Tuesday, 31 August 2010
With the UK facing its biggest fiscal tightening since the Second World War, and with the economic recovery in an early and fragile stage, we now look at the potential impact of the Coalition Government's budget upon the recruitment industry.
Although the UK officially came out of recession in the fourth quarter of 2009, recovery has been slow to gather momentum in 2010. Growth in the economy is very fragile at present; therefore recruitment businesses should understand the current risks involved and be able to prepare for uncertain times ahead. We believe that the Government cut backs will limit the scope for growth in the recruitment sector and make the industry more competitive. End users will take advantage of this situation to squeeze margins. At Oriel we are optimistic that the adaptability and entrepreneurialism of the recruitment industry will enable the sector to take advantage of the opportunities that will arise during this period of change.
As we are currently at the start of the economic cycle this will be a positive time for businesses that are looking to set up or expand into new sectors, but planned cuts in government spending will mean they should be cautious in sectors that are government funded. The cuts will create opportunities for the private sector to fill the gaps, encouraging private sector investment. According to figures announced on 11th August, the number of people unemployed reduced by 49,000 to 2.46 million in Q2 2010. However, as a result of cuts in public sector spending we anticipate that the recovery of the jobs market will stall through the remaining part of 2010.
Oriel has identified a number of risks and challenges recruitment businesses may face over the coming twelve months. Recruitment businesses that currently operate within the public sector should prepare for serious reductions in placements as a result of the government cuts as fewer temporary workers may be required. Teaching agencies, for example, may face a reduced need for temporary placements in schools as they make do when teachers are absent.
However, on the other hand we are seeing signs in the market that companies in some sectors overreacted last year to the economic climate and removed too many staff from their operations. Now that the market is starting to turn around, many companies such as Banks are starting to recruit new staff in order to cope with current workloads.
Once the public sector has reduced staff they may become more dependent on the temporary market in the long term to fill positions without the commitment of permanent workers. At Oriel we believe that the recruitment industry has taken the hit in terms of reduced activity over the past 18 months and the volume increases we have seen in the past three months should be sustained.
The growth of the economic recovery will be good for businesses at all stages of their life cycle, but within the overall growth some sectors will be worse affected than others. Faced with this uncertainty recruiters should consider outsourcing for all of their back office functions. This converts the essential back office functions into variable costs, thus positioning them to deal with growth or a down turn if the "double dip" occurs. Many outsourcing companies also offer funding facilities to alleviate financial pressures. For a new start, agency outsourcing is a solution that can give them the freedom to set up and develop the business without the worry of having to implement and manage systems. If businesses choose to outsource they are less sensitive to volume changes, because the outsourcing company will take the strain of change and keep systems and procedures up to date with industry legislation.
Good credit insurance is essential for recruiters in most sectors. In our experience insurers are now writing more cover, and in view of the uncertainty of the economic recovery it would be a brave recruiter that extended significant amounts of credit to an uninsured client. If a business deals with an uninsured debtor, they should ensure that they increase their margin to compensate for the risk. Outsourcing agencies can arrange credit insurance for businesses on their behalf.
In order to thrive, businesses must look at ways of improving productivity and at the same time reduce costs. Many business services and processes can take up precious time and resources, and successful businesses are increasingly outsourcing these functions. Outsourcing such activities can give you immediate access to more flexible, experienced and cost effective capabilities. Moreover, outsourcing should be seen as a strategic management option rather than just a cost cutting operation as it can support businesses in achieving their objectives through operational excellence.
Oriel, a market leading provider of outsourced business services and finance, gives their clients more time, money and energy to focus on what they do best - and that is getting on with growing their own business.
This is a fantastic achievement given the complexities of the Managed Service Company (MSC) legislation. Oriel Contractors is part of the Cheltenham based Oriel Group which provides services to the recruitment industry and this year celebrates its ten year anniversary.
Accountax Consulting are the market leaders in MSC legislation. Their team of highly qualified legal and tax specialists offer expert advice to their clients on contractor, PAYE and IR35 compliance. This expertise enables Accountax to also have a good track record for helping clients defend cases brought against them by HMRC.
Over recent months there has been a growing concern about the MSC legislation in the contractor market, as agencies can become liable if one of their suppliers breaches the tax legislation. This concern led a group of leading agencies to commission Accountax to review a selection of CIS and Umbrella companies. This would allow the agencies to develop preferred supplier lists safe in the knowledge that the suppliers were operating compliantly. The agencies chose Accountax to do this work as they are the market leaders in this field and are totally independent of any contractor supplier or employment agency.
Oriel Contractors were invited, along with a number of other leading providers, to undertake the compliance review. This review has now been completed and Oriel has been given complete clearance as an Umbrella Company and a CIS contractor. This is great news for Oriel Contractors and their clients as it will give additional piece of mind and will assist Oriel to achieve preferred supplier status for other agencies.
Jim Goddard, Divisional Manager of Oriel Contractors comments "The Accountax review further underwrites Oriel Contractors credentials as experts in this field. This will enable us to compete for preferred supplier status with agencies with an advantage over many of our competitors".
