How alternative finance could help your company grow

Alternative finance has come on leaps and bounds in the last few years — but various studies have shown that small and medium sized companies still don’t have a particularly good understanding of the options available to them.

Although many recruiters will already be aware of ‘FinTech’ and ‘AltFi’ — because they’ve placed candidates with companies in the sector — they’re still not that likely to use those companies for their own business needs.

So why don’t recruitment firms tend to use alternative finance? The simple explanation is effort. Recruitment and human resources companies are famously busy, and while most will have a professional understanding of what AltFi companies do, for many it’s just too much overhead to spend time on reviewing which finance packages are right for the business.

What’s more, a lot of recruiters will already have invoice factoring in place and feel that they’ve got all the bases covered. But in fact, there’s a lot more out there that could be effectively used by recruitment companies — some of which they’ll already know about through their professional knowledge of the sector — and invoice finance is just the tip of the iceberg. 

The world beyond factoring

While factoring is a great way to make cashflow more predictable and manageable, it’s probably not the best way to fund medium-term growth.

Recruitment firms — particularly if they specialise in temporary placements — are most likely to have a high number of smaller invoices, rather than a small number of valuable ones. This means that although using factoring on these invoices will help you stabilise cashflow, it probably won’t get you a meaningful lump sum to reinvest in the business. And with permanent placements there’s still some risk of a rebate weeks or months down the line — which could upset your cashflow if you’ve already invested the money from your invoice financier.

That’s where alternative lending comes in. While bank loans are still hard to come by, alternative lenders offer loans that fast-growing recruitment companies can use to continue their expansion. It might be a revenue loan that offers repayment flexibility, or an unsecured loan that doesn’t require assets to back it.

With this type of finance you’ll have a meaningful lump sum that you can use to up your game and lay the foundations for future growth. Here’s a little inspiration for what you could do with the money. 

Bigger team, bigger office

Although technology has allowed an increase in productivity across pretty much every industry, there are many aspects of recruitment that still rely on people power. The more people you have making calls and searching for candidates, the more placements you’ll have in a month — and therefore the more revenue you’ll make.

A lump-sum term loan can give you the working capital you need to hire new people – and it could be well worth spending the fees to find that all-important executive search superstar who’ll transform your business.

Once you’ve got some extra staff on board, you’ll probably find your current space is getting cramped — new office space is another way you can use a growth loan to expand without leaving your working capital in a risky position.

Update your technology

Although there are still many manual tasks that recruitment professionals have to do, there are also areas where improved technology can help.

The customer relationship management system is practically mandatory for recruitment companies nowadays, but it can be a real source of frustration. While you’ve probably ironed out the kinks in your workflow for the specific system you use, a state-of-the-art CRM could be a welcome addition that gives your whole business a boost.

In an ideal world, most recruiters would love to have a CRM that integrates with job boards and social media. Enriched data means you can make better decisions on candidates faster, do more deals, and generate more revenue.

And if time is of the essence (and let’s face it, in recruitment it usually is!), a sophisticated system that allows you to run Boolean searches for specific job titles is another huge advantage in the race against the competition. And the ability to ‘tag’ different skills and experience means you’ll be able to sift through your database and find the ideal candidate faster than ever.

Many top-spec CRMs will also have integrated email capabilities, allowing you to send personalised emails to candidates at the touch of a button, and advertise roles using automated email that looks personalised.

Other tech

There are lots of other areas of tech that could help you grow your business. Tools like the LinkedIn sales navigator are incredibly useful for prospecting, but expensive, particularly for smaller firms, so you might use a business loan to bridge the gap between the outlay and the return on investment.

There are also sophisticated products out there like Twilio, which enables VOIP calling integrated with a CRM system. The ability to call or SMS using one click from the CRM could be a massive productivity gain, but as with the other technology solutions, there will be a time lag between spending the money and seeing the benefit.

All of these types of tech could help you improve your productivity and reactivity, to ensure your firm is always one step ahead — but top-end software comes with a top-end price. Of course, this price should be quickly offset by productivity-led revenue gains — and if it’s worth having it will soon pay for itself.


While it’s obvious that having a sparkling new CRM, better tech, and more people power will make a positive difference to your business, all this comes at a price. Recruitment and HR professionals know better than anyone that adding new staff isn’t cheap — and if you’ve already got invoice finance in place for day-to-day cashflow, it can be hard to find the extra cash for longer-term investment.

But it’s exactly this kind of investment that alternative finance can help with. Gone are the days you have to rely on the bank for a good-sized loan — there are now many more products on the market that suit recruitment companies, and some with added flexibility to fit businesses with less predictable cashflow.

So in 2016, at least for business finance, finding the right candidate doesn’t have to be a headache.


Conrad Ford is Chief Executive of Funding Options, recently described by the Telegraph as “the matchmaking website for small businesses and lenders”. With the free Funding Options service, you can quickly search dozens of alternative business finance providers.