At TBOS we speak on a weekly basis to many recruitment agencies that are either using or planning on using a Pay-And-Bill solution to run their temps and contractors to see if the services we are offering can be a better alternative. On discussion with many of the agencies it often becomes apparent that there are number of flaws to the solution and in some cases it can be more expensive and time consuming.
In case you are not familiar with the term “Pay-And-Bill”, this service involves a company providing invoicing to the clients, temp payroll and the distribution of funds to the contractor and the profit to the agency as soon as the candidate’s timesheet arrives.
From the discussions with some of the agencies coming from a Pay-And-Bill solution many of them say that their biggest bug bear is that they were sold on the fact that there was an online system in place that would save them time. Unfortunately, the online system being used by these companies is not an online timesheet system but instead an online portal for the agency to upload the data on the timesheets which has to be done by the agency not the Pay-And-Bill company.
On one occasion we met an agency with 90 temp drivers working on a weekly basis where the director was not able to make any sales calls on a Monday and Tuesday each week as he was too busy uploading the candidate data (new starters and finishers) and the timesheet and expense data onto spreadsheets to ensure that the Pay-And-Bill company could raise the invoices and pay the candidates by the Friday. We worked out that even though our solution was slightly more expensive than the Pay-And-Bill company the agency would make more money on the Monday and Tuesday to compensate this cost and allow the Director to concentrate on working with his consultants and generating sales instead of being bogged down with administration.
In some ways this does beg the question of how the Pay-And-Bill companies can charge their fees between 4-6% of turnover when the agency do almost half the work and any invoice finance company would charge a maximum service charge of 2.5% (based on a £500k turnover).
Also these solutions are often labelled as “100% funding” but they often retain the VAT and PAYE element in the provider’s bank account instead of the agency’s account which can have a knock on effect on cash-flow. Additionally, when agencies try to move away from the Pay-And-Bill solution they have to plan their cash-flow where they will not receive their profit until the client pays (like any normal agency does).
At TBOS we provide an alternative solution to the Pay-And-Bill model where all the administration is handled by our staff instead of the agency as the timesheets and payroll data is sent to our offices directly. Also we help arrange and set up the invoice finance arrangements for the agencies so they get the cheapest and best suited funding for their agency which is then managed by the team at TBOS on a daily basis. This keeps the costs to a minimum and ensures that the agency spends a large portion of their time growing their sales, managing their internal consultants and developing their agency growth.