If you’re a 4+ person recruitment agency still working from excel sheets, it’s time to step it up.
Being found lacking in your accounting function can have catastrophic and sometimes irreversible consequences for the success of your business. This could be as simple as missing a lodgment deadline or as serious as fraud.
While you are a small business your accounting may not be a major issue. But as you grow, the role of your accountant or bookkeeper becomes increasingly complicated, and so does your need for a more experienced and specialist accounting department.
So, why does your accounting need to evolve as your agency grows?
The growth and success of your business leads to increased financial complexities.
A small and relatively inexperienced accounting team will not be able to operate at a best practice standard and provide optimal business support in addition to their “day job”.
Even with the emergence of easy-to-use cloud-based accounting software, knowing how to use it doesn’t make you an accountant who can help drive a business forward.
The benefits of evolving your accounting and finance capabilities
Increased financial capabilities
As your business grows, so does your reliance on accurate financial information. An increase in operations will mean you require tighter control over your finances to meet allow you to be across your:
– Profitability and margins
– Working capital management and optimisation, such as debtor and creditor management
– Increasingly complicated pool of contract workers
– Commission calculations payable to consultants
Expertise in reporting and compliance obligations
As your recruitment agency grows, your reporting and compliance obligations need to increase to include:
– Effective taxation structuring for the long term
– An awareness and understanding of Fringe benefits tax and GST lodgments
– Relevant management reporting
– Financial statement preparation requirements
Value of a financial history
When it comes time to sell your business or bring on board a strategic partner, buyers or partners will require up to date, compliant and insightful financial information. Having an accounting function that can manage this information from the start of your business operations will greatly reduce the cost and time associated with the transaction.
It is essential to grow your finance function as your business grows for the financial success of your recruitment agency. You can choose to do this in-house or via an outsourced partner. Find out more about that in our blog here.
What questions should I ask when choosing an internal accountant or accounting partner?
1. Are they willing to consult with you on your needs and work with you on a solution as a partner?
This relationship will be long term, so your provider must be willing to partner with you to develop a solution that truly works for your business.
2. Does the accountant or accounting firm you are considering have experience in the recruitment industry with clients at different stages in their life cycle?
A partner with in-depth knowledge of specific recruitment financial issues will help you stay current on complex changes to accounting standards and taxation legislation. From contractors, margins, to reporting and the compliance associated with recruitment such as payroll tax, FBT exposure and superannuation.
3. How does the accountant or accounting firm intend to operate?
Will they work with and educate your staff as part of their offering, or will they work independently? With Sovereign Private as your blended finance partner, we will help train and educate your existing in-house accounting staff.
If your recruitment agency is experiencing growth, Sovereign Private can provide the extra support you need to ensure your recruitment agency is operating efficiently. Contact the Sovereign Private team on 02 9227 9002 or at sgreen@sovereignprivate.com.au.