Whether you’re just starting out or you’ve been established for a few years, cash flow within your recruitment agency can still be a challenge.
Making a placement then waiting months to get paid by your client, is an issue if you have a growing number of bills to pay.
Luckily there are a few different approaches you can take, to get the cash flowing in!
Offer an Incentive
Encourage clients to pay faster by offering an incentive for early payment.
This might be a discounted rate on one role, or a reduced fee for all future positions if your invoices are paid within an agreed period of time.
It means you get paid faster and hopefully get more new business in the future!
Keep Your Costs Low
One piece of advice we always offer new recruitment agencies is keep your costs low.
By keeping your outgoings to a minimum you reduce the pressure on your brand new business, and on yourself!
Spend some time looking at your outgoings to see if there’s anything you could cancel or renegotiate.
Working from home rather than an office space, and shopping around for deals on job boards, can all contribute to more profit and better cash flow within your business.
Make Payment Easy
This might seem like a little change when it comes to cash flow but it’s an important one.
You need to make it as easy as possible for clients to pay your invoice.
Ensure your invoices are submitted accurately, on time and carry all the necessary information, to avoid any delays in receiving payment.
Choosing to invest in online invoicing software can be beneficial, so clients have a quick and convenient way to pay.
Choose Recruitment Funding
Recruitment funding can be a great way to improve the cash flow within your agency.
If you’re supplying temporary staff to a company then recruitment financing provides the funding to pay your temps, and yourself, before you’ve received payment from your client.
At New Millennia we then take the responsibility of collecting the invoices directly from your client, so there’s no waiting, no delays and no hassle.
With your own dedicated portal for temps to upload their timesheets, and a specialist team to handle the rest of your back office functions, your agency’s cashflow will never have been healthier.
There’s no set up costs, no minimum fee and no personal guarantees are required, making it a low risk way to inject cash into your recruitment agency.
To find out more about the recruitment finance service we provide, click here.
Increase Your Rates
Once your agency has become a little more established, and you’re building a track record with your client base, then you might want to consider increasing your rates.
It’s always a tricky approach to consider, particularly with existing clients.
However if you can prove how you’ve brought success to their business, and justify why you deserve more you’ll find cash flowing a little more easily!
Expand Your Offering
A great way to boost your cashflow is of course by bringing in new business!
Adding additional services or expanding into new areas could help you get more from your existing clients.
Charge a Fee for Late Payment
If you don’t already, you could think about charging a fee for late payment.
Some clients may take issue with this, and you would need to consider long term relationships.
However for clients that really take their time in paying your invoices, it might just be the nudge they need to speed things along!
Pay Your Suppliers Strategically
If some of your suppliers offer an incentive for early payment, then it can make sense to pay those suppliers quickly to take advantage of the discount.
Pay close attention to the date different payments and invoices are due, and take advantage of any time they allow before you need make payment.
Of course avoid late fees, and be sure to always pay within a realistic window of time to keep your business relationships strong.
Lease not Buy
Leasing equipment such as laptops for your business, can be another way to keep the money in the bank.
Though it typically costs more in total to lease rather than buy, it enables you to spread the cost over a longer period.
Review Your Processes
Take a look at the processes that you currently have in place with both clients and candidates, is there anything that could be improved? Are there places where time, and therefore money, are being wasted?
By freeing up time and streamlining your processes you’re giving yourself more opportunities to grow your business, and therefore increasing the amount of money coming in.
Get Help with Accountancy
It can be tempting when you first start out to try and do everything yourself, after all we do always tell agencies to keep costs low.
However investing in an accountancy service can be a valuable outgoing.
An experienced accountancy team will be able to improve the financial status of your recruitment agency, and ensure that you meet the necessary tax requirements.
We offer two accountancy packages here at New Millennia, both specifically created for recruitment agencies.
Services within each package include payroll for directors, submission of tax returns and the preparation of financial statements.
If you’d like to find out more about the accountancy services provided by New Millennia, then get in touch with our team — we’d be more than happy to talk you through all the options!