Call us: 03330 113622

Blog home
Categories
Popular Posts
Recent Posts
Archive

• 22 Oct

  Funding Invoices To Neutral Vendors

  

  Funding invoices to neutral vendors is a specialist invoice finance service that is not available from all providers. Fortunately, recruitment companies that supply neutral vendor companies can get invoice finance from specialist lenders.

  Funding Invoices To Neutral Vendors

  Small and medium-sized temporary staff agencies can often find themselves supplying large organisations via an intermediary organisation. This is due to the ultimate buyer seeking to streamline their purchasing via an umbrella recruitment provider. These intermediaries are often referred to as "neutral vendors" (NVs) or "RPOs" (recruitment process outsourcing) organisations. Funding RPO invoices has become very important for many recruiters.

  Invoice finance (often called "payroll finance") is widely used within the temporary labour sector. This is because it releases cash from unpaid invoices that can be used to pay the staff payroll. However, when dealing with an NV, this can require the agency to find the right invoice financing company, as not all will fund the invoices to NVs at the levels that many recruiters need.

  Neutral Vendors Versus Master Vendors

  Managed services within the temporary recruitment sector is not a new service, but rather one that has developed over time. In the past, a "master vendor" may have been sought by larger companies. This was a single recruitment company that would be contracted to deal with all the temps required by the ultimate customer.

  Over time, this model has developed into the neutral vendor model whereby a single independent purchasing organisation sits between the ultimate customer and a number of recruiters that each deal with part of the customer's overall requirement. The customer wins by still dealing with a single company to handle all their temporary labour needs. The neutral vendor wins over the master vendor model, as the NV can source staff from a wide range of smaller recruiters. This creates flexibility.

  Removing Funding Restrictions

  If you have experienced funding restrictions against sales to NVs, it may be because you are not using the most appropriate funder for your situation. The approach to risk, and hence the liberality of funding varies between different receivables financing organisations. In the past, we have successfully helped customers improve funding against RPO debtors. It may be possible to improve your funding percentage by shopping around the invoice financing market.

  By Glenn Blackman