You are currently using an outdated browser.
Please consider using a modern browser such as one listed below:
This means that, over the years, our exceptional accounts team would have to be idiots not to have picked up a few tips & tricks when it comes to providing the right accounting support to a recruitment agency. 5 of which, we’d love to share with you today.
Every recruitment consultant will, at some stage in their career, toy with the idea of starting a recruitment business.
Of leaving the shackles of employment behind & stepping into the realms of Entrepreneurship. A realm of full of freedom, flexibility, financial gain & the occasional sleepless night. Hey, you didn’t think it would be all plain sailing, did you?
After all, starting a recruitment business is tough. There is no denying that. While it’s an idea full of excitement & positive anticipation, it can (at times) also be met with apprehension & a slight element of fear.
& I suppose what we’ve seen over the years of working with & supporting recruiters in their own agencies is that, for the majority, the fears around starting a recruitment business are mainly focussed around the accounting & back-office responsibilities that come with running your own recruitment agency.
& that could be because of a 101 different reasons, however the most consistent (in our eyes) is because well, as employees, your exposure to the accounting & back-office side of recruitment is just not really there. After all, your job is to make placements, to generate income & to build your recruitment desk.
In your own business, it’s slightly different. & that’s where we come in, with the 5 most important things you need to consider from an accounting perspective when running your own recruitment business.
If Cash is King, then Cash Flow is Queen!…
Without a doubt, this is THE single most important element of running your own recruitment business. I’m sure you’ve all heard the saying, Turnover is Vanity, Profit is Sanity? Well if Sanity was a 3 year old toddler, Cash Flow would be sanity after 15 sweets & a fizzy pop.
In other words, when it comes to the accounting support for your recruitment business – understanding cash flow is pretty important.
Because after all, while a company will look profitable on paper once invoices have been raised, it doesn’t mean the business has available cash.
What’s our advice when looking at managing cash flow? Credit control. In fact, we wrote a separate blog all about this, here.
This is key to make sure those invoices are turned into cash. Equally, just because your company has cash at the moment, it’s important to look ahead to the coming weeks/months before spending it so you don’t leave yourself short.
Ah reverses.
So let’s say your business has generated & received payment on invoices & had accumulated a “good” pot of money. It’s important to not to fall into the trap of assuming that all the money that arrives into your business bank account is eligible for withdrawal.
While the business may be going well at the moment, it is definitely advisable to keep some money in the business for the future. Whether that be because you plan on bringing staff into the business over the next few months or even simply having reverses in the business for those “slower recruitment months” – for example, in the education sector having sufficient reserves in the business for the summer holidays when inevitably placements will be few and far between.
With the motivated recruiters, we’re fortunate enough to support & work with who are looking to scale & grow their agencies, our advice is always to have between 3-5 months worth of “salary” set aside for that member of staff before they join the business. Understanding this element of your accounting support for your recruitment business ensure that you will always have the financial cushion in the event that the revenue they need to generate takes a little longer to come to fruition!…
We love the Tax-man, don’t you?
We love them so much that we couldn’t possibly write an article without mentioning them at least once.
While business taxes (most notably, VAT & CT payments) may not be due monthly, it is highly recommended that you set aside an estimate of your taxes on a monthly basis. That way you can have peace of mind that, once your tax liabilities are due, there are no nasty surprises or scrambling around to find money down the back of the office sofa to avoid said sofa being taken away!
It’s a slippery slope if you end up using money which should be set aside for future taxes and will create a knock-on effect for future years. So, open a savings/deposit account in the company name and physically transfer it out of the business current account so you can’t accidentally eat into it.
With the Monthly Management Accounts we provide at Isotope, we will always breakdown and give you estimates of your tax liabilities to help you always stay one step ahead. I know, we’re great!…
To help manage cash flow, reserves and taxes, it’s key to have a good understanding of your company’s accounts and, more importantly, have up-to-date accounts – say, on a monthly basis?…
When running a recruitment business, it’s just no good having accounting information which is months out of date. It can really be the difference between taking a proactive look at the future or having to take a reactive look at the past.
As well as being up-to-date, as a business owner, it’s important to understand the numbers. Ask questions if you’re unsure. It’s something we strongly encourage all our clients to talk to us about on a daily basis.
We know how important it is to ensure you have an up-to-date real-time understanding of your accounts which is why, when sending over the Monthly Management Accounts, we like to schedule screen sharing calls to run through the reports to answer any questions you may have and make sure you know what the numbers represent.
& finally, your support network.
One of the toughest aspects of starting & running your own recruitment business is going from being surrounded by a team of recruiters, all pulling in the same direction & all experiencing the same challenges, to sitting on your own in your back bedroom. It’s tough. It is.
But that’s why you have to use the support around you. Now with Isotope we know the challenges you’ll face, we know the hurdles that you’ll come up against & we want our clients to know that we’re there for them. After all, it’s true – we are.
We find that our clients talk to us at least 3-4 times a week about some aspect of their business &, in all honestly, we’d encourage them to talk even more than that if it’s important to them! Had a particularly good week? Share it with us! Need to vent frustrations? Get in touch!
Isotope are your support network, not because it’s our job but because we genuinely care.
After all, we launch, support & above all care for you & your business.
You are currently using an outdated browser.
Please consider using a modern browser such as one listed below:
