How Do Recruiters Manage Cash Flow?
Pandemics are bad for the recruitment industry, we all know this now. So how do recruiters manage their cash flow during such a turbulent time?
Of course, the pandemic has been bad for everyone, but that goes without saying.
However, with the help of the furlough scheme and the economy slowly recovering, data shows the UK is experiencing a rebound in employment which means that the recruitment industry needs to be able to keep the money rolling in.
Cash flow is one of the biggest concerns for recruitment agencies across the country, and if you happen to be pay-rolling a few hundred contractors, it becomes an even greater issue.
So how do you get your hands on cash, and more importantly, keep the money rolling in?
We’ve put together some top tips to ensure your agency isn’t left short.
Define payment terms
If you’re dealing with contractors, you’re going to be paying their salaries long before your clients pay you, so you need to factor in that time difference to your payment terms.
Get your invoices right
This is where your recruitment software can help you out to automate the process and eliminate human error. Sending out incorrect invoices with wrong information or costs often leads to further delays.
Outsource - Finance solutions can help your bridge the gaps between accounts receivable and money in the bank. Be sure to find a solution and partner that fits your businesses exact needs. Read more about how Access Pay and Bill Services can help your agency.
Plan everything
Plan your agency’s projections and what is coming in and out on a daily basis. It will give you a bird’s eye view of your business, and with that information and data, you can make the right decisions.
Break it up into manageable chunks
Whatever costs you’re incurring as a business, see if you can split them into monthly instalments to keep as much cash in your hands as possible. Do this even if it’s just yearly subscriptions for your recruiters.
Reassess your payment terms
Ditch the 30 and 60-day payments terms, and move to fifteen days or less. Clients will always pay late, so if you give them 30 days to pay in the first place, the chances are they’ll take 60. Running an agency means you need to get as much cash through the door as quickly as possible and shorter payment terms will help you do this.
Make your CRM work for you
Of course, your recruitment software helps you find candidates, but it also exists to make every aspect of your life easier. This is exactly why we built Access Recruitment CRM to specifically integrate front and back-office functions. It saves your consultants time and keeps them more productive.
Special deals
That doesn’t mean you need to lower your invoices or anything drastic like that, but you can offer preferential rates to clients based on payment being received within terms. Those rates don’t have to be drastically lower, but marginal gains will help you here. The incentive will hopefully get your clients to chase their own accounting teams quickly to ensure their recruitment costs stay down.
Make the penalties clear, and don’t be scared to follow through
Penalties for late payments can often get businesses to pay up surprisingly quickly. No one wants to chase money, but cash flow is always king and your ability to set the right processes to get that cash can often be the starting successes of new recruitment agencies.
Whatever size your business is or aspires to be, our cloud software covers the entire recruitment lifecycle, available as integrated or standalone solutions. Get in touch with us to learn how our recruitment software can help your business be more profitable.
