Contract placements are big business and a great way to boost your recruitment agency value.
However, funding them can be a little tricky and pricey if not carried out correctly.
For this reason, TBOS will share our knowledge on the 4 most cost-efficient ways to fund contract placements:
1. USE YOUR OWN MONEY
The cheapest way to fund contractors is to finance the contractors yourself, doing so, eliminates finance fees.
If you do choose this method, you must ensure you have enough funds to cover your contractors should your contractor book grow quickly. You also need to be aware that your funds may be at risk should a client not pay on-time or if they go bust.
2. OBTAIN AN OVERDRAFT OR BANK LOAN
Banks in the current economic climate can be reluctant to offer overdrafts or loans unless you can secure these against assets. With that said, an overdraft or loan may only cover a certain size contractor book, if the number of contractors grow, you may struggle to get the required increase you need. Nevertheless, if you only need a small amount of funds to start the contract process then this can be an ideal short-term funding solution.
3. SET UP AN INVOICE FINANCE ARRANGEMENT
Invoice Finance is the most ideal way to fund your contract placements as the finance facility can grow alongside your number of contractors. Most companies who offer finance will also offer insurance to give you that added protection to your debt. However, invoice finance arrangements will often have monthly minimum fees that can be expensive in the first few months of the facility, with a long-term sign up period, so be mindful of these in the contract you sign.
It’s worth noting that TBOS are able to help contract agencies in obtaining their own invoice finance arrangement. We have already successfully negotiated the best invoice finance rates for many of our clients, all of which benefit from our team managing the facility daily. This service is invaluable to recruitment agencies as it cuts finance costs significantly, so much so, TBOS offers each clients a free finance review annually, as it is likely there is a saving to be made.
4. USE TBOS FREEDOM
Our popular TBOS Freedom solution is perfect for funding and administering contract placements, here in the UK and overseas. It provides credit insured funding on individual and multiple contract placements, allowing any size agency to place contractors whenever they have a unique opportunity to do so.
This plan also offers excellent value for your hard-earned recruitment money. Your agency pays for the service as and when your contractors work, delivering peace of mind that your contractors are looked after correctly and compliantly. This is a perfect solution for new start up contract agencies, perm-only agencies and independent recruiters who have sporadic contract placements. Additional benefits include no set up fees, rolling contract and immediate finance available.
Please be aware that this facility is not ideal for temp books or low-end contract placements but is an ideal incubator for recruitment agencies to see if contract recruitment is for them.
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