Partnership with Skipton Business Finance

We announced last week that we have formed a partnership with Skipton Business Finance. We are really excited about this and how we can mutually serve recruitment businesses with the best resources and services possible. If you are not familiar with Skipton Business Finance, read on to find out more. 

Skipton Business Finance - what we do

Skipton Business Finance (SBF) provides businesses with working capital through flexible Invoice Finance solutions, including Invoice Factoring, Invoice Discounting, LedgerLite, Headroom Facilities and our interest-free Skipton Select solution. With over 20 years’ experience, we have a business finance solution to suit any type of business, offering speed of delivery and unrivalled flexibility. With multiple locations throughout the UK, this also enables us to form even closer relationships with our clients and introducers. 

We can provide working capital to a business by advancing funds varying from £50,000 up to £15m. A healthy cashflow is vital to any business and our funding solutions allow you access to working capital when an invoice is issued to your customer. The solutions we provide can be used on a confidential or disclosed, light touch or credit managed basis, but what we're really proud of at SBF is that each and every solution we structure is tailored to every single business we partner with.

A personal service

With nearly 900 active clients, we are incredibly proud of our 98% customer satisfaction rate (carried out most recently in Dec ’22).  It’s our belief that we achieve this through;

A Flexible Approach to Funding – Unlike other financial institutions, we don’t base decisions on balance sheet multiples or historic financial performance alone. Our one goal is to create a solution to grow with your business - meaning you don’t have to keep going back to your funding partner, ask for increased funding, that we know can take too long.

Dedicated Account Manager – No getting passed from one department to another every time you need to speak to someone. You will speak to a dedicated account manager who knows you and your business inside out and will be able to facilitate rapid decisions to ensure you have the correct level of funding at all times.

Direct Access – We understand that running a business is time consuming and you don’t have time to be held up in call centre queues, repeating the same security questions over and over. When you call us, you get through to your Account Team – it’s that simple.

Simple Process – Every office completes their own commercial underwriting, so you’re not waiting for cross-department admin and your financial solution is processed smoothly.

Our People-Orientated Approach – Businesses often choose to stay with us for their financial needs, as and when their demands change. This is because we put you first and take the time to really understand your business’s needs.

A Building Society ethos

As part of Skipton Building Society, we share a unified ethos for client care and high-quality service. Independent from the UK clearing banks, Skipton Business Finance has the dual benefits of being part of a highly successful and long-established financial institution in Skipton Building Society, whilst retaining all the benefits of an independent. We have no expensive shareholder dividends to pay, therefore we are very much focused on understanding our clients’ business needs and assisting in creating wealth and jobs in business.. 

If you’d like to find out more about our Invoice Finance solutions and how we could help your business, please get in touch at info@skiptonbf.co.uk or visit our website.

Pay Exchange

David Earl, Business Development Manager of Cambridge Global Payments highlights the challenges of working across currencies.

It is becoming more and more frequent for UK based recruiters to expand into global markets. Here at Cambridge, we have spoken to a number of businesses who face challenges when it comes to Foreign Exchange and highlighted some considerations to make when venturing overseas.

To begin with, the challenge. Let us say you invoice a customer $200,000 with 90 day payment terms.

On day one, you use the market rate of 1.2500 to work out your equivalent revenue in GBP.

$200,000 @ 1.2500 = £160,000

However, by day 90, when they pay, the rate of exchange has moved to 1.3000.

$200,000 @ 1.3000 = £153,846.15

Revenue depreciation : £6,153.85

How can this be managed better? Here are four points for to consider when you address expanding into global markets.

1. Accept payment into the correct currency account

Even in this day and age, it is still common for businesses to accept a foreign currency into their GBP account. The charges applied to this can be substantial, commonly at 3-4 per cent by the Bank. When our clients move into new international markets, Cambridge have over 30 currency accounts which they can utilise when accepting foreign currency revenue. At that stage the business has the control of the conversion, generating a substantial cost saving and allows you to convert the funds as and when it suits you best.

2. Check how broad your provider’s FX product portfolio is

Check what type of FX products they offer. Having access to a broad portfolio of FX solutions may be important if you want to develop a robust hedging strategy. If your needs are fairly simple, you may only need access to spot transactions. However, if you are a larger business with more exposure to currency, a range of products could be important.

3. Keep focus on the FX losses on your balance sheet at the end of the year

The foreign exchange (FX) market can be volatile and some days you may see market move by one per cent or more. If you begin to pay a supplier or receive from a customer the foreign currency equivalent of £100,000, a one per cent move in the market would make a £1,000 difference to the cost or sale. Most businesses don’t have the time or resource to monitor the currency market regularly or the knowledge to protect themselves against market volatility. There are a number of currency market specialists that you can speak to for help. There is also a range of products that allow you to fix the FX rate including forward contracts and structured products.

4. Consider having a look into your provider’s international payment capabilities

Not all FX specialists offer the ability to send third party payments. If you need this option, it may make sense to work with a provider who can facilitate currency exchange and send funds on your behalf. Not all providers can send funds to all destinations in all currencies. If your business makes payments to exotic destinations in emerging market currencies, check that your provider can do this. Some providers will have specialists with expertise in exotic currencies.

Working in foreign currencies can be complicated and without special care can lead to losses as the currency markets shift. Taking advantage of dedicated services in this area can mitigate these risks and make any foreign expansion worth so much more.

Cambridge Global Payments is a leading provider of integrated cross-border payment services and currency risk management solutions. As a trusted partner for over 25 years, Cambridge delivers innovative solutions designed to mitigate foreign exchange exposure and address unique business needs.

Visit Cambridge Global Payments’ partner page to view their exclusive Recruitment FDs' member offer

5 Questions to ask before you consider foreign exchange hedging

Written by Darryl Hood, Head of UK Options Dealing and Sales, Cambridge Global Payments

If your company is weighing up the pros and cons of foreign exchange hedging, take a look at our five-point checklist…

Q1 - What do I hope to achieve from my currency hedging strategy?

As with any strategy you need to have a clearly defined goal. To a certain extent, your goal will help you determine whether to hedge and which may be the most suitable foreign exchange (FX) hedging products to meet your needs.

As the currency market has been volatile in recent times, your goal may simply be to protect your business from foreign exchange losses. Adverse currency market movements can have a direct impact on your company’s profitability. In this scenario you might consider using a foreign exchange forward contract. This allows you to fix the FX rate for a set time period.

Q2 - What impact would a 10% move in the FX market have on my business?

You may think a 10% currency market move is unlikely but, given the current political and economic environment, we cannot rule it out. Put your foreign currency exposure in the context of your profit margins. If you’re an importer or exporter with a profit margin of 10% or less then a swing of this degree could wipe out your profit and may result in you making a loss.

Also consider if you’re in a very price competitive commoditised industry. A couple of percent variation in your price due to a 10% move in the currency market may result in competitors taking business from you. In this situation foreign currency hedging may be a good option. It allows you to fix the exchange rate for a set time period and accurately forecast your profitability on future sales over this period.

If you have a much larger profit margin than 10%, you may think you can absorb the losses if the market moves against you and enjoy the gains when the market moves for you. However, even in this situation you may decide to hedge 50% of your exposure when the market is favourable. You then know you have a fixed rate on a share of your currency exposure for times when the market is against you.

Q3 - How easily and quickly can you re-adjust pricing with customers or suppliers?

If your business prices each piece of work individually and the time between quotation and acceptance is relatively short, you’re probably less sensitive to currency market movements. In this scenario you may decide to adjust your pricing according to the FX rate when you provide a new quote to customers.

If, however, your pricing is only updated once or twice a year (in a catalogue, for example) you’re more at risk from currency market movements. Many retailers and travel companies fall into this category. If you are an importer or exporter in this situation you may choose to fix the FX rate for the catalogue period in order to protect yourself from any adverse currency market movements.

