​When choosing a recruitment partner, it’s easy to focus on their sector expertise, candidate network, and sales pitch. But there’s an equally important factor that often gets overlooked: the financial stability of the firm itself.

As a CFO in the recruitment industry, I’ve seen how a company’s financial health directly impacts its ability to deliver consistent service. A recruitment firm that’s financially unstable is more likely to cut corners, delay contractor payments, or even fold mid-contract, leaving clients exposed. Here’s how to assess the financial soundness of a recruitment partner before committing to them.

1. Check Their Creditworthiness
Start with the basics: does the firm pay its bills on time? Credit checks, via agencies like Experian or Creditsafe, provide a snapshot of how the company manages its obligations.

Red flags include:
• A poor or declining credit score
• County Court Judgments (CCJs) or other legal actions
• Late payment records with suppliers

While one-off issues can happen, a pattern of missed payments suggests deeper cash flow problems.

2. Look at Filed Accounts – But Read Between the Lines
In the UK, all limited companies file accounts with Companies House.

These can be a goldmine if you know what to look for:
• Revenue trends: Is turnover growing, stable, or declining?
• Profit margins: Low or shrinking margins may indicate pricing pressures or inefficiency.
• Cash position: Healthy cash reserves suggest resilience; a high reliance on overdrafts or short-term borrowing can be a warning sign.
• Debtor days: If receivables are ballooning, it may indicate clients are slow to pay, or worse, that the firm’s credit control is weak.

Remember, many recruitment firms use invoice finance, so high debtor numbers aren’t always a problem, but they should be offset by a clear funding arrangement.

3. Understand Their Funding Model
Most agencies fund contractor payroll before they’re paid by clients. If they rely on invoice financing, that’s normal, but how well is it managed?

Signs of a healthy model include:
• A transparent relationship with a reputable financier
• No history of “funding gaps” or payroll delays
• Clear terms around client debtor risk (e.g., does the agency have credit insurance?)

Ask directly: “How do you fund contractor payroll, and have you ever missed a payment?” The response will tell you a lot.

4. Scrutinise Their Payment Practices
A financially unstable agency may delay paying contractors or suppliers to preserve cash. This creates operational and reputational risk for you.

Check:
• Whether they pay contractors on time, every time
• Whether they have any disputes with umbrella companies or limited company contractors
• Whether there have been complaints or online reviews pointing to payment issues

Contractor confidence is essential, if they stop trusting the agency, your projects suffer.

5. Assess Operational Resilience
Financial health isn’t just about numbers, it’s about how well the business is run.

Ask questions like:
• What’s your contingency plan if a major client defaults?
• How do you manage compliance and payroll risk?
• What systems are in place to ensure accuracy in billing and payments?

A well-managed agency will have answers ready. A vague or defensive response is a warning sign.

6. Watch for Overdependence on One Client
A recruitment firm that relies heavily on one or two clients is more exposed if those relationships falter. Look for a diversified client base and ask about their largest customer’s share of revenue. A balanced portfolio means less risk for you.

7. Seek References and Reputation Signals
Lastly, don’t underestimate the power of reputation. Speak to other clients, check online reviews, and see how the agency is perceived in the market. A firm with a history of ethical dealings, timely payments, and financial transparency will stand out.

Final Thought
Partnering with a recruitment agency is a strategic decision. Beyond their sales pitch, you need to know they have the financial strength to deliver on their promises, through good times and bad.

At Skillfinder International, we’ve always believed that financial discipline underpins everything we do. From contractor payments to client delivery, our stability is what allows us to take on complex projects and build long-term relationships.

When you assess a recruitment firm, don’t just ask if they can find you talent, ask if they can do it sustainably. The answers you uncover will tell you whether they’re the partner you can rely on.

We Don’t Just Find Talent – We Sustain It.
Discover how our approach keeps projects moving, contractors confident, and clients protected. even when the market shifts. See How We Work ›