MOVING FROM PERMANENT TO CONTRACT RECRUITMENT

Any company serious about safeguarding its future – and its profits – keeps a weather eye on changes in the market place and adapts where necessary. The recruitment industry is no different and in fact probably fluctuates more than most in response to economic changes.

In the uncertainty following the Brexit referendum, it’s highly likely that your client firms will be reluctant to take on new permanent staff and will look to using contractors instead.

Not only does it make sense in the current market conditions to reposition yourself to capitalise on this shift, moving into the contract market does have a number of further advantages:

– Contract recruitment guarantees a steady income stream each month regardless of the permanent placement situation.

– As contractors’ rates are generally higher than permanent placements, with similar margins, it is accepted that you can charge higher agency fees.

– By offering a choice of permanent and contractor staff you will be the go-to agency for your clients looking for a comprehensive recruitment solution.

– It’s a fact that most contract positions renew at least once during their lifetime so you will be generating higher profits for a longer period.

– Throughout the duration of the contract you will be in touch with both the candidates and client managers regularly which will keep your name uppermost in their minds for any further business need.

– If you are looking ahead to selling the business, a recruitment firm with several long term contract placements and the subsequent large turnover will be viewed as highly attractive.

But what about the practicalities of running a Contractor Basis?

You’ve just clinched a mega deal to place 100 workers with a client but once the euphoria wears off, the practical implications surface – how can I afford the payroll? How do I know how much margin I’m making? How will I find the time to raise the invoice and chase it up if necessary? Do I owe HMRC any money?

Using an accountancy firm with specialist knowledge of the recruitment industry will give you the benefit of peace of mind and improve your bottom line. Azuki Accounts can take the stress off your shoulders, ensuring your workers are paid accurately, on time, every month freeing you to focus on business development and fee-generating activities as well as dealing with all your management accounting needs.

One key concern recruitment firms have is the issue of cashflow. That awkward delay between paying your contractors and receiving money from your client firm is daunting but, with good management, need not be a bar to moving into the contract sector. This is where invoice discounting and factoring really come into their own and could make the difference between your company succeeding or failing.

In addition, Azuki will offer timely and relevant advice such as ensuring you take the funding fees into account when calculating the profit margins and making sure funds are set aside for VAT purposes, etc.

In summary, the good news is that you can move into the contractor sector today, even with no cash. That has to be good news in today’s uncertain times!

 

 

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