Labour hire businesses often have phenomenal wage obligations, and many choose debtor finance as a funding solution this provides cashflow breathing room and allows them to expand
Recruitment business operator Brendan Muller says the labour hire sector has unique cashflow issues because there are so many small to medium operators who, unlike those in other SME sectors, have to make allowances for high wage bills.
Brendan’s firm, New Zealand labour hire specialist North and South Recruitment, runs a lean head office, but at any given time the construction and civil specialists have to pay more than 100 people each week.
The business, which is in its fifth year, was founded with fellow director Ceri John, and provides temporary labour hire for clients who require construction roles including machine operators, carpenters, labourers and a variety of other trades.
“The nature of the business means we may have to carry the wages of our guys for up to two months before we are paid for their work,” Mr Muller said.
“When you might be placing 100+ people at any given time, at an average of say $1000 per week, our wages bill can be quite large.
“Debtor finance with Scottish Pacific has enabled us to deal with this by providing us with the ideal funding solution for this problem.”
Brendan said the directors were keen to use debtor finance when they founded the business in 2013, having had experience of how it worked through their involvement with other recruitment businesses.
“To me debtor finance makes sense, it’s a cost to the business but once you factor it in you really don’t feel it – the great thing is that it doesn’t put a noose around your neck that makes you turn away contracts because you can’t afford to grow,” he said.
“I’d recommend it to any labour hire business, but also to anyone trying to start a business, because in the early days, or in a growth phase, cashflow is always a problem as there are constant tax and wage obligations that can really snowball.
“What we’ve found is that Scottish Pacific has been happy to increase our funding limits as the business grows – the facility we started with has increased exponentially. It’s ideal when you find a facility that actually grows with the business.”
North and South Recruitment’s founders knew they wanted to utilise factoring, it was just a matter of finding a provider who could meet their needs.
“It makes such a big difference that you can pick up the phone to Scottish Pacific and make things happen, you don’t have to wait for a week to get a meeting with a bank official,” Brendan said.
“Scottish Pacific were recommended to us. Their New Zealand staff, who we deal with regularly, have been excellent.”
“We run a lean and fast-moving operation, meaning we are all so time-pressed, with no time to beg or ask for money to fund the business. Having that ease of contact with Scottish Pacific is a huge advantage, their personal touch and availability has been very welcome.”
With the right finance in place, North and South Recruitment has been able to grow.
The business now has a turnover which has doubled in the past year and is on track to double again this year.
Scottish Pacific works closely with recruitment/labour hire business of all sizes and are proud supporters of the Recruitment & Consulting Services Association of Australia and New Zealand (RCSA).
North and South Recruitment is a New Zealand labour hire specialist within the construction and civil industries. Founded by directors Brendan Muller and Ceri John, North and South Recruitment works with New Zealand’s best companies finding the perfect people to fill civil and construction roles including machine operators, carpenters, freight drivers and skilled labourers. www.northandsouthrecruitment.co.nz