Prepare now and protect your business for the future.
In the current crisis, simple actions that keep things going are just as valuable as big vision thinking. Here are five steps you can take to manage cashflow, drive efficiency, improve performance and create revenue. They’re achievable, realistic and inexpensive.
1. Switch your payroll from Umbrella to a PEO
At People Group, we’ve innovated the Professional Employment Organisation (PEO) payroll model with People Pay. It’s completely compliant, more transparent and easier for contractors than Umbrella. Plus in these most challenging of times, it also delivers cashflow savings to recruiters and increases liquidity. With People Pay’s unique HMRC recognised and reviewed Joint Employment Model, only 1% of the invoice attracts VAT. Compared to 20% with an Umbrella Solution. This positively impacts your cashflow by 19%.
This crisis has cruelly exposed the Umbrella model’s flaws. Many contractors are finding they can’t get clarity, much less any money from their providers. There are renewed calls for tighter regulations on the Umbrella industry. Reputational damage could reflect badly on the recruiters and employers. PEO simply doesn’t have these problems. It’s loved by contractors and employers and delivers where it counts.
Try our simple PEO calculator to see how much you could save by switching:
2. Become tax efficient
Let’s be clear. Being tax efficient isn’t about looking for dodgy loopholes. It’s about making sure that you’re taking advantage of every safe and compliant option. If you don’t have a tax adviser who really understands the system, get one. A good tax adviser can negotiate new pay arrangements with HMRC, help you make the most of the opportunities available and also find out if you can get tax relief on previous capital expenditures.
The Government is pulling out all the stops to support businesses during this crisis. You should utilise the VAT deferral arrangements. VAT due between 20 March and 30 June can be deferred until 31 March 2021. No penalty, no interest. You still need to submit your return, but the payment can be deferred.
3. Get ahead of the finances
Money coming in, money going out. For the next few months, that’s going to be your focus. Get ahead of things before they become a problem. The Government’s Coronavirus Business Interruption Scheme is a great option If you’re a solid agency who just needs some short-term financial help. It’s also a less intrusive alternative to private equity.
Be forensic about cashflow. Don’t wait a couple of months to chase an invoice, give it a week and gently touch base with your client. The same with your suppliers; is there any leeway to renegotiate payment terms? Everybody’s hurting and we’ve already seen some organisations wreck relationships with unreasonable demands. Burning bridges never pays off in the long-term. So it’s vital that you’re a good corporate citizen and do the right thing. While you’re asking for flexibility also ask how you can help. Be open, honest and supportive.
4. Open up new opportunities
Now’s the time to focus on your core skills and see how they can be applied differently. If, for example, you specialise in recruiting teachers and you have the contractors, but not the opportunities, how else could they be useful? They’ve been DBS checked so there are many roles they can transfer into. Few people like sitting around doing nothing. Partner with other specialist agencies who are struggling to fill roles. The same works in reverse, if you’ve many opportunities but no candidates, reach out to recruiters who have the opposite problem. We’ve seen so many inspiring stories of airplane pilots driving supermarket delivery vans. Recruiters can play their part. Think differently about your business and be brave. Helping is the right thing to do and it could open up a new source of revenue.
5. Make a long-term impact
Every company has the to-do list that they never get around to. It’s usually long-term thinking that’s time-consuming activity with no immediate benefit. Well, now’s the time to tackle that list. Upskill furloughed staff and make sure they’re more effective when they come out of lockdown. Join a network like APSCo, REC, The Recruitment Network, TEAM or the Recruitment Director’s Lunch Club. Apart from the brilliant shared resources that these groups offer, it’s also an opportunity to build your profile within your community.
If you’ve ever thought about expanding into different markets or a growth strategy but haven’t been able to get your head out of the day-to-day, you’ll probably never have this time again. Take the steps that will help strengthen your business for the long-term.