pros:

  • Highly experienced team
  • Flexible and innovative approach to invoice factoring

X Cons:

  • Advance of 85% is less than other invoice factoring providers
Testimonial
Testimonial user photo
Nathan Ferris Company Director, Darcy Associates
2019-09-25

“Invoice factoring is essential for a recruitment agency – we have to pay workers before we get paid ourselves. It allows us to have sufficient cash flow so that we can continue to grow the business. One of the key things with Optimum at the moment is that their customer service is absolutely spot on. We get the highest quality service, and we know that we can rely on what they say.

They can provide us with the facilities that we need [and] the credit limits that we need, which means we do have access to cash flow and it doesn’t stunt the growth of the business.”


Funding Options

Best for small businesses

If your business is small and this is your first foray into the world of invoice factoring, Funding Options is a perfect place to start. In its own words, it’s “helping the small walk tall,” empowering hard-working businesses to reach their potential. Endorsed by the British Business Bank, it’s an award-winning brokerage with a friendly team dedicated to helping your business grow. Funding Options works with recruitment agencies all over the UK. It’ll match the needs of your SME with one of over 50 providers to make sure you get the cash injection you need – fast.

Funding Options has a quick, friendly, and genuine approach to customer service. The proof? A whopping 99% of its customers gave it four or more stars on Trustpilot, for an ‘Excellent’ overall rating. When you have over 400 reviews, that kind of score isn’t easy to achieve!

Pros:

  • Superb customer approval ratings
  • Friendly staff talk you through the recruitment finance solutions best suited to you

X Cons:

  • Funding Options doesn’t provide the actual loan; it’s a broker that connects you with providers that will

Touch Financial

Best for personalised service

As the largest invoice financing brokerage in the country, Touch Financial helps secure funding for businesses of all sizes. It’s been servicing the needs of recruiters for decades, so you can be sure it’s in touch with the demands of the industry. Touch Financial offers your recruitment agency a no-cost, no-obligation chat. It assigns you your own dedicated consultant for quality, personal service. And its online cost calculator gives you a great idea of both the advance and fees your recruitment agency can expect.

Oh, and we forgot the best bit: up to 100% of your invoice value upfront, and within 24 hours. However, as with all invoice factoring services, what you can expect to pay in fees will differ based on how much you’re making and what you’re owed.

For the deal that best suits the size and needs of your business, take a minute to explore our quick quote-finding form.

Pros:

  • Experience sourcing funding for thousands of businesses in the UK
  • Strong customer service ratings

X Cons:

  • It’s a broker, so won’t be the only company you deal with in your funding journey
Testimonial
Testimonial user photo
Lloyd Gordon Managing Director, ERP Focus
2019-09-25

“Starting my recruitment business, I knew I needed help with factoring, but I didn't know who to call or who was good or bad. Touch Financial took that pain of phone calls away. Within two days, I had four suppliers of factoring/invoice discounting services in my office for meetings.”

“It came down to personality in the end. Ultimately it was Touch Financial that made this happen for me. They also kept in touch throughout the whole process, and I really got an impression that they cared. Even when the deal was signed, they still kept in touch to make sure I was happy with the whole process.”


Bibby Financial Services

Best for business support

What does Bibby Financial Services do best? Offer invoice factoring that’s tailored to the recruitment industry. Bibby helps you manage compliance, breaking down baffling acronyms and helping you get to grips with your obligations. This helps you spend less time fretting over data protection and agency workers regulations, and more time growing your business. And above all, Bibby gives you all you need to free up that all important cash – including up to 100% of the invoice value – and shed that heavy administrative burden. Liberating!

Bibby is also paired with the UK’s leading pay and bill provider, to offer you reliable back office support. Cloud-based software also means you can access key info about your business anytime, anywhere.

For the deal that best suits the size and needs of your business, take a minute to explore our quick quote-finding form.

Pros:

  • Excellent online customer approval ratings
  • No long-term contracts

X Cons:

  • Less suitable for smaller businesses

Expert verdict

If you’ve read this far, you’ll agree that invoice factoring can bring big benefits to your business. It’s ideal for the long payment terms common to the recruitment industry. The verdict? Invoice factoring for recruitment is less a question of if, and more a question of when – and who.

While all the providers here excel in what they do, the right one for you will depend on the unique qualities of your recruitment agency. That means size, turnover, and the value of that invoice backlog clogging up your files. To find your ideal invoice factoring company, click here to receive tailored quotes.


Benefits of invoice factoring for recruitment

You probably already have an idea why invoice factoring services are so ideal in the world of recruitment. But to help you remember, here’s a quick recap:

✔ Reduce your staff’s administrative workload

 Encourage prompter payments from your clients

 Curb the effects of bad debt

 Receive expert advice from industry pros

 Use increased cash flow to grow your business

 Improve your planning for the future

 Tailor finance solutions to the needs of your business


FAQs

Invoice factoring vs. invoice discounting. Explain?

Invoice factoring involves turning over responsibility of your unpaid invoices to a third party. This service takes charge of chasing up the cash you’re owed, while you sit back and put your feet up. Because of the company’s more ‘hands on’ approach, though, your customers will know you’re using factoring.

Discounting is largely the domain of larger companies. It’s similar to factoring in that you’re getting quick cash for outstanding invoices. However, you’ll chase your own payments, keep control of your sales ledger, and process your own invoices. The bonus? Your customers won’t even know there’s a third party financier involved.

Will an invoice factoring service protect me from bad debt?

Worried your customers won’t pay up, or might (gulp) go under before you receive their money? If there’s a chance your debtors might never be able to settle up, bad debt protection might be right for you.

What it means is that the factoring company takes on full responsibility for the value of your invoice. The downside? It’ll cost you, because there’s more risk for the factoring company. You’re also more likely to get tied down to a longer contract.

You talk about brokers and lenders. What’s the difference?

Brokers like Touch Financial and Funding Options act like middlemen. They’ll connect you with a lender after consulting with you to get a sense of your needs. What they don’t do is actually lend you the money for your unpaid invoices. Instead, brokers generally take a fee from the invoice financing services in exchange for the introduction.

Rob Binns Expert Market
Rob Binns Senior Writer

Rob writes mainly about the payments industry, but also brings to the table industry-specific knowledge of CRM software, business loans, fulfilment, and invoice finance. When not exasperating his editor with bad puns, he can be found relaxing in a sunny (socially-distanced) corner, with a beer and a battered copy of Dostoevsky.

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