Average age of recruitment agencies using bank finance hits nine years

The average age of recruitment companies using bank finance to fund growth is nine years, five months and 19 days, according to research from leading contract finance provider Sonovate.
 
The data, taken from Companies House, also reveals that the average age of recruitment companies signing up to bank finance for the first time (with HSBC, Lloyds, RBS or Barclays) is four years and four months.
 
Richard Prime, CEO and co-founder of Sonovate comments: “Agencies placing contractors rely on invoice finance to fund them. What these findings show is that, unless you’re a well-established agency that’s been around for some years, you’re unlikely to secure the finance required to grow. Why? Because banks offer products grounded in outdated approaches to lending that can be very restrictive.
 
“They tend to place limits on the amount of business a recruitment agency can conduct with a single client, for example. This really strangles the growth of small agencies, many of which have built their businesses on agreements to provide temp workers to one or two major organisations. Banks also insist on all turnover agreements which result in lengthy and expensive contracts. Their systems are just not tailored to recruitment – and especially to agencies in the first few years of inception.” Prime continues.
 
Sonovate is a new offering tailored to the needs of recruitment agencies by providing a flexible finance solution, combined with the technology that takes care of all the admin associated with running contractors.
 
Since launching in January 2014, Sonovate has overtaken the banks in terms of news deals recorded on a monthly basis to become the number one provider of contract finance to the recruitment industry. Unlike the banks, the average age of Sonovate customers, which are growing by 20 percent a month, is seven months.
 
Prime, who has 20 years’ experience working in recruitment, continues: “With a record number of new agencies launching year on year, it’s crucial that they can gain access to the finance they need to grow. At Sonovate, we make it our mission to enable more agencies than ever before to access the finance and administrative support they need to fund contractors, ensure growth and become more profitable as a result.”