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Beware the Hidden Costs of Recruitment Finance

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Recruitment is big business. The sector is currently one of the fastest growing in the UK economy, having exceeded even the most optimistic of expectations each year since the end of the recession. This, unsurprisingly, has led to an increased demand for recruitment finance, but is the traditional factoring option really the right solution for ambitious recruitment business owners?

Factoring has long been the recruitment finance option of choice for many recruitment business owners. And while there are some reasons to factoring, there are some notable drawbacks with this type of funding that recruiters need to be aware of.

First let’s take a look at the plus points.

Factoring enables you to get instant access to your cash, typically funding up to 80-90% of the total value of your invoice as soon as those invoices are raised. This bridges the gap between what you need to pay out in the here and now and when your client settles your invoice. And because there are so many factoring companies around, prices are usually very competitive.

SOURCE: simplicityinbusiness.co.uk

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Never switches off. Dubbed as Mr Innovation by colleagues and industry, in 1987 David Thornhill first started out in the recruitment industry as a payroll clerk for a local firm in Gloucestershire, Staff UK. David went onto write the first ever software model of its kind for the temp recruitment market, integrating payroll, invoicing, sales ledger, funding and comprehensive management reporting; in essence creating a completely new funding supplier sector.

Prior to the Cash Simply venture he also worked as a board director for another recruitment company, where David used his extensive operational, accountancy and IT skills, to streamline processes and grow the business through increased cash flow and cost savings.

In April 2004, David aka “Mr Innovation” and Tom Atkinson joined forces to launch and begin trading under the brand name Cash Simply, which marked the start of a company based on a similar model to those they had previously developed to great success. They have progressed from a standing start to an annual turnover of more than £45 million, and have built an operational base that could double or treble that volume.

When he’s not dreaming up his next business venture, David enjoys running, attending music festivals and doing the occasional charity skydive. His next challenge is to complete a marathon.

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