Finance for agencies
Agencies pay people before clients pay them. The larger the contract you win, the bigger that gap becomes — which is why growth so often creates the crisis.
Request a callback- Commonly funded
- Payroll and contractor pay
- Typical facilities
- Invoice finance, term loans
- Lender focus
- Debtor quality and retention
This page describes what businesses in this sector typically fund and what lenders generally look for. It is not a recommendation, and what is available to you depends on your own circumstances.
About agencies
The agency cash flow problem is structural rather than a sign of anything going wrong. Contractors and staff are paid weekly or monthly, while clients settle on thirty, sixty or sometimes ninety days. Winning a large account makes that gap wider, not narrower, which catches out a great many growing agencies.
Invoice finance is the standard answer, and recruitment in particular is one of the most heavily funded sectors in the market. There are specialist providers who handle timesheet-to-invoice processes and will advance against contractor placements within a day, which changes what an agency can take on.
What agencies fund
- Contractor and temporary worker payroll, funded against placement invoices.
- Permanent staff payroll during a period of expansion.
- Invoice finance across the sales ledger, including confidential facilities.
- Office moves, fit-out, technology and equipment.
- Acquiring another agency or a book of client relationships.
- Working capital to fund a large new account from day one.
What lenders assess
- The credit quality of your clients, since invoice finance risk sits largely with them.
- Concentration — one client dominating the ledger will limit what is advanced.
- Client retention, and how much revenue is retained rather than project-based.
- Your systems for timesheets, approvals and invoicing, which funders will rely on.
- Historic bad debt and credit note levels across the ledger.
Frequently asked
Will my clients know I am using invoice finance?
Not if you take a confidential facility. Collections continue in your name and clients pay into an account you appear to control. Confidential facilities cost a little more and usually require stronger systems and a better track record.
Can a young agency use invoice finance?
Yes, more easily than it could get a term loan. The funder's principal risk is your clients' ability to pay rather than your trading history, so a new agency invoicing solid corporate customers is a perfectly reasonable proposition.
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We will tell you which funders lend into your industry, and roughly what they are likely to say.
