FINANCE, SCALE, EXIT – MAYACHI’S FIRST JOINT SEMINAR WITH NORDENS AND METROBANK

On Thursday 3rd October 2024, MAYACHI joined Nordens Accountants and Metrobank Invoice Finance at the Metrobank office in Holborn for a Panel Networking session.  This session was aimed at recruitment agencies to help look at ways to help manage their cash flow, incentivise key employees via EMI schemes, and strategies to maximise an agency’s future sale.

The seminar started at 4 p.m. and was led by Ashlee Cooper from Nordens. Stewart Roberts from MAYACHI, Adam Truluck from Nordens Accountants, and Andy Knight from Metrobank Invoice Finance participated in a lively discussion, which was followed by questions from recruitment agency directors and various industry suppliers.

There were a number of questions asked, which are summarised below:-

How can recruitment agencies strategically manage cash flow to ensure sustainable growth, especially regarding financing options like invoice financing or working capital facilities?

Recruitment agencies can ensure sustainable growth by taking a strategic approach to cash flow management. This involves gaining financial visibility, proactively setting aside funds, and strategically leveraging financing options like invoice financing and working capital facilities. Agencies must also stay on top of tax obligations and carefully budget for staffing costs. By adopting a proactive, data-driven mindset, recruitment firms can achieve the financial stability needed for sustainable growth.

What are some of the best practices recruitment agencies should consider when setting up employee incentive schemes, such as EMI schemes, and how can they impact long-term growth?

Recruitment agencies should carefully consider the structure and eligibility criteria when setting up employee incentive schemes. Schemes like EMI can effectively align employee incentives with long-term business growth, but agencies must implement them correctly. Best practices include making the schemes available to all eligible employees, setting clear performance targets, and establishing fair valuation and vesting periods. By incentivising staff to contribute to the company’s success, these schemes can positively impact retention and drive sustainable growth over time.

With changing tax regulations like IR35, what steps can recruitment businesses take to remain compliant while maximising their tax efficiency?

Recruitment agencies must stay vigilant in maintaining compliance with evolving regulations like IR35. Key steps include thoroughly assessing contractors’ employment status, ensuring proper documentation, and working closely with accountants to optimise tax efficiency. Agencies should also consider outsourcing payroll and compliance management to specialised providers who can navigate the complexities. By proactively addressing compliance, agencies can mitigate risks while still pursuing tax-efficient strategies to support their business growth.

How important is it for recruitment agencies to consider protections like credit insurance, tax investigation insurance or bad debt protection policies when managing financial risk?

Protecting against financial risks is crucial for recruitment agencies. Credit insurance can safeguard against client non-payment, while tax investigation insurance and bad debt protection policies provide a safety net. These measures help agencies manage cash flow volatility and avoid costly disputes. Agencies should carefully evaluate their risk exposure and implement the appropriate insurance coverage. By taking a proactive approach to financial risk management, agencies can focus on growth opportunities without the constant threat of unexpected liabilities.

What financial metrics and key performance indicators (KPIs) should recruitment agency directors focus on to drive growth and scale their business effectively?

Recruiting agency directors should focus on key financial metrics and KPIs to drive growth and scale their business. These include closely monitoring cash flow, profitability, and productivity measures like placements per consultant. Agencies should also track the performance of their sales team, client retention rates, and the efficiency of their back-office operations. By maintaining a data-driven approach and setting clear targets, directors can identify areas for improvement and make informed decisions to support sustainable expansion.

For agency owners looking to exit or sell their business, what are the most important factors they should consider to maximise the value of their recruitment agency?

Maximising value requires a strategic approach for agency owners looking to exit or sell their businesses. Key factors include building a solid client base with long-term contracts, ensuring compliance with regulations like IR35, and developing a talented team to operate the company without the owner’s direct involvement. Owners should also consider tax planning, such as structuring the sale to minimise capital gains tax. By proactively addressing these elements, agency owners can position their businesses for a successful and lucrative exit.

The event was a great success and enjoyed by all attendees and participants. Discussions continued after the panel session was finished. The evening rounded off with the speakers and some of the attendees enjoying some drinks and networking.

Posted in