Background
A fast-growing contract and temp recruitment agency serving the construction and manufacturing industry is a satisfied customer of APositive. In the two and a half years they’ve been operating, they’ve scaled quickly – growing the team to 17 consultants and 200 contractors, with impressive turnover figures to match that growth. That they’ve grown so rapidly is partly down to their close partnership with the team at APositive, who have been there from the beginning.
One of the company’s co-founders previously ran another agency, and that led him to cross paths with the APositive team, who were approached when setting up this new company. As they explain:
‘We were in talks with APositive right from the start. We were setting up a temp/contract recruitment business, so the invoice financing piece was quite crucial from day one. We were also speaking to the team about the payroll function from then as well.’
The situation
Scaling a temp recruitment company quickly without invoice financing can become extremely challenging. As one of the founders stated: ‘In layman’s terms, the way of setting up a temp business is like this. We hire a temporary recruiter, they put people out to work, and we’re paying those wages weekly. So whatever cash we have in the bank, we would have to pay in wages for those temps. Let’s say that’s $20k, then that’s two workers. We get to the end of the month, hope the client pays the invoices on time, and you get $25k in from the client. Now you have $25k, so you can afford three temps.’
And that’s how the business grows, at the rate of one temp per month; therefore, achieving their growth would take 200 months, and they’ve done it in 30!
The agency owner has some advice for others in a similar position looking to start a contract recruitment business
‘I'd say 100% speak to APositive and see if it's something that works for your business. It worked for us. Especially if you're planning on starting a high volume temp business that you want to be able to grow at an organic pace. Then, yeah, it'd be a no brainer.’
The APositive difference
Growing to 200 contractors in two and a half years – that’s the difference APositive’s invoice financing solution has made. With APositive, they get 85% of the invoice value back immediately, which can be put straight into hiring more temps without worrying about cash flow. They’ve scaled at the rate of 10-15 temps per month, or ‘limitless growth’, as the founder describes it.
In addition to debtor finance, they use APositive for outsourced payroll management. The two co-founders are the only non-billing heads at the agency, so all of the back office admin fell on them, and that’s in addition to launching and running the business. This included managing payroll, invoices and accounts payable. Not only was doing it in-house time-consuming and complicated, but it was also expensive. The agency co-founder explains: ‘A huge part of your cost in a recruitment agency is your back office, your non-billing heads.’
APositive took the complexity of running payroll off of their hands and ensured accurate payment every time, which is essential in the labour hire business where your reputation relies on your ability to pay your contractors accurately and on time every week.
The APositive payroll team guided the founders through the back office set-up, integrating with their CRM platform, JobAdder, and assisting with the set-up of payroll solution, Astute.
Key outcomes
- Rapid Growth: Achieved growth to 200 contractors in two and a half years with APositive's support.
- Invoice Financing: Enabled hiring of 10-15 temps per month, aiding cash flow.
- Outsourced Payroll: Simplified back office tasks, reducing cost and complexity.
- Integration Support: Assisted in back office set-up, integrating CRM and payroll solutions.
- Economic Resilience: Helped navigate global challenges, ensuring steady growth and stability.
How APositive has helped
It’s been a challenging environment to start a business due to the global pandemic and now, during uncertain economic times. As the economy turned and interest rates continued to rise, chasing invoice payments and managing cash flow became even more important. It’s here that the APositive team stepped up and really helped the business.
‘That’s where the advice and partnership side of the relationship came in. Once the invoices became harder to chase, there was a knock on in terms of cash flow. It can get quite complicated with aged invoices, disapproved invoices and how that impacts your available funds. That was where Lindsey [APositive’s account manager], came in. Understanding how things affect your available funds was crucial.’
The agency owner has some advice for others in a similar position looking to start a contract recruitment business:
‘I’d say 100% speak to APositive and see if it’s something that works for your business. It worked for us. Especially if you’re planning on starting a high volume temp business that you want to be able to grow at an organic pace. Then, yeah, it’d be a no brainer.’