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By definition, a recruitment company provides a service to both employers and job seekers, by helping to place those job seekers into a specific job for a permanent basis. This allows businesses to find suitable employees without the stress and hassle that can be associated with the process.
However, recruitment companies, who not only assist employees looking to find a permanent job, but also contractors, face a unique situation. The nature of a person working as a contractor is that their position is not permanent, but rather is based on a predetermined time within the contract. The contractor may only have the position for six months, which creates a level of uncertainty on the behalf of the recruiter.
But why should a recruitment company or business consider running contractors? In this New World of Work, there is an increased focus on what is known as the ‘contingent workforce’ and the ‘gig economy’, meaning there is a greater number of non-permanent placements in the workforce. The growing market in the ‘gig economy’, and the contingent workforce of contractors and freelance workers, allows employers the flexibility to alter their staff numbers in response to business demand, which in turn allows them to monitor their costs plus be able to access at the drop of a hat highly qualified staff for a fixed period of time.
Employers are also realising the advantages of being able to find a person who fits the skill set for a particular project. With business activity changing throughout the year, this flexibility is essential for creating a strategy to meet the business goals for that period. Further, the ability to be able to cover permanent employees when they take leave with contractors allows greater confidence for employers to know that their business will continue to run as smoothly as possible.
A recruiter that has the people on their books to help fill these short-term and long-term contracts is going to have a competitive edge in the changing market, plus will actually increase the value of the company overall. In most cases, recruitment agencies are responsible for paying temporary or contract staff. This can mean there is a gap between meeting your payroll commitments and when the end customer pays.
Firstly, for the success of your business you must ensure you have enough cash flow to meet your contractor invoices, wages and taxes on time, every time. Late payments, or worse, errors can break a business before it’s really got off the ground – the key consideration for recruitment agencies is payroll funding.
If you aren’t confident in your ability to maintain your cash flow in the uncertainty, you should consider looking to outsource, or at the very least get some advice. Outsourcing your payroll and improving cash flow though necessary finance to help you meet your payroll or invoicing requirements can help you build your business.
By looking into payroll and invoicing finance, it ensures that as a recruiter you have a consistent cash flow even when you have customers which are slow in paying their outstanding amount. Using this system, you can also look at a payroll solution on credit, whereby you are able to have money paid prior to having the invoice fulfilled.
Services provided by cash flow and compliance organisations can include:
– Funding the contractor payroll eliminating any cash flow issues as you expand your business
– Manage the complete contractor on boarding, payroll and invoicing cycle
– Provide credit checking of your clients and debtor management to ensure you get paid on time.
– Options for both companies and individuals to arrange cash flow services to ease the burden of the monthly payroll for the company or cash advance for the individual.
Companies need to adapt and embrace the ‘gig economy’ and the ‘contingent workforce’. With the workplace and employment traditions changing, companies need to be prepared to meet these new challenges, including the unique challenge of recruiting contractors, head on in order to find success.
Read Pendragon Management’s statement about our new partnership with APositive, and the services we will be able to offer to assist with cash flow, compliance and salary management.

Purnima Kabra