The Real Business Hot 100 listing - which has been running for over ten years, now tracks the fastest growing firms in the UK by sales over the past four years. In this survey Oriel has been ranked the 32nd fastest growing company in the UK in terms of sales throughput, with a growth rate of 79% per annum over the period from 2006 to 2009.
Oriel were inadvertently omitted from the recent publication of Gloucestershire's Top 100 companies but, we would like to acknowledge their achievement in the Hot 100 survey and to celebrate the success of this growing business in our region. Oriel are a major employer in Gloucestershire and their success will only bring good news to the local community as they expand and take on new staff.
Oriel commenced trading in 2000 and therefore celebrates their tenth anniversary this year. Their product range includes bookkeeping, payroll and are one of the largest providers of back office support services for the recruitment industry in the country. They are also a leading debt collection agency in the UK.
As part of their growth Oriel continue to recruit staff and have recently made three significant new appointments to their sales department to support the growing need for their services. Jane Kimpton has been appointed as Business Development Executive for the contractor division of Oriel. Jane's main responsibilities will be to generate new business leads for the contractor division targeting recruitment agencies and contractor workers direct promoting CIS and umbrella services. Boosting sales resources in Oriel Support, Adam Jones has joined as Business Development Executive. Adam has joined Oriel from Venture Finance where he developed his knowledge in the factoring and invoice discounting industry before returning to his roots of the recruitment industry. Finally Joel Celestine has been appointed as Sales & Telemarketing advisor for the collections dvision within the group.
Brian Pursey, CEO at Oriel adds; "Being ranked 32nd in the Real Business Hot 100 survey means a great deal to all of us at Oriel as we have received recognition for all of the hard work and commitment we have put in over the past ten years. 2010 is a significant year for Oriel as we look to mark our ten year anniversary. As we celebrate the past ten years of success we now must focus on the future and invest in our staff and systems to ensure that Oriel will be still going strong in ten years time and can adapt to the changing market that we operate within".
Oriel will be celebrating the significant 10 year milestone and their achievements with a prestigious party in December to thank all of their staff for their hard work and dedication of the past decade. Without them Oriel would not be what it is today.
Wednesday, 21 April 2010
During 2009 many businesses were struggling with cash flow pressures resulting in an increased level of redundancies, unpaid bills and the potential of a number of businesses failing.
There was a growing fear that the UK would experience a record level of businesses becoming insolvent resulting in rising unemployment levels and this could have pushed the country into an even deeper and longer recession than had been previously anticipated. In an effort to reduce the impact of the problems facing the economy the government introduced the time to pay scheme.
The time to pay scheme (TTP) allowed businesses to defer PAYE, VAT and National Insurance for up to six months. The scheme was designed to allow businesses a period of time to accommodate cash flow pressures and get order books back on track. Since inception the scheme has enabled over 242,000 companies to defer £4,2billion in tax payments.
The TTP schemes have allowed businesses to soldier on and try to survive. However, this may not have been the best option for some businesses who continue to struggle out of the recession. The trouble with the TTP scheme is that it has been, historically, relatively easy for companies to defer their debt and enter the scheme.
Group Sales & Marketing Director at Oriel Group, Trevor Deacon, believes that “the introduction of the scheme has potentially just delayed the high level of insolvencies that we had been expecting and that potential problems will arise in 2010 as a result”.
Since the start of the early signs of economic recovery the HMRC has hardened its stance on the TTP scheme and have become more forceful when receiving requests for assistance. As the HMRC tightens its reigns on outstanding debt, companies who have participated in the TTP scheme may now find themselves being pressed harder by HMRC to pay back quicker where previously the system has been less stringent.
On 6th April 2010 the HMRC will be introducing an independent viability review to ensure no businesses join the scheme unless they can show the potential to afford the repayments. The new process will encourage businesses to provide a detailed cash flow forecast and a management plan to demonstrate that the business is robust enough to survive and fulfil their financial commitments before approval to join the scheme. If the business is unable to meet the new tighter regulations to enter into the scheme then it means the business is a high risk company and may result in early insolvency.
For companies that are still experiencing financial difficulties they could find themselves under increased pressure to pay back crown liabilities faster resulting in businesses struggling to trade through. This could potentially create the double dip recession we have all feared if insolvencies and unemployment levels rise.
The most dangerous time during a recession for many businesses is the recovery stage when confidence begins to rise, many businesses become stretched by the increased working capital demands for the growing business and potentially take on more financial risks to try to expand sales.
Trevor Deacon comments, “Whilst we should all embrace the possible signs of recovery we should continue to be mindful of the customers we trade with and ensure effective credit management of overdue receivables”.
The next twelve months will be a challenging time and it will be a challenging time for many businesses. Therefore business owners should be extremely cautious when making decisions and taking on new, and managing existing clients, to ensure that they are controlling risk accordingly.
They should look internally at their systems and review their credit management and collections cycle to ensure that all debts are potentially collectable and debtor risks are mitigated by effective credit management.
It is also important to give consideration to outsourcing to a debt collections agency after 90 days as part of an effective and streamlined credit management policy.
