At APositive our purpose is ‘to make lives easier through innovative workforce finance’. We’re not just fair weather supporters of the recruitment and labour hire industry, as we realise that cash flow options are now more important than ever. With that in mind, we have summarised some scenarios and solutions during challenging times that our lateral thinking clients and colleagues have shared.
Scenario 1 – Permanent revenue is decreasing
Issues: Are your perm placements being pulled due to;
- Not being able to onboard the candidate in an office environment
- Permanent recruitment has been put on hold for budget reasons
Solution: Look to place contractors. A quick win is if you have a temp that has previously worked for the company, your client should be more willing to onboard them even if it is a WFH environment. Alternatively if the client does not have the headcount budget but has budget to use on marketing, IT, risk agencies etc, you can look to place a contractor with their 3rd party suppliers. This means the client gets the temp, but the expense is allocated to the functional cost line and not the temporary headcount cost line.
Also, there will always be industries that will increase recruiting in times like these e.g. healthcare, banks, supermarkets, telco professionals and IT contractors for work from home set-ups.
Supporting Product: If you don’t have cash reserves to scale a contract offering, you can look at a flexible contractor finance and management solution. This will allow you to take on as many contract placements as you can in order to bring in the revenue you need for your business.
Scenario 2 – Clients delaying the payment of your invoices
Issues: When times are uncertain cash is king. Your clients will be heavily scrutinising their outgoings and stretching their payments. Sometimes it is difficult for recruiters to ask for payment, especially as we are built on a relationship heavy industry. First of all, you shouldn’t be afraid to ask for payment. This shows your client that you have delivered a great service that deserves payment.
Solution: Have an open conversation with your client about payment, if there is hesitation or they keep saying “I’ll pay you next week”, then don’t be afraid to offer them a payment plan.
Supporting Product: There is a recruitment specific ‘Recruit Now.Pay Later’ model for perms. APay allows you to get paid upfront whilst your clients pay over 3,4,5 or 6 monthly instalments.
Scenario 3 – Self funding your contractors in a challenging market
Issues: It is common for a business’s revenue to drop before they can counteract with a reduction in expenses. This can put an immense amount of pressure and stress on the business while you get your balance sheet & cashflow in line.
Solution: Look to implement an invoice finance facility to release the working capital you have tied up in weekly payroll. This will give you the injection of cash you need, so you can continue to manage your obligations while you bring the business back into line.
Supporting Product: There are a range of flexible invoice finance solutions where you can fund one, some, or all of your clients.
Scenario 4 – Manual paper-based timesheets
Issues: Relying on manual timesheets is costing your business time and money.
The time of having to manually enter the weekly / daily information and the cost of paying someone to manage this manual process. Reviewing hundreds of recruitment & labour hire firms, those that use manual timesheets have higher rates of disputes, and on average are paid 14 days later than a company using online timesheets.
Solution: There are a range of online timesheets that cater for any type of contractor. So even if your hesitation is my client won’t use an online timesheet, there are options that allow your contractor to enter their time on their phone and then hand their phone over to the site manager, they then sign it with their finger, just like signing for a package from a courier.
Supporting Product: Many online timesheets plug straight in to your payrolling, funding and accounting system and a range of options can be found amongst our tech partners https://apositive.com.au/technology/
In summary, running a recruitment business can be complicated in the best of times. In times like these, it’s crucial that you maximise the support network that you already have in place, and look for additional support through relevant experts.