As Game of Thrones ends, TBOS marks the finale by setting alight the many pitfalls of hiring an expensive accounts team for your recruitment business.
When a recruitment agency develops to a certain size it is not uncommon for directors to hire an internal accounts team for its business needs. They will usually start off with administrators to look after the invoicing, credit control and payments and then develop into financial controllers and in-house accountants to complete management accounts, VAT returns and year end accounts.
Whilst this may seem like a natural progression for some agencies this can be a costly exercise and require a level of HR management which can take up a lot of the director’s time, when ideally, they should be spending their time on closing sales and acquiring new clients for the business.
For this reason, TBOS lists the top 5 pitfalls of hiring an internal accounts team for your recruitment business:
1. IT CAN BE VERY EXPENSIVE ON THE WAGE BILL
The wages for back office and accounting staff depends on their experience, qualifications and the work they will be undertaking for your agency. For accounts administrators alone, you are looking to pay a minimum salary of £20k P/A just to look after the invoicing, credit control, payments and general admin. However, you step into the salary expectation for payroll, bookkeeping, management accounts, VAT returns etc, you are looking at senior finance staff which are far more costly. You will also have to take into account whether you need more than one person in the team to cover holidays, sickness and workload which can double (or even triple) up the costs.
2. THEY TAKE UP SPACE THAT COULD BE OCCUPIED BY RECRUITERS
Back office and accounting staff require their own space within a busy recruitment agency in order for them to perform their role within the business. Often this cannot be next to the consultants who should be constantly on the phone due to the noise distraction and also due to the sensitivity of some of the information being handled such as bank details, company finances and staff payroll. They will also require space for filing documents, photocopiers and printers which means their area can be quite large in comparison to utilising the space with recruitment consultants.
3. THEY COULD BE MISSING VITAL EXPERTISE
The rules and regulations imposed by HMRC are ever-changing and it is up to your accounts team to ensure they are staying ahead of the legislation in order to keep the agency compliant. This may involve ongoing study, attending seminars and subscribing to alerts about recruitment specific legislation. By allowing one person to hold all of this knowledge may be an issue if the person leaves, ultimately exposing your company to potential risk.
4. THERE ARE OTHER COSTS TO CONSIDER
When most directors do a comparison quote on their current back office costs they will mainly look at the staff salaries of the personnel in the accounts department. With that said, there are often other costs that need to be considered such as employers NI and HR costs, computers and accounting software licences, stationary and postage, office space and furniture. There is also the management time on the director who ultimately has to split their time between the recruitment and accounts team.
5. WHAT HAPPENS IF YOUR ACCOUNTS TEAM DO IT WRONG?
One of the biggest concerns for any company is if the accounts team makes significant errors on a daily/weekly basis. This could be if they pay funds to the wrong bank account, if they complete the bookkeeping incorrectly, if they miss a HMRC or Companies House deadline or potentially steal funds from the company accounts and hide it. All of these scenarios can cause reputational distress along with potential financial losses to the company.
HOW TBOS CAN HELP WITH YOUR BACK-OFFICE & ACCOUNTS
TBOS provides a comprehensive back-office and accountancy solution for recruitment agencies making permanent and/or contract placements. Our solutions provide the agency with all the staff, software and services they require to look after the day-to-day running of their company such as timesheets, invoicing, credit control, payroll, bookkeeping and management information.
What’s great about this service is that it allows the director to concentrate on making placements, managing their teams and growing their agency. Another benefit is our fixed fee plans which are significantly lower to employing in-house staff. With over 10 years’ experience in the business, we also provide the expertise and knowledge to ensure your agency remains compliant and up to date on current legislation.
For more information on how TBOS can help with your agency’s back office and accounts, please contact our office on 0345 504 6333.