In summary in order to survive such a challenging economic climate businesses should continue to be careful when trading and continue to review the length of credit they offer their clients. Be careful when approaching new clients and new credit limits if you don’t have insurance cover.
2010 will be a tough year back on the road to recovery, by being mindful of your individual situation and putting in place ridged systems will allow you to focus on bringing your business back in line to develop in the future.
Monday, 22 March 2010
We all do it, but how many of us really do it well? These few pointers may get you thinking and make a difference to how you network in the future.
In advance of an event ...
Ask to be emailed the list of attendees to an event in advance so that you know who you want to meet when you get there. Then telephone any of those on the list that you know and say: ‘Did you know x will be there?’
When you are there ask someone if there is anyone they would like to meet and, even if you don’t know that third party, you can track them down and introduce the other person. The latter will be eternally grateful and it’s somehow easier to approach a person on behalf of another.
When in a crowd of people you might not know:
- Listen hard rather than talk.
- Ask people you meet for information/help - people like to feel valued.
- Wait to be asked for your business card - benchmark of their interest in you.
- Use different pockets a) for your own cards - OUT
b) for others’cards - IN.
- When you introduce yourself, do so for no more than 7-10 seconds and stress the benefits of what you have to offer eg Not ‘I’m an investment banker,’ but ‘I make people rich.’
- Aim to come away from an event with cards from other people (not just to have given out yours) - follow up on return to the office with a call or letter. ‘It was good to meet you at ....’
- Take the initiative and draw the ‘lonely’ one in - they’ll be grateful and you have an ally.
- Names are important to remember - use someone’s name in sentences when you speak and then you will remember it.
Making your network work for you:
- On average, a person has around 200 people in their active network.
- Ask myself who I can get together in my network, to their benefit - building up favours for later?
- Actively ask friends and contacts: ‘Who do you know who can help me with ...?’
- Reconnect with 4 of your contacts every day, so that every 2 months you speak to them all. Start today!
- Offer to exchange ‘filofaxes’ with close friends in business.
- Organise events where each friend who is invited has to bring along another friend from another circle.
Every now and then photocopy your filofax/black book, or back-up your computer-based record, in case of loss.
Tuesday, 16 March 2010
- Credit check your clients – this may seem costly and cause a minor delay but would you lend a stranger a tenner? You are about to lend them hundreds of pounds of goods or services!
- Get a good Credit Insurance policy – a luxury to some but this is what I class as sleep-easy month! A single client going bust not only costs you your margin but you end up paying for the goods or services provided as well. Too many businesses go bust because of just one of their customers goes out of business. A good CI policy at least allows the Directors to sleep easy and you may even get your money’s worth!
- Accurate invoicing – this sounds basic but too often invoices go out with the wrong details (addresses, charges). If you give 30 day terms you can bet you won’t be told about the problem for 30 days at least, therefore delaying your cashflow.
- Swift invoicing – The terms only start ticking once you issue your invoice. Don’t delay this while chasing new sales – if you don’t get paid for existing sales, new sales will only replace rather than develop your business!
- Early telephone chasing – if an invoice becomes overdue don’t leave it for another week. A gentle call often secures money and if your client takes umbridge this is a fair indication that there is a problem.
- Recognise early danger signs (delayed payment, failed promises, lack of contact) – any of these should set the alarm bells ringing. Don’t dismiss this as “it will be resolved next week because it always is”.
- Don’t be afraid to put clients on Stop! – this is the best leverage you have and don’t think a client will just go elsewhere for supplies. The right follow-up action will jeopardise their credit rating and others won’t want to supply them either.
- Avoid going legal too soon! – Too many people go from doing nothing straight to a solicitor’s letter. This is a sure way of making sure you lose the client and also is costly as you pay for this even if unsuccessful, and it costs you a client.
- Use a Debt Collection Agency promptly – these people are expert in collecting overdues as this is all they do. The earlier they can help the more they can help as if a client has not got the money, then they have no money, but a good DCA will ensure you get to the top of the list, if they do have some money.
- Choose a SME Debt Collection Agency that understands your business – value your brand capital – it’s your most important asset. Don’t risk a partner sullying it for you by using the wrong approach, and or being too heavy-handed. A good DCA will take time to understand your business, your philosophies and your practices before doing anything with your invoices. Some can even operate in your name so it doesn’t appear that you are using a debt collector but you still benefit from having the superior skills working for you.
Sunday, 10 January 2010
We are pleased to announce that Oriel has been highly commended at the recent Debt Collection Awards. The certificate was awarded to Oriel for the hard work of Oriel's Commerical Collections team over the past twelve months. Adrian Stalley, Managing Director of Operations and Finance for Oriel Collections commented;
"To once again be recognised by our industry as being one of the best shows tremendous consistency of performance and is something we can be truly proud of. The Highly Commended award also illustrates the effective detail of our service.
Our Commercial Collections team work hard to understand the needs of our clients and use these to achieve our objectives and those of our clients. This particular award is excellent recognition of their efforts whilst being well supported by the whole Oriel Collections team."