With greater emphasis on costs, due to external pressure on margins brought about by the recession, back office support service providers are saving recruiters time and money, allowing them to not only to survive but even to grow their business.

“Recruiters are being squeezed from all angles. They are being squeezed in terms of volume of business they are able to pitch for, the margins they are able to put it out at and by the master vendors,” says Ian Humphrey, managing director of Back Office Support Services.

And with such downward pressure on margins, recruiters are gaining valuable breathing space through securing better access to funding.

Edward Winterton, recruitment specialist at Bibby Financial Services, told Recruiter: “As credit worthiness has become more challenging because of our good funding lines, we have been able to advance cash to clients.

“We are seeing more people take up the back office function not only to do the payroll but also to work the payments, VAT, PAYE, statutory notices and P60s to free up their time.” And the time saved has allowed Carol Connolly, director at Command Recruitment, a Bibby client, to focus on training her staff in an increasing competitive trading environment. “We can recruit more staff and train and develop them. They are coming on board faster and quicker as a result of that time and attention we can give them.

“We want to take the time to spend with staff to make sure they are delivering the service that clients and candidates need to cement relationships. Clients need more help and guidance to make sure they remain loyal.”

Technology also has a role to play in speeding up the payroll process, according to Kevin LeCompte, managing director at Hydra-AHL.

“We advise our clients to produce an e-slip directly to candidates, which can be emailed and texted. We try to generate e-procurement within their process. We will do an e-timesheet, einvoice, e-payslips. It dramatically reduces the costs,” he says.

While there are candidates aplenty on the market right now, Margaret George, director at office and accountancy recruiter Morgan Spencer, says Hydra-AHL’s services have been warmly received by candidates.

“Candidates can get their pay information texted straight to their mobile phones from Hydra. It comes in on a Thursday, so even if they are on holiday in Spain, they can see how much money is going in. They can also have their own unique login code to see how much they have earned a week.

“Hydra run six payrolls a day, five days a week, so effectively our payroll is never closed.” Oriel helps recruiters in their tax discussions with Her Majesty’s Revenue & Customs (HMRC), says Brian Pursey, managing director at Oriel.

“By linking together all the services and providing 100% financing, clients benefit from an integrated approach,” he explains. “Because we look after HMRC payments on behalf of our clients, they don’t suffer as they could if using a factor. This is because the money from factoring current sales may not be sufficient to cover their HMRC liabilities, should sales volumes decrease. Oriel’s approach, on the other hand, means that HMRC payments can be made without causing strain to the client’s finances.”

This simplification of the process has enabled Gary Kimpton, director at transport recruiter The Ministry, to do what recruiters do best — bring in sales. “This allows you to focus on sales rather than back office operations,” he told Recruiter. “They take the money in, invoice on time and pay my guys on time. The service they offer is a complete solution. It really frees my time up. The more time I focus on sales, the better for my
business.”

And not getting that process right first time for temps can prove costly, according to Humphrey. “Back Office’s philosophy has always been a ‘right first time’ approach. If done well, that saves money. Firstly, you don’t have to spend money putting it right again and generally the costs of getting it wrong can represent 10-15% of a company’s business, so we are saving them money.

“By getting the right temp paid first time and getting the right customer invoiced for the right hours at the right address sounds easy, but isn’t.”

Humphrey has found a kindred spirit in client Adrian Rawden, director at blue collar staffing firm On- Call Recruitment. “There is a synergy with us in terms of supplying labour to clients in that we want to get it right first time,” says Rawden. “Where they [Back Office Support Services] benefit us is that they save us the time and effort, so we can spend time delivering services to our clients. It is imperative to get it right first time so there are savings for everybody.”

Humphrey could not give an exact figure on the amount saved by enlisting the help of Back Office Support Services but said the facility would generate £400,000 in turnover this year for On-Call Recruitment and had helped the firm open another office in Mansfield.

“We have been able to grow our business on the back of that benefit,” explains Rawden. “We’ve opened another branch and employed three consultants. Back Office Support Services also benefits in that more turnover will go through their business and be more profitable in future. It would have been more difficult to do that without their funding; it has been a result of their involvement.”

Laurent Drouin, managing director at online payroll outsourcing firm Safe SME, told Recruiter: “We look at every aspect of a recruiter’s business, mainly their accounting function. By talking to us, they have been able to reduce their payroll accounting costs by 30- 5%. We have turned their fixed overheads into variable costs, which is very attractive to our clients. We can deliver bigger savings because of the technology we use and economies of scale.”

John Dick, financial director at Options Employment Group, told Recruiter that the savings made using Safe SME were significant. “You’re talking about £200,000,” he says. “Because they have great economies of scale, they could make savings we couldn’t. It has greatly helped our profit/loss account but it has also enabled us to concentrate on providing services to our clients.”

Ultimately, in a recession, the most compelling reason to engage a back office support services firm is to save money. Recruiters are certainly reaping the rewards of introducing these support solutions but whether the lessons learned in this recession will hold agencies in good stead, with a continued focus on such cost savings come the recovery, is unclear, Drouin believes.

“As human beings, we have short-term memories. We will all forget about the recession once it is over.”

Back office support experts’ top tips to choosing the right outsourcing partner

1. Experience
Evaluate the experience of the outsource provider in the recruitment industry and knowledge of your specific sector.

2. Data capture
Capturing information and avoiding duplication of data entry is essential to eliminating errors and delivering a smooth outsourcing process. Can the supplier integrate with your front office systems for payroll and billing data?

3. Service level
Defining service levels and expectations before contract signature is key to a successful long-term relationship. Enquire into the structure of the
service level agreement. Agree on procedures to be followed.

4. Technology
Evaluate the technological platform of the provider. What online access will you and your team have? Do they own the software on which their services will be delivered? Verify their IT infrastructure and disaster recovery plans.

5. Financial strength
Ask to see the financial statements of the outsource provider. Ensure that your chosen provider is financially strong and will be there in the long term to service your needs.

6. Staff
What is the experience of the team assigned to look after your business? How long have they worked for the supplier? Find a supplier who retains its staff and has the experience to give you the best service possible.

7. Services portfolio
Can the supplier meet all your present and future needs from payroll, billing, credit control and management accounting?

8. References
You are putting all of your administrative eggs in one basket. Check them out. Ask for references and examples of their customer base you can speak to.

9. Value for money
Value for money is more important than cost because getting it right first time is cheaper than having to go back and do it again.

10. Credit control
The last thing a small business can afford is bad debt. Prevention is the best cure. If you have great credit control, you don’t get into the situation in the first place.

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