APSCo joins forces with the Asset Based Finance Association to resolve recruitment sector funding is

APSCo joins forces with the Asset Based Finance Association to resolve recruitment sector funding issues

Half day event at CBI headquarters in London

Hirers, banks, RPOs and recruiters to attend

The Association of Professional Staffing Companies (APSCo) is joining forces with the Asset Based Finance Association (ABFA) for a groundbreaking half-day event with the aim of resolving funding issues in the recruitment sector.

The event will take place on the morning of March 11 2011 at the headquarters of the CBI in London. Senior managers from hirers, banks, recruitment process outsourcers (RPOs) and recruitment companies will attend free of charge. APSCo members have been invited to bring their clients.

The forum will discuss and attempt to resolve the problems caused by contractual terms in the recruitment supply chain. These terms – ‘pay when paid’ and ‘non-assignment of debt’ clauses – are making it extremely difficult for banks to lend to recruiters.

End users increasingly engage recruiters through intermediaries (RPOs). ‘Pay when paid’ clauses mean that recruiters in the supply chain do not get paid until the RPO itself is paid. This creates cashflow problems for recruiters because they have to pay workers, regardless of whether they have been paid themselves. Recruiters supply through an ever-decreasing number of intermediaries, which increases the cashflow risk.

‘Pay when paid’ clauses also mean that recruiters have no legal means to recover debts owed to them, which makes banks reluctant to lend against recruiters’ invoices – a vital source of cashflow for many staffing companies.

The highlight of the event will be a panel discussion, which will feature Kate Sharp, CEO of ABFA, Matthew Rodger, Director of Alexander Mann Solutions, Julian Bond of the National Air Traffic Services, Stephen Grant, MD of Cititec Associates, Les Duncan, MD of Hays Corporate Accounts, Andrew Richardson of Group Procurement, Lloyds Banking Group and Kieran Rossiter, CEO of Morgan McKinley Group

Ann Swain, Chief Executive of APSCo, comments: “Banks are keen to extend credit to SMEs, but the emergence of ‘pay when paid’ and ‘non-assignment of debt’ clauses over the last few years has made funding the recruitment sector significantly more risky. Providing invoice finance to recruiters has historically been fairly low risk, but many recruiters are now finding that their invoices are almost worthless as collateral.”

“This is one of the most pressing issues in the recruitment sector at the moment and cannot be allowed to persist. It’s in no-one’s interest if the supply chain collapses. The insolvency of a recruitment company as a result of non-payment further up the supply chain could leave workers on which end users depend unpaid and disgruntled.”

She adds: “I am confident that we can make headway on this issue. There is growing appetite in the industry to get this matter resolved. It’s about educating RPOs and end users as much as anything else, so the fact that they’re willing to sit round a table to discuss this is a positive sign.”