Sonovate review: recruitment invoice finance and back office for UK agencies

Sonovate is a specialist finance and technology platform for recruitment businesses. It funds the invoices that agencies raise for contractors and freelancers they place, and wraps that funding in back office tools for payroll, timesheets and invoicing. Smart Funding Solutions is an independent broker and is not part of Sonovate. Sonovate is one of the lenders on our panel, so we can compare its model with general invoice financiers and other recruitment funders.

01About Sonovate

Sonovate was founded by people with long careers in the recruitment industry, and that background shows in how the product is built. It describes itself as the platform powering global recruitment and has bases in London and Cardiff.

It says it has funded more than £6 billion of invoices, works with more than 1,000 active clients and supports agencies in over 40 countries. Its clients range from start up agencies placing their first contractors to established staffing firms and consultancies.

02What Sonovate funds

Sonovate's core service is recruitment finance based on the agency's sales ledger. In simple terms, Sonovate buys the invoices for the contractors you have placed, pays those contractors, sends you your margin in advance and then chases your client for payment.

Because Sonovate collects payment from your clients, it works much like invoice factoring, with credit control included.

The big advantage for a contract recruiter is cash flow timing. Contractors expect to be paid weekly or monthly, while end clients often pay on 30 to 60 day terms. Without funding, a growing contract desk can run out of cash simply by winning more business. Our article on funding wages covers other ways businesses bridge that gap.

03Who Sonovate suits (and who it may not)

• Good fit: recruitment agencies placing contractors, freelancers or temporary workers who need to be paid before the client settles.
• Good fit: start up and young agencies that want funding and back office support in one place.
• Good fit: agencies with clients overseas, given Sonovate's international reach.
• Less likely to fit: businesses outside recruitment and labour supply, as Sonovate is built specifically for that sector.
• Less likely to fit: agencies that only make permanent placements and want a general business loan rather than invoice based funding.

04What Sonovate looks at

Sonovate does not publish a fixed list of criteria. For recruitment invoice finance, providers typically look at:

• The creditworthiness of your end clients, since they are the ones paying the invoices.
• Signed contracts or terms of business with clients and contractors.
• Approved timesheets supporting each invoice.
• Your placement pipeline and contractor numbers.
• Company details, director background and any existing funding.

Sonovate says it carries out automated credit checks on clients, so the quality of who you place contractors with matters a great deal. A spread of solid clients will usually get you better terms than reliance on one large customer.

05Pros and cons

Pros

• Built specifically for recruitment, by people from the industry.
• Funding plus payroll, timesheets and invoicing in one platform.
• Credit control and client credit checks included.
• Supports start up agencies as well as established firms.
• International reach for agencies with overseas clients.

Cons

• Only suitable for recruitment and labour supply businesses.
• Clients will know a funder is involved, because Sonovate collects payment.
• Moving payroll and back office onto a new platform takes some setting up.
• A general invoice financier may be cheaper for agencies that only need funding.

Sonovate says it carries out automated credit checks on clients, so the quality of who you place contractors with matters a great deal.

06Applying through a broker vs going direct

Recruitment agencies have more choice than they often realise. Some invoice financiers have dedicated recruitment teams, some offer confidential facilities, and some will fund both contract and permanent fees. Sonovate's combined funding and back office model is a strong offer, but whether it is the best value depends on your size, clients and how much admin support you want. Our invoice finance hub explains the main options.

We compare the market for you, present your agency's figures to the providers most likely to fit and manage one application. It is free to enquire; any broker fee is disclosed separately before you proceed. Use our Instant Quotes tool to compare lenders in minutes.

07Alternatives to Sonovate

• Skipton Business Finance may suit larger agencies that want a traditional invoice finance facility with a relationship manager.
• Bibby Financial Services is a large invoice financier worth comparing alongside a specialist platform.
• Ultimate Finance is another option for agencies wanting invoice funding without moving their back office.

For Sonovate's own information, visit sonovate.com. Any firm's details can be checked on the FCA Register.