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Name: Sonovate
Industry/sector:Recruitment
Date founded: 2012
Founders: Richard Prime and Damon Chapple
Location:London
Young, talented individuals have always been drawn to recruitment but it has become increasingly difficult to attract and retain that talent.
Prime explained: “The industry has changed so much, commission schemes are lower, churn rates continue to be high and the fast track career progression once promisingly simple isn’t there, in most cases. We understood from experience how daunting the idea of starting a recruitment agency could be; some people have the ambition but lack the means to make their dream become reality.
With their recruiting experience to help them in their mission, Prime and Chapple created a platform for recruiters to launch their own businesses, while supporting their technological, financial and administrative needs.
A number of the recruiters that came to us were also concerned about how much time and administration it would take to run the contract side of their business. They had no idea that it could be such a time consuming process.
This prompted the company to take on the banks.
Until now, recruitment companies seeking contract finance have had to turn to banks, which offer off-the-shelf products that are based on outdated approaches to lending and are not tailored to the unique requirements of recruitment businesses,” said Prime. This results in complex, rigid contract finance agreements that hinder an agencys ability to scale by placing limits on, for example, the number of contractors that can be placed with a single client.
As recruiters ourselves we understand first-hand the frustrations associated with funding and running contractors. For many, the cash flow and finance admin headache presents the biggest barrier to growth. So we built a service that enables recruiters to focus their time on recruiting, rather than worrying about chasing payments.
One of the primary functions behind Sonovate Finance, however, is the average of 314,991 in outstanding late payments each year.
Cash flow is vital for the survival of small businesses and it is stopped by neglectful clients exceeding their agreed repayment times,” he said. In contract recruitment the repayment window typically sits between 28 and 45 days, but in reality payment materialises between 45 and 60 days, if not longer.
A culture of fear prevents small businesses from challenging large clients to pay on time they dont want to rock the boat and risk losing out on repeat business,” said Prime. And without any real regulations enforcing timely payment, many SMEs are left with inadequate finance solutions from banks to address the shortfall left from delayed invoice payments.
Traditionally, recruitment agencies have turned to the banks for invoice finance to bridge the gap between contractor and client payments. However, they only provide between 60-90 per cent of invoice profit and impose heavy restrictions including concentration limits and insist on all turnover agreements.
Until businesses change their position around unethical payments, and banks do more to understand the unique requirements of the recruitment sector, UK recruitment companies need to look elsewhere to address this issue.
It turns out that Sonovate is one such place.
