Managing cashflow and working capital as a recruitment company

The explosion in Recruitment Finance

There has recently been a boom in the recruitment market and this can be put down to many reasons, such as corporation tax cuts, lower cost finance being readily available and lower energy prices. All these factors taken together with many others – some of which are discussed below have all meant that there is increased confidence in the jobs market.

City AM reported in October 2015 that professional and financial recruiting was up eight per cent in 2015 as salaries increased too. The Association of Professional Staffing Companies (APSCO) found that finance and accounting roles has risen 17 per cent from last year. In June, 729,000 people were employed in both financial and professional services in the City of London. At the start of 2015, APSCO outlined that recruiters have seen the number of permanent vacancies rise 29 per cent in the previous year. Leading sectors are IT and finance.

Engineering jobs are the leaders in relative pay increases, as salaries have risen 10.5 per cent. Finance has also risen 5.3 per cent on the year. As inflation remains low at 0.5 per cent in the year to December, people’s real incomes are further improved by the higher salaries that workers can demand in the current market.

In terms of value, the recruitment sector has increased in annual turnover to over £28.7bn, which is 6.3pc higher than the previous record. On the whole, the busiest recruitment sectors this year have been finance, legal, construction, information technology, engineering, energy, oil and gas, healthcare, emerging technology application and retail. When companies grow, there is almost always the need for a working capital facility and shorter-term invoice discounting facility – something that should definitely be explored if not used; or re-visited to look at other available funders offered in the market.

The UK economy has grown this year – rising in the first quarter of 2015 by 0.3%, and industrial output increased with the rate of those jobless falling to a seven year low; this has been a positive for big industry and the recruitment market. The APSCO figures for new UK recruitment agencies started in 2014 was 4,083. The REC Jobs Outlook survey predicted industry growth continuing and being 9% in 2015/16.

Where is the future growth going to come from?

Tech – Technology advancements and related demand has meant that there is a greater need for more specialist jobs as Euope becomes the centre for tech. The demands that stem from mobilisation, cloud storage and big data has meant that there is further growth in the sector. Over the next ten years it is estimated that over 45,000 jobs will be created in the tech sector and with the high skilled jobs required, there is more demand than supply in some areas.

Construction – Housing and shortage are the buzz words for 2015 and with the issue high up on the list for investors, construction companies and the government it is predicted that houses will continue to be built at a fast pace and jobs created. It is thought that there is a shortfall of between 40-50,000 new homes in 2015, and the construction industry will inevitably grow. The CITB (Construction Industry Training Board) predicts that 200,000 jobs in the construction sector will be created in the next 5 years.

Engineering – There is a predicted skill shortage of over 80,000 people in the engineering sector. With a relative large proportion of over one fifth of workers being over 49 in the sector, it is predicted that the demand for skilled workers will increase as time goes forward. The Royal Academy of Engineering has outlined that in order to meet this shortage, we would need a yearly number of 100,000 STEM (science, tech, engineering, maths) graduates up to 2020; a big difference from the current number of around 10,000.

Finance – Lower borrowing rates, increased liquidity and the resultant increased confidence has meant that the sector has experienced growth, with jobs created being around 10% more since the start of the year.

Marketing – Increased borrowing availability in the market, growth and the impact of online and mobile has meant that the marketing sector has grown and there is a need for talented and well educated individuals that understand many new forms of media and campaign ideas, that established companies do not. Some roles demand a very specific skill set with knowledge of both technology and statistics.

Health – We have all seen the headlines which have flared up between MPs and junior doctors in recent months. This goes hand in hand with the need for better health care, longer hours of service and many skilled workers moving away from the UK. Also, due to changes many can expect that there will be more temporary and short term contracts for both nurses and doctors. In terms of the population, people are ageing and the above along with other pressures are testing the healthcare system. This will all lead to greater staffing needs.

As shown from the above and the data readily available, we have seen that effective recruitment solutions will become increasingly significant over the coming years. The heightened mobility of workers and search functionality on various devices has meant that job seekers are using different and new methods of seeking out new roles. Therefore, more companies are being set up and growing in order to capitalize off the current market. TFG will assist as your business expands and help with the much needed finance to fund this growth.

Article Name
Working capital solutions and recruitment finance for recruitment companies
TFG explores the need for working capital solutions within the recruitment sector and funding for recruitment agencies.