You’ll find no such thing as a short to-do list when you’re running your own recruitment agency. Whether you are responsible for two clients or 20, the list of tasks just keeps getting longer and longer. How you stay on top of the essential financial tasks makes a difference to your success and how well you can grow your company. Get organized with finance and reap the benefits in other areas of your business – here’s how outsourcing key financial tasks like payroll can streamline your agency, leading to improved cash flow and a more manageable to-do list.
What Funding Does Factoring Provide?
Recruitment or payroll factoring is the procedure where your agency outsources payment of your weekly margin to a specialist company. Funding includes payroll, VAT, holiday pay, weekly margin, and HMRC liabilities. A lot of factoring companies will allow you to claim funds for as many workers as you have on your books at any one time – this is important as it allows you as a business to grow quickly without meeting a cap in the level of funding available.
What About Tax, VAT and National Insurance?
A factoring company will make payments for tax and National Insurance under your name with your own PAYE reference. VAT is normally calculated on a weekly basis and released the week before the return is due, to avoid problems with VAT already being spent. Make sure that the service provides all relevant documentation so you understand how the calculations have been made.
How Does Holiday Pay Work?
Some services will hold back the amount of holiday pay workers are entitled to and will release it at certain points in the year. Others will simply release the holiday pay entitlement to you when you get your funds every week. If this is the case, it is advisable to put aside money for workers’ holidays so you don’t go short when workers request it. Check whether there is an organisational element to the payroll service that allows you to keep track of payments for holidays.
Are There Fees Involved?
Every factoring company charges in a different way. When you are deciding which firm to work with for your payroll needs you should look carefully at how the fees are worked out. Some firms charge extra for paying on a Friday, for example, or there are fees for set-up and for credit checks. Some services do not make these charges – take a look at http://www.cashsimply.co.uk/improved-cash-flow/, for example.
Why Consider Recruitment Factoring?
The benefits of enrolling in a payroll factoring programme include having more time on your hands to concentrate on other aspects of the business like finding new clients, marketing, and developing industry contacts. The service also means you free-up your cash flow and won’t run out of available cash to pay essential wages – the lifeblood of a recruitment agency. Hence, you operate with professionalism and you develop better relationships with clients.