Over the past 15 months, MAYACHI has met with nearly 100 recruitment agencies to review their current back-office, funding, and accounting setups.
In many cases, recruitment directors have limited understanding of their own financials or whether the work completed by their accountants is genuinely beneficial and adding value to the business. Often, due to this lack of understanding, accountancy is viewed as a minimal business cost and not seen as a priority, leading to the appointment of a “cheap” accountant.
These lower-cost accountants typically serve a wide range of general businesses, “the butcher, the baker, and the candlestick maker,” and are not recruitment-specific.
Many simply provide access to an accountancy software package with minimal training for the recruitment director or an internal administrator. They may submit VAT returns and complete year-end accounts, but often offer no additional reporting and certainly little to no advisory support based on the financial data produced.
There are several major flaws in this approach, including:
• The internal person entering data into the accounting software is often not a trained bookkeeper.
• Accounting software does not teach you how to be a bookkeeper.
• Data may be entered incorrectly, leading to issues such as reclaiming VAT when it is not allowable, or misclassifying transactions in the accounts.
• There is often no accurate visibility of the company’s financial position or its liabilities with HMRC.
• Time spent on bookkeeping could be better used making additional placements and generating revenue.
Recruitment directors should view accountancy as a critical business function, not an afterthought. Back-office and accounting tasks should be outsourced to professionals with specific recruitment industry expertise.
Engaging a recruitment-specific accountant or an outsourced back-office and accountancy provider, who can handle all aspects of bookkeeping and financial management, is essential. This ensures that financial data is kept accurate and up to date, providing directors with clear insights into sales, overheads, and profitability.
These specialist providers will also keep directors informed of relevant legislative changes and typically offer monthly, quarterly, or annual reviews to go over financial statements and advise on strategies for maximising profitability and take-home pay.
MAYACHI works with many recruitment-specific accountants and back office and accountancy providers which are recommended to clients. MAYACHI works with these providers to ensure that they can provide the best possible service for the agency director so they can concentrate on growing their company using the financial information at the right cost for their business.
