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UK recruitment companies losing millions in late payments

Sonovate’s research, based on data from Companies House, has revealed that over the last decade recruitment companies have faced an average of &pound314,991 in outstanding late payments each year. The average start-up agency founded after 2013 is already owed in excess of &pound100,000 from clients. This figure rises in relation to the lifespan of the agency, with those running for ten years or more owed an average of &pound600,000.

Richard Prime, CEO of Sonovate, comments:“Cashflow is vital for the survival of small businesses, and as these figures demonstrate, it is stopped by neglectful clients exceeding their agreed repayment times. In contract recruitment the repayment window typically sits between 28 and 45 days, but in reality payment materialises between 45 and 60 days, if not longer.

“A culture of fear prevents small businesses from challenging large clients to pay on time – they don’t want to rock the boat and risk losing out on repeat business. And without any real regulations enforcing timely payment, many SMEs are left with inadequate finance solutions from banks to address the shortfall left from delayed invoice payments.”

Traditionally, recruitment agencies have turned to the banks for invoice finance to bridge the gap between contractor and client payments. However, they only provide between 60-90 percent of invoice profit and impose heavy restrictions including concentration limits and insist on all turnover agreements.

Prime comments: “Until businesses change their position around unethical payments, and banks do more to understand the unique requirements of the recruitment sector, UK recruitment companies need to look elsewhere to address this issue.

“That’s exactly why I founded Sonovate – so recruitment agencies can relax safe in the knowledge that their cashflow is secure and their contractors are being paid so they can get on with growing their business.”

Designed to make paying and managing contractors easy and profitable, Sonovate provides finance for recruitment agencies to enable them to place contractors. Agencies working with Sonovate receive 100 per cent of their profit the week after the invoice has been submitted, ensuring secure cashflow and accurate forecasting. In addition, Sonovate takes care of all the admin associated with paying contractors, including invoicing clients, credit control, and managing timesheets.


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