Nursing Recruitment Agency Uses Invoice Discounting to Cope with Rapid Growth
A nursing recruitment agency was referred to us by their bank. They were a group of individuals who had formed a company to provide a quality recruitment service. All nurses themselves, they knew there was a profit to be made by marketing themselves directly to service providers rather than relying on the usual agencies.
One of the partners of this group had previous experience running a similar agency. He knew that if their operation grew quickly and significantly, then they would need a lot of working capital to keep the business solvent, because wages would need to be paid weekly, but most service providers would pay their invoices on the 20th of the month following.
They also knew that the business would likely grow rapidly - which it did. This would tie up increasing amounts of money in accounts receivable. So, the solution was an adaptation of
We set up an easy to use system where their invoices are sent out through our office with our details. The nursing recruitment agency is able to raise 80% of the invoice values up front. This means they can always make pay roll. Then they get the balance minus our charge when the invoices are paid. This is an undisclosed 'micro-invoice discounting' arrangement. The end customers, a range of rest homes, do not know that
we are involved.
At the time of writing, this business is growing in leaps and bounds. Once their income plateaus they will be able to reduce the percentage they have advanced, thus retaining more profit eventually.