Recruitment Agency Funding Guides: Payroll, Temp and Contractor Finance

Market Invoice is an independent UK invoice finance comparison site that ranks 87 UK invoice finance providers.

Recruitment finance is specialist UK invoice finance built for the unique cashflow profile of recruitment agencies: weekly contractor payroll on the outflow side, monthly client invoicing on the inflow side, often on thin margins. Sonovate is the largest UK recruitment-specialist platform by its own figures, with a fully integrated tech-plus-finance bundle (contractor onboarding, timesheet capture, payroll, factoring, all under one roof). Bibby Financial Services, Aldermore, IGF and Skipton offer alternatives, particularly for permanent recruitment factoring and larger established agencies. Sonovate's blended fee, with weekly payroll bundled in, is 2 to 4 percent of contractor invoice value on our provider data; most other providers quote per facility.

What this page covers

This page covers

recruitment agency funding guides: weekly contractor payroll funding, temp and contractor finance, permanent placements

Not covered here

Ranked provider comparison (see /best/best-for-recruitment/), general invoice finance education (see /guides/), individual provider reviews (see /providers/), full pricing breakdown (see /guides/costs/)

Looking for a ranked provider comparison?

Our best invoice finance for recruitment agencies guide ranks the leading specialist providers by advance rate, back-office support and startup acceptance. For broader context, also see our guides hub and our cost calculator.

Detailed recruitment finance pages

AP

Adam Parker

Founder & Managing Director, Muswell Rose, founder and PSC of Best Business Loans Ltd

Adam is the founder and managing director of Muswell Rose and a founder of Best Business Loans Ltd, the company behind Market Invoice. He spent over three years as managing director of Penny, a UK invoice finance business, and his career runs through insurance, mortgages, commercial finance and fintech lending. He writes the Market Invoice library.

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Before you enquire

The questions most people ask at this point, answered before you fill anything in.

Will my customers know?

Only if the facility is disclosed. Confidential invoice discounting exists precisely so they are not told, and you keep running your own credit control. Which one suits depends on your size and ledger quality.

Confidential vs disclosed

Will I have to give a personal guarantee?

Often, though not always, and it is usually capped rather than unlimited. Invoice finance is secured on the ledger, so guarantees here tend to be narrower than on unsecured lending, and the wording varies more between funders than the headline rate does.

How security works

How quickly can it be in place?

A new facility is usually a matter of weeks rather than days, and the security paperwork sets the pace more than the credit decision does. Switching from an existing funder takes longer, because the outgoing lender has to release or rank its security.

What sets the timetable

What does it actually cost?

Two charges, not one: a service fee on turnover and a discount charge on the funds drawn, plus arrangement and sometimes exit fees. Comparing headline rates alone is how businesses end up on the wrong facility, because the total annual cost is what differs.

Full cost breakdown

Is my ledger even eligible?

The usual blockers are concentration in one customer, a history of credit notes, and billing that is staged, retained or applied for rather than invoiced on delivery. None is automatically fatal, but each reduces what a funder will advance.

Check your concentration

I already have a facility. Does that stop me?

No, but it changes the route. Either the incumbent releases its security so a new funder can take over, or the two rank alongside each other. If your current lender is exiting or has withdrawn the facility, the timetable is set by their notice period.

Existing or withdrawn facility

General information about how the market normally works, not advice, an offer or a quote. Market Invoice is a comparison and introducer service, not a lender.

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Recruitment Finance UK FAQ

What is recruitment finance?

Specialist UK invoice finance for recruitment agencies. Funds the gap between weekly contractor payroll outflow and monthly client payment inflow. Often bundled with timesheet management, contractor onboarding and payroll administration.

Why do recruitment agencies need specialist finance?

Recruitment agencies pay contractors weekly (under contract terms or CIS) but invoice clients monthly with 30-90 day payment terms. This creates a 30-60 day cashflow gap that grows linearly with agency size. Illustrative example: a 10-contractor agency at £800/week each pays out £8k a week, about £35k a month, before the client pays a monthly invoice for the same work. Without specialist finance, agencies need huge working capital reserves to scale.

Recruitment finance for permanent placements?

Different product. Permanent recruitment fees are paid as one-off invoices (typically 15-25% of first-year salary) rather than weekly contractor billing. Most recruitment finance providers offer separate facilities for permanent placement factoring at standard invoice finance fees (0.5-2%). Combined contractor + permanent facilities typically priced as a blend.