Pay your temps Friday. Without waiting on clients.
Recruitment invoice finance covers the gap between weekly payroll and clients who pay in 30 to 60 days. Compare invoice finance and Pay & Bill options from a panel of UK lenders.
No obligation. Your customers won’t be contacted as part of the comparison process. Facilities from £25,001.
- Client invoices raised
- £48,000
- Temp payroll due Friday
- £38,400
- Clients pay on
- 45-day terms
- Funding released this week
- £40,800
- Payroll covered
- Yes, with headroom
What is recruitment invoice finance?
Recruitment invoice finance is funding for staffing agencies against the invoices they raise to clients for temporary and contract workers. It releases cash each week so agencies can pay workers on time without waiting for clients to pay.
Temp and contract recruitment has a built-in cash gap. Workers expect to be paid weekly, yet clients commonly pay on 30, 45 or 60 day terms. Every new placement widens the gap, so the more successful the desk, the more cash it needs.
Recruitment facilities are built around timesheets. Once a timesheet is approved and invoiced, the lender advances most of the invoice value, often in time for the next payroll run. Facilities can be run as factoring, where the lender collects, or invoice discounting, where your team does.
Pay & Bill goes further. The provider processes timesheets, runs payroll for your temps, invoices your clients and collects payment, then passes your margin back to you. It suits start-up and growing temp desks that want the back office handled.
How recruitment funding works
The cycle runs weekly, in step with your payroll.
- 1
Temps submit timesheets
Hours are approved by your client, usually through a timesheet system or portal.
- 2
You invoice the client
An invoice is raised for the approved hours at the agreed charge rate.
- 3
Funding is released
The lender advances an agreed percentage, in time to fund payroll.
- 4
Temps are paid, clients pay later
You pay workers on schedule. When the client pays, the balance is released less fees.
Which agencies it suits
Recruitment is one of the sectors invoice finance lenders know best. Most facilities are aimed at agencies with a temp or contract book.
Usually a good fit
- You place temporary, contract or interim workers billed weekly or monthly
- You are launching or growing a temp desk and payroll is outpacing cash
- Your clients are businesses or public bodies on standard credit terms
- You want payroll, invoicing and collections taken off your hands (Pay & Bill)
- You are moving from a perm-only model into contract recruitment
Worth checking first
- Your income is mainly permanent placement fees, which fewer lenders fund because of rebate periods
- Timesheets are not signed off by clients before invoicing
- One client makes up most of your billing
- Your workers’ employment status or IR35 position is unclear
- You bill through a master vendor with long or disputed payment cycles
What recruitment lenders look at
Lenders that specialise in staffing understand the sector’s risks. These are the areas they tend to focus on.
Timesheet approval
Invoices backed by client-approved timesheets are the core of a recruitment facility. Clear approval trails help your limit.
Client spread and quality
A mix of creditworthy clients reduces concentration risk. Public sector and large corporate clients are often looked on favourably.
Worker compliance
Right to work checks, payroll set-up and IR35 handling for contractors all come up in underwriting.
Margins and payroll timing
Lenders look at your gross margin and how payroll dates line up with invoicing, to make sure funding arrives when you need it.
Recruitment funding options compared
Most agencies choose between three structures depending on how much of the back office they want to keep.
| Recruitment factoring | Recruitment invoice discounting | Pay & Bill | |
|---|---|---|---|
| Who pays your temps | You | You | The provider |
| Who invoices clients | You | You | The provider |
| Who collects payment | The lender | You | The provider |
| Typical fit | Growing agencies without in-house credit control | Established agencies with a finance team | Start-ups and new temp desks |
| What you keep | Client relationships and payroll | Full control of the back office | Your margin, with admin handled |
Available products and terms depend on your business, sector, turnover, debtor ledger and lender criteria.
Compare recruitment lenders in one place
Factor Now checks your agency and debtor ledger against the criteria of a panel of participating UK lenders, including recruitment funding and Pay & Bill providers.
- 1Tell us about your businessWe verify available Companies House information automatically.
- 2Upload your aged debtor reportIt shows who owes you, how much and for how long.
- 3See matching lenders instantlyYour ledger is checked against participating lenders' criteria.
- 4Compare indicative funding and pricingNo waiting for quotes or callbacks.
- 5Progress with the lender you chooseContinue through to formal offer on Factor Now.
| Customer | Current | 1–60 | 61–90 | 91+ |
|---|---|---|---|---|
| Northgate Engineering Ltd | £26,064 | £66,557 | £6,093 | £1,693 |
| Brightway Supplies Ltd | £20,800 | £49,965 | £5,643 | £1,171 |
| Meadowbrook Foods Ltd | £31,129 | £72,750 | £9,771 | £3,729 |
| Total | £77,993 | £189,272 | £21,507 | £6,593 |
Export it from Xero, QuickBooks, Sage, FreeAgent or most other accounting systems. Older and concentrated debts affect how much of a ledger lenders will fund.
Recruitment invoice finance questions
What is Pay and Bill for recruitment agencies?
Pay & Bill is a back-office service for temp recruitment. The provider runs payroll for your workers, invoices your clients, collects payment and pays your margin back to you. It is common for new agencies and new temp desks.
Can I fund permanent placement fees?
Some lenders fund perm invoices, but many exclude or limit them because perm fees can be refunded if a candidate leaves during a rebate period. Temp and contract invoices are far easier to fund.
How quickly can a new agency get set up?
Setting up a facility involves the lender’s own KYC, credit and underwriting checks, so timing varies. Once live, funding against eligible invoices can often be released the same day.
Do I need trading history to get recruitment finance?
Not always. Pay & Bill providers in particular work with start-up agencies. Invoice discounting generally needs a more established track record.
How much of each invoice is funded?
Lenders typically advance up to around 85 to 90% of approved invoices. Facilities through Factor Now start from £25,001.
Will my clients know?
With factoring and Pay & Bill, clients pay the lender or provider, so they will know. Invoice discounting can often be run confidentially. See confidential invoice finance.
Is Factor Now a lender?
No. Factor Now is a technology platform, not a lender. The lender or provider you choose carries out its checks and provides the facility.