0845 606 9632
Recruitment Accountants2023-06-08T13:43:41+01:00

Recruitment

The Recruitment team are here to help you and your recruitment agency prosper.

Our specialist recruitment accountants team will help you plan and grow your recruitment business

Our teams many years of experience working with recruitment agencies has helped us understand the unique requirements and common pitfalls within the industry. We’re able to support you with any compliance, back-office or advisory services that you need to help your business grow.

We look to understand how each recruitment business works and can advise on software, such as timesheet systems that integrate with your accounting software, to help automate your finance function and streamline processes as you scale.

We work with many different types of agencies within the recruitment industry, such as:

For many businesses, not just recruitment, one solution to standing out from the competition is to specialise in a niche. In recruitment, this could involve focusing on a specific industry or on specific roles which allow you to become go-to experts in this niche. As an accountancy firm, we’ve also chosen to be experts in niche areas – one of those being recruitment. As a result, our specialist recruitment team are experienced in supporting a wide range of recruitment agencies and we understand the common mistakes, challenges and legislation facing the industry. By focusing on this niche, we’re able to help our recruitment clients grow.

Running a staffing agency that provides temp workers can be as fast-paced and challenging as it is rewarding. We understand that it’s easy for temp agency business owners to get caught up in the day-to-day operations so we aim to help them as much as we can from a finance perspective. From advising on apps that will help automate manual processes like Xero, Evertime and Konquest to providing outsourced accountancy services to help ease the administrative burden. We’re here to help you continue to focus on growing your business.

The majority of recruitment agencies that we work with operate on a contingency basis, meaning they don’t get paid until their candidates are actually placed. Without good management information and planning, many recruitment agencies will fail. However, we’re well-placed to help you navigate and avoid the common pitfalls, whether you need help with the basic compliance or support with a full back-office solution.

Executive search firms are very different to temp agencies and require more support on cashflow planning and building value within the business. Often forecasting can be tricky with the nature of the deals made, however having triggers in place can help you navigate those cashflow minefields.

Marie Pegram
Marie PegramRecruitment Sector Specialist

Our team have a wealth of knowledge and a deep understanding of the recruitment sector that we use to keep our clients compliant and well informed. Heading up our Recruitment sector Marie, one of our expert recruitment accountants, has been actively involved in developing this unique sector specific service. She’s rapidly gaining a reputation as a key advisor to the recruitment industry. Whether she is working with existing clients, meeting new clients, presenting to wider audiences or helping tailor forums through the firms APSCo membership, Marie is determined to enable clients to achieve their goals.

Her talent has also been recognised by her peers, having made the Accountancy Age “35 under 35” list in 2016, which represents the “best and brightest accounting practice talent in the UK”.

For more information about how we can help you, please contact Marie.

“One of my previous headaches was always the absence of reliable management information and that often consumed my time unnecessarily. Since working with the team, they have implemented new systems, enhanced existing systems and they provide information on a monthly basis which is accurate and clearly communicated. This allows me to spend time doing what I should be doing.

Combine that with their sector expertise, knowledge and professionalism we would have no hesitation in recommending their services to anyone.”

Sheldon Paule, Cameron Kennedy

We’re can provide a wide range of services that can be tailored to your business, from outsourcing your entire back-office and attending board meetings to supporting just on the compliance. Some of our services include:

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FAQ’s

  • Review your expenses regularly and look for ways to cut costs. This may include negotiating lower rates with suppliers, finding more cost-effective suppliers, or even ditching office space and considering hybrid working model.
  • Consider offering flexible payment terms to your clients to improve your cash flow.
  • Consider offering financing or payment plan options to your clients to help them pay for your services.
  • Consider your commission payment cycle and whether that aligns with your client payment terms.
  • Seek advise from your accountant on how you can streamline your operations and identify potential areas of improvement.

  • Look for ways to increase the number of clients you work with. This may involve expanding your marketing efforts or offering new services to appeal to a wider audience.
  • Review your pricing and consider whether you are charging enough for your services.
  • Consider offering additional services or upselling to your existing clients to increase your revenue.
  • Take a look at your staff costs to net fee income ratio, if this is more than 50% then you may need to reconsider your commission scheme.

