Invoice discounting for recruitment agencies - discreet funding for payroll

Thursday 14th August 2025

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Cash flow challenge: I need to release cash from invoices quickly while maintaining full control of payment collection and client relationships.
Perfect for: Agencies that want immediate access to cash from outstanding invoices while keeping control of client relationships.

Novuna helps agencies access confidential funding through invoice discounting while retaining full control of payment collections, either through our award winning in-house service or by comparing the market to find the best fit for your business.

We match you with providers who understand the recruitment sector, help you apply, and make sure you get the right deal.

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What is invoice discounting?

Invoice discounting is a type of invoice finance where your business uses unpaid invoices as collateral to secure short-term funding. Unlike invoice factoring, you continue to manage your own credit control and payment collection, meaning your clients are unaware of the finance arrangement. This confidentiality can be valuable for agencies that wish to retain control over client communications.

How does invoice discounting work for recruitment agencies?

Here’s the typical process for a recruitment agency:

You issue an invoice to your client after placing a candidate.
The lender advances a percentage of the invoice value, often up to 90%, within 24-48 hours.
You continue chasing payment directly from your client.
Once the client pays, you repay the lender, minus any agreed fees.

Because you maintain control over the sales ledger, your clients won’t see a change in the way invoices are issued or followed up.

Key benefits of invoice discounting for recruitment agencies

Maintain client relationships: Keep full control of credit control and collections.
Confidential arrangement: Clients remain unaware of the funding agreement.
Quick access to funds: Improve cash flow without waiting 30-90 days for payment.
Scalable: Funding grows in line with your invoiced sales, supporting business expansion.

Is invoice discounting right for your agency?

Invoice discounting can be a good fit if:

You have a reliable client base with a history of paying invoices.
You want to maintain a hands-on approach to credit control.
You need working capital to cover payroll, marketing, or operational expenses between placements.

However, it may not be ideal if your agency has irregular invoice volumes or a high proportion of clients with poor payment histories.

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Alternatives to invoice discounting

If you prefer to outsource payment collection, invoice factoring might be a better choice. With factoring, the lender manages credit control on your behalf, which can save time but also makes the arrangement visible to your clients.

Other funding options include: