6 ways trade credit insurance can support recruitment agencies

According to the Office for National Statistics’ July 2024 Labour market overview, the number of vacancies continues to fall and unemployment is rising.

The UK employment rate for people aged 16 to 64 years old was 74.4% from March to May 2024, below last year’s estimates and a decrease in the last quarter.

Therefore, high-quality recruitment services and reliable agencies are more desirable than ever.

1. We’ll support you with your funding lines
2. We’ll cover outstanding invoices
3. We’ll help prevent missed payments
4. We’ll help with collections
5. We’ll protect you against economic uncertainty
6. We’ll offer you a bespoke policy

Trade credit insurance (TCI) can be a valuable asset for recruitment agencies looking to secure and enhance funding lines. Maintaining steady cash flow is essential, as agencies often need to pay contractors and staff weekly while clients pay invoices on longer terms. This creates cash flow gaps that can strain operations.

With TCI, a recruitment agency’s receivables are insured against client non-payment, significantly reducing the risk of bad debt. Lenders recognise the reduced risk provided by TCI and are more likely to offer credit at lower rates, as they have more confidence in the agency’s ability to repay loans.

This access to cheaper, more flexible funding can help recruitment agencies scale more efficiently, with the security of knowing that their receivables are protected.

The very nature of a recruitment agency’s structure means that, at any given time, there are dozens of contracts in play. While most deals will complete, and invoices will be paid when candidates are placed, there’re some that’ll become outstanding.

Some sectors have been badly hit by financial struggles or insolvencies in recent years and, despite the desire to grow, businesses may not be able to fulfil their commitments or become slower in doing so. This is especially true for the retail, manufacturing and construction industries.

Other businesses have found they’ve had to offer higher starting salaries to secure the candidates they require, bolstering the financial burden.

2024 started with insolvencies above pre-pandemic levels in most advanced economies and we expected another acceleration in global business insolvencies as the year progressed, before a stabilisation in 2025.

Trade credit insurance can cover losses incurred from client non-payment, providing protection to recruitment agencies that may have already paid wages before receiving payment on their invoices.

This protection helps prevent a ‘domino effect’ where the financial troubles of one client cascade through the agency. By insulating themselves from these risks, recruitment companies can maintain a stable cash flow—vital for paying staff, meeting operational expenses, and funding ongoing recruitment activities.

The very nature of a recruitment agency’s structure means that, at any given time, there are dozens of contracts in play. While most deals will complete, and invoices will be paid when candidates are placed, there’re some that’ll become outstanding.

Some sectors have been badly hit by financial struggles or insolvencies in recent years and, despite the desire to grow, businesses may not be able to fulfil their commitments or become slower in doing so. This is especially true for the retail, manufacturing and construction industries.

Other businesses have found they’ve had to offer higher starting salaries to secure the candidates they require, bolstering the financial burden.

When invoice payments are missed, trade credit insurance can cover the cost for indemnified policyholders. However, a conscious effort must first be made to secure the payment with terms that work for both parties.

Our team can step in and help with this complex and time-consuming process, allowing your teams to concentrate on their core day-to-day activities. No matter where in the world a debtor is located, we have a team of investigators, negotiators, and legal professionals who can help recover outstanding payments.

This process involves alerting the debtor that we’ve been appointed and stressing the need for a swift resolution. If this is unsuccessful, a collection specialist will research the debtor and gain a deep understanding of the situation. With this information, they can reapproach the debtor in a way that is most likely to end positively and maintain the customer relationship.

For UK debts, our process ensures that claims are resolved within 60 days—whether through successful collection or payment of the claim—helping you manage your cashflow more effectively. This prompt timeline minimises potential disruptions and allows your agency to maintain a steady working capital, enabling you to focus on growth without being held back by overdue invoices.

We’ve already mentioned insolvencies leading to missed payments, but economic or political factors can also impact invoices.

For example, one of the benefits of trade credit insurance is being able to successfully navigate uncertainty. Following Brexit, the UK recruitment industry faced challenges and subsequent market volatility. Trade credit insurance helped mitigate the risks associated with market uncertainties and continues to provide stability in unpredictable environments today.

At Allianz Trade, we understand that no two recruitment agencies are the same. With over 62,000 clients worldwide and an AA rating, we bring extensive experience and deep industry knowledge to the table. We work closely with recruitment companies of all sizes across various sectors, so we know that a one-size-fits-all policy doesn’t work.

That’s why we take a bespoke approach to our recruitment policies. Our tailored solutions are designed to meet the specific needs of your business, ensuring that you’re fully protected where it matters most. Whether it’s adding clauses for binding contracts, enhancing delayed effects, or incorporating specialised recruitment wording, our team can craft a policy that works for you.

Whether you’re looking to secure cash flow, enhance client relationships, or simply protect your bottom line, trade credit insurance offers powerful benefits for recruitment agencies. With our expertise and tailored approach, you can focus on growing your business with confidence.

If you’re looking for a bespoke policy that aligns with your agency’s unique needs, reach out to our consultants today. Visit our trade credit insurance page to learn more, or request personalised quote online.