Tuesday, 6 December 2011

How to cut the red tape and focus on liberating your business to become more profitable

How to cut the red tape and focus on liberating your business to become more profitable

By David Thornhill, MD of Simplicity

Where there’s a will there’s a way....here Simplicity MD David Thornhill explores the opportunities available to new start up recruitment agencies who don’t want to be strangled by the ever growing amount of red tape facing businesses in the UK.

Tune in your TV or radio and you will be presented with a tale of economic and employment doom and gloom, and while different sectors suffer the slings and arrows of government cuts, reduced spending, and limited credit, there is still hope for innovative and determined businesses. That need to focus on the positives in life is especially true for anyone working in the highly competitive world of recruitment.

With AWR (Agency Workers Regulations) now embedded across the recruitment sector, and statistics highlighting agency insolvency and rising unemployment, you would be forgiven for thinking that recruitment is probably not a healthy place in which to operate a profitable business. While there are some recruiters that are going through very hard times, there are also those prospering in what seems like desperate times for many folk. That old maxim holds true, what’s bad news for some is good news for others.

Where does this optimism spring from? The rebuilding and re-birth of the British economy will come from entrepreneurs and SMEs, and recruitment will be the sector that will fuel the economic machine. Small businesses can develop new revenue streams for the UK’s GDP and recruitment agencies can help tackle the blight of unemployment In Britain. Simple!

The larger companies either spectacularly fail with new legislation or effortlessly integrate it into their corporate mechanisms, but it is the start-up and smaller to mediums size businesses that will face the brunt of challenges from the new complex limitations and regulations. You either tame the beast or get eaten by it. As a professional dragon slayer, I’m keen to solve the puzzles that HMRC and other agents of Government throw at us.

Worries about AWR and financial constraints should not limit the ambitions and growth plans of SMEs. During times of trouble and uncertainty, innovation and searching for clever and new solutions can be the key to surviving and even prospering during the challenging times.

Problems certainly exist for recruiters that do not fully understand the AWR, or lack the knowledge of its application. Low credit ratings and a general climate of economic uncertainty backed by statistics of insolvency can put off potential funders and banks, hamstringing new and developing businesses with no credit to fund prospective growth.

In my view AWR is just red tape waiting to be cut. Smaller businesses can outsource their back-office duties and payroll to companies that are experts in these fields. Outsourcing can provide trained professionals, who can handle the complexities and trials of AWR, leaving the front-of-house free to carry out lead chasing and recruitment drives to their maximum capacity.

Loopholes and workarounds such as the Swedish Derogation Model can help recruitment agencies further avoid the hassle of AWR. But, this clever let-out negotiated by the Swedish team at the EU ‘pow wow’ which cooked up this concoction means that rights to equal pay for agency workers no longer exist when agency workers are employed on a permanent basis by their umbrella company or temporary work agency and receive pay in-between assignments. There are strings attached: the agency worker needs to be genuinely employed by the umbrella company or agency with a permanent contract of employment in place. The contract should also have been entered into before the beginning of the worker’s first assignment. But, it is only a matter of time before this loophole is closed off. The side affect not considered by the Unions in their rush to protect workers’ rights is that this device enables employers to pay the absolute minimum.

Companies considering outsourcing can take such options into account to ensure that a businesses’ back-office is as efficient and cost-effective as possible leaving the front-end clear and free to pursue growth and future success. Any mistakes with AWR can also lead to costly tribunals and fines which smaller recruiters cannot absorb, but professionally trained outsourcers can ensure that such errors and problems are avoided.

Fears that AWR can cripple an agency’s payroll if their client suddenly goes under, poses a concern for companies that may not have the financial reserves to handle the pay for a cohort of expectant temps. With the state of the UK economy limiting the confidence of financing and credit loaning, some recruiters could find themselves facing bankruptcy due to their client’s insolvency leaving them with wages to pay and no fee to collect, and destroying their bottom-line.

But, once again, there are solutions at hand. Simplicity itself offers credit insurance that can protect agencies from such trials, and the company’s new ‘Double It!’ scheme, can provide businesses with the finance needed for growth that rallies in the face of economic downturn. This allows agencies to more than double their credit limit, and in turn increase the recruiter’s overall sales and margins, in addition to providing increased opportunity to win new business. This innovative solution works with existing funders and includes full back office payroll, invoicing and credit control with debt protection included.

An efficient and effective company will flourish in good times, and continue to excel in a challenging climate. And while uncertainty plagues all business sectors with a terrible tenacity, the innovations and solutions at hand can turn trial in to triviality and help businesses grow into industry leaders and bring a beleaguered British economy back into fighting shape.

So, don’t run for the hills, consider your options and take expert advice. Cut the red tape and liberate yourself to think bigger!

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