Anyone have any knowledge of recruitment?

[The101]

I've been a recruitment consultant for some time now. My friend and I are looking to set up a small agency, he's in a technical field so with his contacts and my recruitment experience It should be a good partnership.

The one thing I've never known or been involved in is how often the hiring company will pay the recruitment agencies Bill, as this can significantly affect our startup costs, or limit us to how many agency workers we can take on to start with until the money/overdraft builds.

Perhaps it varies with companies but I'm told 3 months is when a company usually settles up with the agency and pays their staff bills.

If anyone has a bit more of an insight in to this I'd be grateful as sadly anyone I can ask on this matter would be the one who pays my wages currently!

Thanks

101

[Ghost91]

As a contractor, I've worked for large agencies, and small ones. Recently I was working for a small one who billed the company at the end of each week, the company paid the bill the following week. I'm guessing that's something you'd need to negotiate with the hiring company on an individual basis. I only know how often they paid as they stopped paying when they had cash flow issues and I was taken out of the company until they paid their bill. Perhaps larger agencies work on a quarterly basis but by the time you are supplying large quantities of staff you'll probably be in a position to manage that fine anyway. Best of luck

[Wilmslowboy]

Employer ...(I've recruited about 20 IT bods in the last 6 months)

We normally pay for perm placements - end of the following month after being billed (average 45 days)
We normally get billed once the successful candidate starts

If the candidate has a notice period (previous role to work through) - the payment to the agency can be months after the offer was made/accepted..in one case we made an offer in June (candidate strats next week) agency will get paid end November (perhaps end October if lucky).


For contractors

End of week 1 time sheet gets done by contractor (signed of my line manager)
Mid week 2 we get a bill from the agency
Week 4 agency paid (we only do two payment runs a month)

This is the best case scenario for contractors....

Edited by Wilmslowboy on Monday 28th September 20:59

[truck71]

Lots of experience in the logistics sector. For temporary staff invoice is weekly with payment terms of 30 days. Full time placements only invoiced on successful completion of three month probationary period, again 30 days. Suppliers operating in the former category nearly all use factoring services initially, some never seem to wean themselves off though.

[andy-xr]

The101 said:

I've been a recruitment consultant for some time now. My friend and I are looking to set up a small agency, he's in a technical field so with his contacts and my recruitment experience It should be a good partnership.

The one thing I've never known or been involved in is how often the hiring company will pay the recruitment agencies Bill, as this can significantly affect our startup costs, or limit us to how many agency workers we can take on to start with until the money/overdraft builds.

Perhaps it varies with companies but I'm told 3 months is when a company usually settles up with the agency and pays their staff bills.

If anyone has a bit more of an insight in to this I'd be grateful as sadly anyone I can ask on this matter would be the one who pays my wages currently!

Thanks

101

I thought that this was what was negotiated when you take on a new client? Seemed to be when I did it back around (shiiiiiit) 18 years ago. Back then, terms were 25% of salary with 15 days net payment, clawback at 50/25/10% over candidates first 3 months. These were permies though, I never got involved in contractors as it was too much of a ballache and we never worked as an employment agency as that was a massive red flag on cashflow

[sideways sid]

I assume you're referring to temps OP.

Many agencies factor the invoices (use their High St bank to pay a portion of the invoice when it is issued) to help with cashflow.

[Countdown]

As an employer - our temps submit weekly timesheets electronically, their line manager authorises the timesheet online and the Agency invoices us online (PDF I think). We would pay the invoice within 5 working days.

[foliedouce]

Countdown said:

As an employer - our temps submit weekly timesheets electronically, their line manager authorises the timesheet online and the Agency invoices us online (PDF I think). We would pay the invoice within 5 working days.

5 days from invoice date? Wow, can I have you as a customer please? I'm surprised your FD is still in post in this day and age agreeing to that.

OP - clients will generally pay anything from 30 - 90 days (a few jokers try 120 days). Personally I would never sign to anything longer than 45 days, but that's your choice to make. The large corporates are the worse as payment terms can make a massive difference to their cash position.

As others have said, you can get factoring (although easier to get for temp / contract rather than perm, but also perm puts less pressure on your cashflow)

Clients will vary from happy to have weekly invoices to only send me an invoice once a month.

Paying temps can be from weekly to monthly and you have to nbalance the books from there.

There's a myriad of options out there, all of which can't be explored here.

I'm currently mentoring a recruitment business through Start Up Loans which is a Government initiave to help people start businesses. I'd suggest applying to them, even if only for a small amount of cash, you can get hooked up with a relevant mentor who can provide valuable insight into this.

Good luck with the venture.

[Countdown]

foliedouce said:

5 days from invoice date? Wow, can I have you as a customer please? I'm surprised your FD is still in post in this day and age agreeing to that.

We have no cashflow issues, sitting on large cash reserves, and get a discount which compensates us adequately for prompt payment.

[foliedouce]

Countdown said:

We have no cashflow issues, sitting on large cash reserves, and get a discount which compensates us adequately for prompt payment.

Fair play, nice position to be in, although the entrepreneur in me would want to invest it into new business lines to grow the business or return it to shareholders.