Recruitment Is a Finance Business in Disguise: 6 Money Rules That Keep Agencies Alive

Here's a number that should make any agency owner put their pint down: 345 recruitment agencies went insolvent in England and Wales in 2025 (opens in a new tab), and most of those were creditors' voluntary liquidations. Late payment doesn't help either. Government-commissioned research estimates it costs the UK economy almost £11 billion a year and closes 38 businesses every day (opens in a new tab), and the average affected business is owed around £17,000 at any given time. On the latest episode of RecTalk (opens in a new tab), Nitin Sharma sat down with Louisa Plint, founder of Auxeris (the company behind AuxPay), for an honest chat about the money side of recruitment. Her view? Most of us have been looking at this business the wrong way round.

Recruitment is a finance business, not a sales business

The very first slide of Louisa's pitch deck says it straight out:

"Recruitment is a finance business disguised as a sales business. You are dealing with lumpy money coming in and you are having to think and plan about how that money is then allocated over the next 12, 18, 24 months."

Everyone obsesses over winning more clients. Louisa's answer: fine, "just make sure they pay you." And if they don't, make sure you know how to handle the people you can't pay.

Rule 1: Always pay your VAT. No exceptions.

If you remember one thing from this episode, make it this one. Louisa's golden rule: "Always pay your VAT." She'd rather have a debt collector from a loan shark after her than HMRC.

The reasoning is simple. As Nitin put it, VAT money "is not yours". It comes from your customer and passes straight through you. HMRC will grudgingly talk to you about a corporation tax or PAYE shortfall. Spending the VAT is a whole different conversation. Louisa says she has "begged, borrowed and stolen" to make sure hers gets paid.

Rule 2: Own your own books

Louisa told the story of a business owner who couldn't file his year-end because his accountant was holding the work back over an unpaid bill. The obvious fix was to get someone else to do it. The problem? "I don't have access to my own accounts."

Nitin admits he was the same once. He handed the entire back office to a business partner, turned down online banking, and only went through the books when things fell apart: "Why is there so much being attributed to director's loan here? None of these transactions are mine."

The takeaway:

• Be the admin on your accounting software, and give your accountant access as an agent
• Open the management accounts your accountant sends you. Nitin heard from one recruitment accountant that small agencies open them at a rate of "practically zero"
• Learn the basics. In Louisa's words, "it's not rocket science"

Rule 3: Cash in the bank isn't the same as solvency

Nitin found out the hard way that he'd been trading insolvently, because he'd always reasoned "we've got money in the bank" and invoices were coming next week.

Louisa explains that recruitment agencies rarely build up assets. Your laptops won't save you. What counts is your balance sheet: cash plus what you're owed, set against what's due. "If you're owed 25 grand and in the next three weeks you owe 120, then you've got a bit of a problem."

Same goes for burn rate. A £150k balance looks great until you remember your costs are £30k a month.

Rule 4: Don't sign a three-year contract two months in

Nitin has seen agency owners wind up their businesses because they were stuck paying for per-seat CRM and LinkedIn licences they no longer needed after shrinking from 50 people to 12. He's been caught too: a three-year software deal signed two months into a new business, followed by a claim for £45,000. After a lot of back and forth, he settled it for £2,000.

Louisa's verdict: "Don't get into a three-year contract two months into a business." Before you sign, build in an exit route.

That's why Nitin now asks suppliers who want to join the rectools® ecosystem a blunt question when they offer two- or three-year terms: "Do you not back your product? Why don't you have a rolling option?" Suppliers, take note.

Rule 5: Everything is up for negotiation

This is the big one. Louisa says: "When you owe someone money, they have really three outcomes. They get paid in full, they get paid in part, or they don't get paid at all."

If a creditor pushes you into winding up a business with no assets, they often end up with nothing. So they negotiate, and HMRC does too. Louisa has heard of people turning a £50,000 PAYE demand into a ten-year payment plan. HMRC figures back that up: £3.8bn of overdue tax sits in 172,402 Time to Pay agreements (opens in a new tab).

A few of Louisa's tactics:

• Find a human. On HMRC calls, she asks whether riding a horse counts as operating a vehicle. If they laugh, she stays on the line.
• Ring before you have to. Lenders and card providers have responsible-lending hardship options that they rarely advertise.
• Use your leverage. She got an extra 15% off a software deal by bringing her fractional CFO in at the last minute.
• Set up parachutes early. She negotiated a £10k overdraft for her agency and never touched it. It's "all about the parachute".

Recruiters already haggle all day ("we send our terms at 35%" and end up at 15%, as Nitin says). Use the same skills when you're the one doing the buying.

Rule 6: Get paid on time, and build a business worth selling

Louisa's company, AuxPay, is built to tackle the late-payment problem, and she says hiring companies of every size have been happy with it. She's honest that agency owners often push back at first with "my clients would never go for that." Her reply: everyone thinks their clients are special.

Clean books pay off at exit time too. Louisa told the story of a founder whose buyers spent 18 months on due diligence, ready to knock money off for every problem they found, and found nothing. If you're still on an incubator model, the episode also mentions Recruitment Funding Solutions, which rectools® recommends for back-office support. Just keep an eye on when doing it in-house becomes cheaper.

Louisa signs off with a warning: stick your head in the sand and you'll "end up with a business that, if it goes, is going to be worth less than you want it to be. And if it doesn't go, you're going to be left cleaning up the mess."

This is general information, not financial or legal advice. If cash is tight, talk to a qualified adviser.

Watch or listen to the full episode with Louisa Plint on RecTalk (opens in a new tab).