Q4 - Can I accurately forecast business currency requirements?

Is it possible to accurately forecast how much currency you’re going to need to buy or sell over the next one, three, six or twelve months? If you’re a well-established business this is much easier as you have historical data to help forecast future requirements.

You may find forecasting more challenging if you:

• are a new business

• have just started working with a new overseas distributor

• have a new product or service and don’t know how well it will sell

Most forward contracts and structured products require you to commit to an agreed sum of currency over a set time period. Therefore, should there be a significant drop in your currency requirement, you are still committed to the contracted amount of currency. Whilst you may be able to sell the contract back to the market, if the contract has devalued you may be liable for any losses.

If there is a level of uncertainty over your requirements you can still protect yourself using foreign exchange hedging products but you may choose to only hedge 50% of your requirements and use the daily currency rate (spot market) for anything else you need. In this way you limit the potential downside if the FX rate moves against you and won’t leave yourself over-committed should your situation change.

Q5 - Do I have cashflow that can support my currency hedging requirements?

If your business is tight on cashflow, you may need to think about the following:

•  Can I afford to pay a deposit of 5% of the total currency hedged up front?

Some providers may ask you for an upfront deposit to secure the currency contract, which is returned once the contract has matured. This gives the provider security should you default.

• Can I afford to make further deposit payments if the currency market moves more than 5% against the contract?

If the market devalues the contract by more than 5%, some providers may ask for an additional deposit payment, which could be another 5% of the value of the contract. This is often known as a “margin call”.

•  Will I have the funds available when the contract matures to cover the contract?

On maturity you may be obliged to pay the remaining balance of the contract. Therefore, you need to make sure you have the funds available to settle with your provider.

If you answered “no” to any of these questions you may not have the available cashflow to hedge at this time.

It can be difficult to assess whether your business is ready to hedge currency, and what products may be suitable. These questions are a good starting point, but if you’d like to discuss foreign currency hedging with one of our experts, please fill out this form and we’ll be in touch.

For more hints and tips on international payments, download our white paper today.

Cambridge Global Payments, a FLEETCOR company, is a leading provider of integrated cross-border payment services and currency risk management solutions. As a trusted partner for over 25 years, Cambridge delivers innovative solutions designed to mitigate foreign exchange exposure and address unique business needs.

Visit Cambridge Global Payments’ partner page to view their exclusive Recruitment FDs' member offer

The 10 Commandments of Commission & Rewards

Written by Carl Jones, Founder of Konquest

The 10 Commandments of Commission & Rewards schemes:

Whether writing from scratch or reviewing (which I'd suggest you do annually), starting with desired behaviours is a smart choice. Quite often undesirable behaviours can be traced to the wrong ones being incentivised.

Consider each role independently, ensure you're incentivising the right behaviours and regularly review to ensure the ship and all it's crew are sailing in the right direction.

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Anything that's detailed in your employment contracts naturally becomes contractual. So, if you ever want to make changes to your commission plan, and they're detailed in your contracts then you're talking a change of contract. At best a pain in the backside, at worst a real headache.

Instead, make reference to a separate commission policy, or section in your employee handbook. You'll thank me later.

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There's one sure fire way to limit sales performance; limit the reward. Just don't do it. Ever.

Well, there are some exceptions. One of the best of which is New Business incentives which give the account originator a split of any fees made with a new client. Limit this by TIME, 12 months is fair, and goes back to the desired behaviours; you want these guys and gals opening new doors, but you don't want them sitting back forever once they've opened a few.

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About 25% of recruitment agencies operate a "flat rate" scheme. That means a quarter of us are leaving a whole lot of effort on the table.

The problem with flat rate schemes is that the rate of reward doesn't correlate with the increased effort needed to over perform. As such they do little to encourage urgency, and the result is lower performance than what's possible. This is all driven by suboptimal incentive programming.

