Small financial services recruitment firms are feeling the pain. Especially if they’re working for big banks. In fact the bigger the bank, the greater the (alleged) pain.
“It seems to me that any sort of small or medium-sized supplier of anything to an investment bank is being held up on payment,” complains the chief executive of one medium-sized financial services recruiter. “It makes you think there’s some sort of hidden agenda, especially with the bigger banks,” he claims.
A director at another London recruitment firm confirms that cash flow is becoming the overriding issue. However, he says it’s not that banks aren’t paying on time; it’s that their terms are excessively punitive.
“Banks will usually only pay us 3-6 months after a new recruit has started,” he complains. “We could start a piece of work in January, take six months to fill the role, and only be paid in January 2012.
“We’re basically providing banks with free credit,” he suggests.
To make matters worse, most banks will then attempt to recoup their fee on a sliding scale if the new hire leaves within 3-6 months of starting.
“It’s very, very problematic,” says the director. “Cash flow is a huge issue in this industry.”
However, the head of recruitment at one large bank says recruiters are being paranoid. It’s not a question of being punitive or deliberately not paying bills on time, he says: “Some banks are just more efficient than others. If people are having problems it’s reflective of the system – some bills have to pass through lots of online and offline gates. If anything, we’re trying to make it much easier for people.”