…or as Recruitment Agency owners call them, Non Billers
Recruitment Agencies need 2 main staffing ingredients in order to ensure that they can function effectively: a productive recruitment team and a strong back office team. There is no point in doing the recruitment sales if there is no way of invoicing them or collecting the debts. Also having the capability of being able to monitor your accounts and cash-flow is necessary to decide if you want to expand your recruitment team. Accounting for the true cost of back office staff members allows for greater clarity and better choices to be made.
Some recruitment agencies have the luxury of being able to have an in-house back office team to support their consultants (administrators, invoicing clerks, credit controllers, financial controllers, management accountants, etc.) but as this type of staff do not physically sell they can be seen as a large additional cost to the company. An alternative is to look at outsourcing all or part of the processes to payroll companies, pay-and-bill providers and accountants but in order to do a full comparison of the costs you need to take into account many factors not just the salary cost of the individuals. The factors that need to be considered are:-
- Staff Costs including Employers NI and Benefits – The cost of any staff member is not just based on the amount of salary they are paid as you also need to include Employers NI and any additional benefits offered to your other staff you may have to pay such as pensions, private medical insurance, gym membership, etc. Also, how busy are the staff members who are working? Are they busy for certain times of the month? Are two staff members really busy but by adding a third would they have an easier time but at a higher cost to the business?
- Desk Costs – The desk cost of a staff member consists of the costs associated with having their desk within the office such as portion of rent, insurance, furniture, etc. Also, when running an internal back office you have to consider the office space used as back office staff will need a private and quiet environment in order to work effectively. The storage space for financial records and documentation also needs to be considered.
- Computer Costs – The computer costs include the cost of the computers, the software and licence costs, printers and photocopiers, network and software support costs, etc. By outsourcing you do not have to worry about having specific software or licences as this is provided for you.
- Incidental Costs – Incidental costs include stationary, postage, telephone bills, etc. Often by outsourcing these costs are minimised as these are included as part of your services.
- Continuity of service – You have to look at the scenario of “what if”; if your back office staff were ill or on holiday how would your back office function? If you only have one person looking after all of the back office and they go sick, what happens? By outsourcing you are paying for someone else to worry about this on your behalf and ensure continuity of your business functions.
- Additional Provided Services – Depending on the capability of the staff you are hiring for your back office you may find you are missing some knowledge or experience which could mean you are not working correctly or efficiently. By outsourcing you will often get a full array of additional expertise and services at your fingertips without having to pay full salary costs.
By taking into account all of these factors you should be able to see whether outsourcing all or some of your back office is cost effective and good for the continuity of your business.
TBOS offers a full back office and accounts outsourcing service to recruitment agencies that would normally be provided by invoicing and payroll clerks, credit controllers, bookkeepers, management accountants along with help and advice on invoice finance and contract recruitment services. If you would like to discuss our services please do not hesitate to contact our office.