  • Set up a system, such as Xero, to track your accounts receivable and accounts payable, including setting clear payment terms with your clients and suppliers.
  • Consider Xero add-on called Chaser that helps automate the debt chasing process.
  • Follow up on overdue accounts in a timely manner to ensure that you are paid on time.
  • Consider reviewing clients that are consistent late payers – can you replace them with better clients that pay on time?

  • Stay up-to-date on changes in tax laws and regulations that may affect your business.
  • Work with a financial professional, such as The Smart Accountants, to ensure that you are complying with all relevant tax laws and taking advantage of any tax deductions or credits that you may be eligible for.
  • Keep accurate and complete records of your business’s financial transactions to support any tax returns or annual accounts.
  • Set reminders of tax payment and submission deadlines.

To create a budget for a recruitment agency consider the following:

  • Identify your revenue streams month by month, this may include fees from placing candidates, retainer fees and commissions.
  • Identify all your direct costs such as contractor fees and PAYE temporary workers that directly relate to your revenue.
  • Identify all the expenses associated with running your recruitment agency. This should include things like salary costs, commissions, job boards, insurance, professional fees, CRM system, rent & marketing. Don’t forget to include your remuneration as a business owner.
  • Once you have a list of expected revenue and expenses, subtract your expenses from your review to forecast your net profit.
  • Estimate your corporate tax based on the net profit calculated.
  • Track your actual results and compare these to your budgeted numbers. This will help you see how well are sticking to your budget and identify areas where you may need to make adjustments.

To track the financial performance of a recruitment agency, it is important to up to date, accurate financial data. We recommend implementing a cloud accounting system such as Xero to help keep track of profitability.

Determine what you would like to achieve financially as this will help you focus your efforts and tack your progress. The metrics we recommend keeping track of are:

  • Contractor margin
  • Gross profit or net fee income margin
  • Average placement fee
  • Net profit margin
  • Salary costs to net fee income ratio
  • Contribution by consultant and department
  • Debtor days
  • Fill rate
  • Interview to placement ratio
  • Sourcing channel effectiveness

To handle unexpected costs or changes in demand for recruitment services, the agency should have a contingency plan in place and be prepared to make necessary adjustments to its budget and operations.

It’s a good idea to have a reserve fund that you can draw on in emergency situations such as overdraft. You may also be able to negotiate with suppliers, even HMRC, and put a payment plan in place to help with cashflow.

To properly invoice clients and manage accounts receivable, the agency should have a clear billing process in place and follow up on any unpaid invoices in a timely manner. The agency should also consider using a cloud-based accounting software such as Xero to help manage this process.

To pay temporary workers and contractors in a timely manner, the agency should have a clear payment schedule in place and follow it consistently. Often contractors will push on timesheet submission deadlines or ask for advances. On occasion you may wish to accommodate these requests to build a good relationship but if the requests are continuous we recommend putting in stricter deadlines to avoid a chaotic pay & bill process where the risk of mistakes being made increases.

Engaging with temporary workers on a PAYE basis can be confusing with all the additional costs you need to consider. In summary these additional costs are holiday pay, employers National Insurance, employers pension contributions (if the worker doesn’t opt out) & apprenticeship levy (only if your payroll is more than £3million).

All these additional costs should be considered when negotiating rates with your candidates and clients.

To manage cash flow and ensure that your agency has enough funds to meet its business needs, it is important to regularly review and forecast cash flow, track expenses, and make necessary adjustments to the budget.

Keeping track of your sales pipeline and building this into a cashflow tool like Float, Futrli or Fathom which automates cashflow projections and easily shows you where the peaks and troughs are. This will enable you to have some time to plan how to invest excess cash or plug an upcoming cashflow shortage.

Firstly, you will need to consider what type of funding you require, whether this is a one-off injection of cash to support business growth or an ongoing facility to support a contract desk.

With the former, Smart Accountants can support you through our online platform, Capitalise, where we can submit one funding application for multiple lenders.

With an ongoing facility, there are various funding options and these depend on the industry you specialise in and whether you would like additional support with running the pay & bill process. Feel free to get in touch and we can talk you through the various options that are available.

The Next Steps

If you’d like further information or to discuss how we can support your recruitment business, please get in touch and one of our specialist recruitment accountants will be happy to talk to you. 

Please call us on 0845 606 9632, email us at team@thesmartaccountants.co.uk or complete the contact form below.