Summer surge or cash flow crisis

Recruitment agencies are being warned to prepare now for the summer surge in temporary workers or face a serious cash flow crisis

Bibby Financial Services, specialist cash flow provider believes agency owners and managers must ensure they have the right financial packages in place to guarantee they can pay their staff on time.

The Summer is traditionally one of the busiest times of year for the recruitment industry, last year 53% of students undertook temporary employment in their university holidays* and this year will be no different.

Andrew Dixon, product development director of Bibby Financial Services
said: Students make up a large percentage of the summer peak in temporary workers and that combined with the seasonal peak in summer employment due to increased levels of tourism, means recruitment agencies are incredibly busy. However many agency owners and managers don’t have the time to make sure that they have the right funding in place to see them through this financially rewarding time.

Temporary workers need to be paid weekly, but with the majority of recruitment agencies not getting paid by their customers for at least 60 days after invoice, this can leave many recruitment agencies in a quandary - needing to pay staff before they have received payment themselves, continued Andrew.

However, it is not just the logistics of funding temporary workers that recruitment agencies need to be aware of this summer, there is the ever-changing legislative landscape. A year on from the implementation of the Gangmasters Licensing Authority and two years on from the Employment Agencies Regulations, the recruitment industry wants to prove it is a reputable sector and is tightening its grip on the industry. Extensive employment checks, which both these pieces of legislation dictate, are time consuming and can mean less time for investigating payroll and funding options.

Andrew added: it is vital that recruitment owners and managers think carefully about what funding they have in place, especially when they know, that the summer is going to be so busy and will put a strain on their finances. Thinking about the specialist recruitment financing options that are now available could save time in the long run and prevent any cash flow difficulties as we move into this busy period.

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