|Requirement:||£500,000 Invoice Finance Facility|
This growing Sussex recruitment company had a successful permanent search business and was looking to increase its exit value by building a temporary recruitment solution using their existing client base. Typically a temporary recruitment business will achieve up to 5x greater exit values than a permanent recruitment business, it can also bolster a permanent business in a down turn.
For the first year they had used a combination of their overdraft and a high street bank invoice finance facility to develop their position.
When borrowing against invoices one of the key requirements for businesses is how much they can get up front (the advance rate). Despite this being an established business in permanent recruitment the high street bank was unwilling to provide greater than 80% advance rate. Furthermore the high street banks will not typically advance against permanent placements. The implications of this were limiting their cash-flow and their growth.
There are over 100 invoice funders in the UK market, whilst the recruitment sector is well supported - a greater advance rate and ability to fund against permanent placements dramatically reduces the number of lenders.
'The high street bank was unwilling to provide greater than 80% advance rate'
Whilst doing a funding search online the company had enquired using Capitalise’s instant messenger to give more colour to the problem. After understanding the business needs, three lenders were identified on capitalise.com and introductions made.
A 90% advance rate was achieved for the temporary business line, upto 70% advance for the permanent placements (dependent on contract detail). Best of all the effective cost rate was reduced by over £10,000 per annum.