Carrying out credit checks on clients is recommended to prevent cash flow issues.

Outsourcing back office solutions, including invoices and payroll services, is one of the ways through which people starting a recruitment company can help their businesses to grow.

However, to counter the potential threat of developing cash flow problems good credit control measures are required and one recruitment professional has suggested credit checking all clients.

Writing on business networking site LinkedIn, Gareth Jones advised his peers to use their judgement, insisting "if a company looks dodgy and smells dodgy, it probably is dodgy".

"Don't be tempted to go after any business - if you don't think they are not going to pay up after you have put the hard work in to source people and incurred the cost of paying them, then don't supply," he said.

He went on to urge recruitment professionals to "be very clear about your payment terms at the outset" and ensure they foster good relationships with their clients' accounts departments.

Late invoices and debt are "endemic problems" for UK businesses, Natwest and Royal Bank of Scotland said recently.

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