When setting up a recruitment agency, usually an accountant the director or directors already know and trust is brought in to handle year end accounts and statutory work while the recruiters themselves work to keep up with the company’s back office needs.
This combination is designed to ensure that the accounts are as accurate as they can be, while also keeping the cost of the back office as low as possible. As the agency passes the six month mark and reaches profitability, usually they will look to bring in an administrator/bookkeeper who can take on the back office work and free up recruiters’ time to bring in more contracts.
Continued growth of the agency will inevitably lead to expanding the back office to handle the increased workload, and after a little while your administrator will be joined by many others. Once the back office has grown to this level, you’ll almost never see an agency consider returning to outsourcing these services, but you also almost never see a proper cost-benefit analysis made of the two options.
There are a few occasions which should make you look at outsourcing to a service like TBOS Complete. Here are some of the most important.
A Key Back Office Staffer Gives Notice
Finding a replacement for someone who has primacy on your back office work – a financial controller or accountant especially – is difficult. You need someone who can be relied on to do high-quality work and who will learn your agency’s systems quickly, and you need to find them fast. Put another way, you need a great candidate to be looking for a job at just the right time – and there’s no guarantee that will happen!
Outsourcing to a reputable agency lets you be sure of finding a good candidate at the right time.
Business is Suddenly Booming
A smooth increase in business allows an agency plenty of time to anticipate the extra back office work and hire accordingly. When a new opening presents you with an immediate and substantial revenue spike from many new contracts, getting your back office capacity in order can just take too long – while an outsourced service should have the capacity to spare.
Recruiters Are Looking to Divest Back Office Responsibility
In that middle stage where your recruiters still have responsibility for invoicing, credit control, and bookkeeping, there are savings to be made (even with fees for outsourcing) by freeing up your recruiters’ selling time to be more active and close more contracts. Going straight to an outsourced system rather than hiring an internal back office at this time cuts out the need for more desks, computers, etc. in the office.
Imbalance between Back Office Cost and Agency Revenue
Or, put simply: Sometimes your back office team can cost too much. Factoring in pay rises, staff membership replacement, benefits, sickness and holidays makes running a back office more expensive than you might expect, past a certain point – and investing to handle that is always a hard sell for these “non-biller” staff. Far better to outsource to a firm which has already paid off that investment.
Opening Up Office Space for Billers
Any room and resources given to your back office is room and resources not being given to recruiters who can bring income in. Depending on the balance, it may well be time to switch.
We’ve received calls over the years from a number of agencies who finally did perform a cost-benefit analysis and noticed the potential benefits of outsourcing. If you’d like to discuss the possibility of doing the same, you can call us on 0845 881 1112 or email [email protected] for more.