In Part 1 of this 2-part series, we covered staffing software, account receivables, tax codes and new hire reporting as signs to reassess your current back office operations. There are many more pieces to evaluate for back office operations to ensure that it is supporting your staffing agency’s growth. Your company’s stability and continued operations depend on making sure your back office processes can sustain your front office objectives. Here are a few more signs to assess whether it’s time to change key aspects of your back office operations.
1. Dealing with staff turnover and absences
Many small staffing agencies have a team of one or two back office staff members. That means covering for absences such as vacation or maternity leaves can be extremely difficult to manage. Turnover and covering for absences are a normal part of any business. However, making sure your employees get paid is a top concern for staffing agencies. Even worse, when your sole payroll processing person leaves the team for a new job, where does that leave your staffing agency? If this is an increasingly common pain point for your staffing agency, it might be time outsource payroll processing. This will help to ensure turnover does not impede the company’s growth opportunities.
2. Scaling with staffing agency growth
As your staffing agency grows, opens new branches, and acquires more customers and orders, your back office team also needs to scale to support this growth. With an internal back office team, this means hiring more people to keep up with the additional workflow. At this point, it is time to assess any potential cost-savings from outsourcing this function instead of adding more overhead costs to your business. Depending on your staffing agency’s business model, outsourcing payroll processing and other back office functions can be more cost-effective and help mitigate potential risk of human error.
3. Rejecting customers due to slow payment terms
It is difficult to reject new customers, but maintaining a healthy cash flow is vitally important. This is especially true in the staffing industry with its high payroll costs. So, what do you do when a new client has high potential for profitability but requires 30-day or 60-day payment terms? Does your staffing agency have the cash flow means to make ends meet while you wait for payment? Small staffing agencies often do not have access to that kind of capital.
To bridge the gap, staffing agencies turn to payroll funding services. For a small percentage of the invoice, payroll funding allows staffing agencies to work with clients that have longer payment terms. The advanced funds help staffing agencies make weekly payroll and pay overhead expenses. This includes rent or other office expenses. If your staffing agency has turned away new business because of slow payment terms, then payroll funding is a service to research to ensure that you are not missing out on profitable opportunities.
If any of these signs are pain points at your staffing agency, it is time to evaluate potential changes to your back office operations. At Lone Oak Payroll, we partner with our staffing agency clients to make sure they have the support and services that make sense for their unique business models. From payroll processing services to payroll funding services, our experienced payroll team helps to ease the administrative burden of back office functions. Without worrying about back office operations, staffing owners can focus on business growth. For more information on the cost-savings and added efficiencies of our back office services, contact us today!