Time is money – are you losing £520,000 a year?
If I were to tell you, you could hire somebody for £25,000 a year who would return your business over £500,000 annually, I bet you would hire them instantly? Right?
Well, meet your new Compliance Officer!
If we assume, in a month, your Consultant bills £20,000 and works 180 hours, that means their billings per hour is £111. If s/he spends only 2 hours a week on compliance checks, that is £222 a day, which is £1,110 a week. If you have 10 Consultants, that is £11,100 a week for the business. Now, times that by 52 weeks’ in a year, it could be costing your business £577,200 a year when Consultants spend just 2 hours a day carrying out compliance checks.
Compliance is a highly process driven and administrative activity, which makes it very time-consuming. So, isn’t it a waste of time for your Consultants’ to be spending a few hours a week simply chasing compliance documents?
Imagine if those hours were spent business developing or resourcing exceptional candidates that are going to generate even more profit for the company.
By allowing your Consultants to do what they excel in, the money generated will more than cover the cost of having compliance in-house (it’ll only cost circa £25,000 a year for a Compliance Officer).
Isn’t outsourcing compliance easier?
Compliance providers generally have multiple clients they need to cater to, so, with that in mind it is never guaranteed that your compliance checks will be their utmost priority – but it would be your in-house teams’ priority!
If you add the total costs on outsourcing your right to work checks, the day rate of someone to come in on a strategic level for policies and procedures, plus external counsel on some legal issues, well, that can cost you anywhere between £30,000 to £80,000 a year (if not more depending on the size of your business). You are paying out that much for potential mistakes and even delays; and with so many different contacts involved your compliance may not be reflecting your business objectives as closely as you’d like. Another consideration is, who is liaising with these external suppliers? If it’s the Consultants, we have already covered the value of their time, or is it the owner? Again, there are much more long-term, value-adding things an owner could be doing with their time.
Your only other option is to have an in-house team. What will this mean for you? You’ll have someone who is dedicated to the cause of the business and therefore won’t be trying to squeeze more money out of you to do the job – they signed up knowing what their salary is; they will be invested in their own career and therefore will come up with creative initiatives to cut cost and improve efficiency; and you’ll mitigate mistakes and delays.
Think about the return of investment!
Are you willing to lose contractors?
In recruitment, the efficiency and customer service of your compliance process is reflective of your business and can be a difference as to whether contractors want to work with you or not. You could even lose existing contractors if your compliance is inaccurate which will inevitably affect both your bottom line and your reputation within the market.
However, if you have an effective, organised and dedicated compliance function who is going to build excellent relationships with your contractors and provide them with a good service, you can prevent the negative consequences.
In the modern, digitalised market, it is important your contractors are taken care of as this is a selling point for your business which will help you grow, and everybody knows how easy it is to leave a bad review!
Having a healthy contracts book
Every recruitment company sets up to be successful and be the go-to choice for their given markets, and therefore, winning new clients is never far from the forefront of their minds.
So, assuming you are running a successful recruitment business and winning over new clients, your contractor’s book needs to keep up and continue growing to maintain a strong balance between supply and demand.
With the increased number of contractors, is your business able to keep up with the compliance demands? Have you ever had a contractor unable to start on time because their pre-employment screening was not complete? Or, if you check everything, will you notice a lot of mistakes are slipping by unnoticed?
With an in-house compliance team, such mistakes can be mitigated or at least rapidly rectified as well as ensuring compliance checks are completed to tight deadlines. Otherwise, when this process isn’t done on time, naturally, your contractors will not be able to start on time. Assuming you have excellent Consultants, who work on a £50/day margin, you can see how expensive this may become.
Will the legislative changes ever stop?!
We have seen many legislative changes as well as the introduction of new regulations in the recent years, and with the ever-changing world and impacts of globalisation (for international businesses) and not to even mention Brexit, there will be plenty more changes to come. With more and more regulatory barriers and hoops to jump through, it can be hard to keep up with everything – never mind be prepared!
GDPR had a massive impact on the recruitment sector and was an enormous project with so many uncertainties – uncertainties that many businesses are still not sure if they have overcome! Among these, IR35 also hit recruitment businesses operating in the public sector pretty hard, and now that we know it is going to be introduced to the private sector as well, do you really want to try and figure it out on your own or would you rather an experienced in-house professional to manage this for you?
Of course, the common view is, this can be sorted by an external counsel or compliance provider, however, legislations like IR35 aren’t that simple. It requires open communication with all the clients to determine if the contracts fall in or out of the IR35 tax code, and then communicating this with the contractor so they can change to an umbrella company accordingly, and then change and re-issue their contracts. Things that require such accuracy and a constant dialogue with your clients and contractors can be most efficiently done in-house.
Your business needs protection and your contractors need to feel confident they are being looked after.
Business expansion – especially internationally
Is your business going through an exciting period of growth? Are you ready to expand internationally and possibly open an office abroad?
Then you are more likely to need someone who is going to be an expert in the subject matter than not. This is for 2 key reasons, firstly, to ensure your new international office is being set up within the legislative and regularity requirements. Secondly, to have someone in-house who can actually map out what compliance requirements are necessary for the candidates for the jurisdictions you wish to operate in.
The process of expanding a business into new markets or overseas is an extensive and time-consuming project, not to mention potential success it may add to your business. So, to effectively roll this out, it makes business sense to delegate the tasks to a professional to allow you to focus on what you are good at while they look after the legalities.
Even though it seems like it will be less hassle to out-source as much as you can, when it comes to compliance that may not necessarily be the best option.
For a contractor-driven recruitment business, compliance is an enabler rather than a deal-blocker but for that to be effective, it needs to be done properly. Having an in-house team can ensure accuracy, resolve issues quicker, save money and even generate revenue when your consultants are given the freedom to focus on billing!
If you’re looking for a business enabling compliance professional, get in touch with me today on firstname.lastname@example.org
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