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Opposite and inverse to the last commandment, I've seen some crazy complication. If your policy is more than a couple pages long it's probably too complicated. The core elements should be easy to convey with a paragraph or table:

• What's expected

• What do I get if I achieve X, Y, Z...

• When do I get it

• Any exceptions / special conditions

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Not to try and sound cool, but there are levels to this game, and your rewards programme should have levels too.

Levels, or tiers help create urgency and form the basis of gamification. If you want your team to be forever pressing on, make sure they always have another level of reward to strive for. Don't leave anyone out, apply the same concept to all roles including resourcers and delivery consultants.

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Warning, controversial opinion ahead; thresholds are a good thing, when used properly.

Threshold or not to threshold? It's about 50/50 in the recruitment market, and I'm on the side that HAVE them for perm, but NOT contract. Building a contract desk takes time, and is tough, so I don't think having a threshold is conducive to an effective incentive here, but for Perm I think it's essential.

The modern recruitment consultancy pays good basic salaries, invests in internal and external training, provides a rich and sexy toolkit and operates within proven frameworks for success. So I think it's appropriate that in return for this we expect a minimum level of performance, or return on our investment. Anything less than this minimum level is underperformance, and it shouldn't be rewarded.

However, once this level has been breached I think we should be rewarding our troops handsomely and this starts with paying from £0 up - an inclusive threshold, if you will, as opposed to an exclusive threshold which pays from the threshold amount onwards.

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A well rounded rewards programme considers more than month to month individual performance. The best setups that I've seen also have elements that reward other highly desirable behaviours such as teamwork and loyalty. Do you cover all 3?

Take the below example from Theo James Recruitment. Director Mark Bracknall introduced their "Bushido Board" which hangs proudly in the office. Based on lifetime billing, the Bushido Board moves consultants up the levels of ancient Japanese society, with each level bringing a new benefit, from be released from their desk with a headset, to enhanced commission, health care, and car allowances:

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I've seen this a surprising amount. The classic example is lunch clubs - hit your monthly / quarterly target and you're at lunch with the directors. This is a false economy, and makes no commercial sense.

Anytime you add a layer of reward, do all you can to make sure it is self funding so that everyone wins, including you! Lunch clubs should be based on achieving a stretch target, for example. To GET extra, DO extra.

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We've reached the final commandment and it's one I feel quite passionate about - the immediacy of reward. The concept is very simple; the quicker I'm rewarded for an action, the more effort and urgency I will apply to completing the action.

In her study "It's about time: Immediate rewards boost workplace motivation", Kaitlin Woodley, a Marketing Professor at Cornell University, discusses the benefits of quicker rewards. Not only did the study conclude that there is a direct correlation between reward speed and intrinsic motivation, but also an increase in enjoyment and interest in work. If that's not compelling enough, the study also found that a QUICKER reward carried a BIGGER impact than a LARGER reward; 35% vs 19% #powerstat

In recruitment immediate rewards are impractical, and things like payment terms, rebate length and dropout rate are likely to influence when you decide to pay commissions. However, I'd urge you to keep the period between doing a deal and getting paid as short as possible if you want to maximise motivation and happiness.

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About Konquest

Having a great rewards programme in place can make a real impact on your business, but managing calculations, disputes and approvals can become a drain on resource if like the rest of the industry you're still using spreadsheets. As you've made it this far, please permit me just a few more seconds to outline why I think you should consider looking at Konquest:

• Autonomy - an industry buzzword for good reason. Konquest automates your calculations.

• Transparency - sharing comms pipeline's with your team will boost motivation and with it performance. Konquest provides all shareholders with their own login so they can track progress.

• Security - spreadsheets are centralised, corruptible and insecure. Konquest is securely encrypted in the cloud.

• Accuracy - where manual process exists, human error exists. Konquest calculates accurately without fail.

• Audibility - Konquest retains a digital audit trail against every claim. Giving you peace of mind should you ever need to manage a dispute.

I'd love to hear from you - Carl@konquest.io