Recruitment · 🇬🇧 United Kingdom
Paying contractors weekly, invoicing clients monthly
A recruitment agency funding the gap between contractor pay runs and client payment terms ran out of headroom.
UK recruitment agency, permanent and contract placements. Client identity withheld — we publish names only with written permission, so this engagement is described by its shape rather than by who it was.
Weekly → matched
Pay and billing cycle
54 → 31
Debtor days
Weekly
Cash forecast introduced
The situation
- Contractors were paid weekly. Clients were invoiced monthly on 30-day terms.
- The agency was effectively financing seven weeks of contractor cost on every placement and had not modelled it.
What we found
- Working capital requirement grew with every new contract placement — growth made cash worse, not better.
- Timesheet approval delays pushed invoicing later still.
- Permanent placement revenue was subsidising the contract book without anyone seeing it.
What we did
- Modelled the working capital requirement per contract placement so the cash cost of growth was visible.
- Moved timesheet approval to a weekly cut-off and invoiced weekly in arrears rather than monthly.
- Separated permanent and contract profitability.
The outcome
- Debtor days fell from 54 to 31 and the funding gap narrowed from seven weeks to about two.
- Separating the two revenue lines showed contract placements were materially less profitable than assumed.
What we'd flag
Two clients pushed back on weekly invoicing. One accepted fortnightly; one did not move.
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