Many of the companies that had problems during the recent recession had those problems because they were unable to generate cash flow. When it was not possible to reduce overheads to take into account reduced turnover they often failed. The key to success in business is finance. Every company needs to meet its commitments and by and large that means paying its staff and creditors on the due date. In order to do that there has to be sales and effective credit control to actually get invoices paid on time.
Remember the Detail
The prospects in the economy look much better than they have been for years. If as a result you are thinking of starting a recruitment business you will need to be particularly careful because your business will be your people. Your pool of workers whether they are weekly paid contractors or temporary office staff will expect their money on time together with details of the gross and deductions. Her Majesty’s Revenue and Customs (HMRC) expects that everyone’s PAYE and NI are remitted on the due date and all paperwork is in order.
This is where you may need help; certainly good advice and probably some material help. There are service companies that specialise in different sectors and when it comes to recruitment there are some things that are peculiar to the industry. If you are placing workers with your clients they will be paid as per their contracts. It is likely that your clients will pay you on invoice. If you are also providing credit, because that is standard in the industry, you are spending money before receiving payment. There is a strong case for considering factoring so that you receive your money as soon as you invoice. You can include the cost of doing that in your business plan and it will certainly improve your cash flow.
If you run your plans for a recruitment business by Startupsimply you may find that you can outsource elements of the business administration leaving you more time to concentrate on development. The obvious thing that you may want is someone to process your payroll. As long as all the basic personnel information is provided, processing is simple for an expert. Every member of staff can receive an email that is protected by password and provides salary details with the money deposited by BACS into their individual accounts.
HMRC will be happy to deal with someone on your behalf although you will bear ultimate responsibility for your figures. It is a matter of satisfying yourself about the quality of the service you are thinking about using. If you find the right company you ought to be able to move forward strongly with the opportunities that are presenting themselves.
Image attributed to Freedigitalphotos.net Stuart Miles