Many businesses are heavily reliant on recruitment agencies to provide them with the specialist advice and support to enable them to grow. But recruiters can face their own business issues which, if left unaddressed, can threaten their growth and hinder the essential business services they provide.
Key to many recruitment agencies is how they ensure that they get paid.
What are the Costs of Recruitment?
“Just as other sectors have unavoidable overheads, so recruitment companies must meet certain payments,” explains Wendy Allen, of PCS Credit Management. “One good example is how they are responsible for paying the temporary staff on their books.”
They must meet these essential outgoings to be able to offer the reliable, efficient service that attracts, and keeps attracting, business clients.
“If you are a recruiter with cash-flow issues, you could be putting your entire business model at risk”
In Wendy’s experience, it is frequently newer, and smaller, recruitment agencies that can find themselves so exposed.
“As a recruitment start-up, you’re very much dependent on being paid on time so that the books balance. You need to pay your temps because they’re some of the main assets on which you rely.”
Taking Preventative Measures
There are several cash-flow dependent sectors where businesses have begun to look at alternative ways of raising finance, outside traditional banking models. One of these methods is invoice factoring. However, as Wendy observes, this is not going to suit all businesses.
“For some companies, asset finance can feel too exposing and too much of a risk. An alternative is to look more closely at their credit management.”
For Wendy, this is not simply a reactive set of processes, but rather a means of anticipating pressure points and setting up systems to prevent them becoming exacerbated.
“You don’t have to be using all your time and resources worrying over and chasing after debt. Credit control can be a preventative measure, where you ensure you identify the right kind of customers first, so that you avoid payment problems later”
Wendy points out that sound credit control is down to good relationships, which are what recruitment companies specialise in, so it should be the right fit for them.
“Don’t be afraid of seeking outside help with your credit management,” Wendy concludes, “because credit control is a specialisation that can, if professionally applied, transform your finances.”
If you would like finances transformed with credit management help, please call PCS Credit Management on 0161 941 7511 or visit pcscredit.co.uk.