REC encourages Banks to lend to Recruitment Agencies to oil the wheels
The Chair of the Recruitment and Employment Confederation, Neil Smith, said that “Recruitment agencies often have to pay workers before they receive payment from the end clients; loans from banks are the only realistic way to plug this gap and keep the agency going in the interim. A steady stream of bank funding over the next few years will therefore be vital if the recruitment industry is to continue its recovery from the recession and particularly if new agencies are to get a foothold in the market.”
“Large parts of the UK economy rely on the flexibility that agency workers provide, including in some cases the banks themselves. If the economy as a whole is going to create more jobs, then there must be sufficient support for the employment agencies who ‘oil the wheels’ of other businesses. As banks do more to support SMEs as part of their deal with the Government, it is important that the recruitment sector is included in this if all parts of the economy are going to benefit from a flexible, accessible workforce.”
Following the economic downturn many recruitment agencies faced severe funding problems, leading many to make sweeping cuts in front office staff and some to close altogether. Agencies are very important to contract assignments in particular as they act as ‘factors’ whereby they receive payment from clients at say 60 day terms but pay contractors within 7, 14 or 30 days. Without agencies clients would face far greater financial pressure with regards to cash flow and contractors would be subject to far greater payment terms, leading to contractor cash flow issues.
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