Six Signs Your Staffing Agency Has a Payroll Problem

You Don’t Have Time to Manage Payroll and Run Your Staffing Agency

Staffing agency owners assume that managing payroll internally will cost less and run well. These leaders also believe that if there is a payment problem, they will catch and resolve it quickly. Unfortunately, this isn’t always the case. 

Most staffing agency owners come from a sales background and generally underestimate the importance of effective payroll. They also may not realize the ripple effect that one seemingly small mistake can have throughout the entire process.  

Payroll Problems Impact More Than Just Your Contractors

Wrap your head around this: Invoices in the staffing world are a byproduct of correct payroll, so incorrect payroll will generally lead to incorrect invoices. Additionally, if you have a sales team that gets paid on profits, mistakes in invoices and payroll can cause discrepancies in RP, ultimately impacting sales commissions.

Unpaid contractors are unhappy contractors. Unpaid salespeople can be more than just unhappy — if the payroll mistakes are consistent, you may lose your best earners to your competition.

Building Your Staffing Agency Should Always Be Your Top Priority

Noncompliance is a constant threat to recruiting companies running their own payroll process. Additionally, staffing agency owners are too busy trying to build and grow their business; they simply don’t have the time needed to dedicate to payroll. Even if they have the bandwidth, most staffing agency owners are great recruiters — but not great accountants. As a result, they often don’t pay attention to payroll until it becomes a problem, both for their business and their employees. 

You May Need Help With Your Payroll Process If…

Knowing some of the signs that your staffing agency has a payroll problem can not only save you money — it can potentially save your business. Here are six indicators that it’s time to outsource your payroll process to an experienced provider: 

1. Delayed Payment
   Not paying employees on time should not be an option. Late payroll isn’t just inconvenient to your employees; late payroll can directly impact how your workers are able to pay their own bills. If you’re finding lack of time or cash flow problems are causing late payments, it’s absolutely time to find an alternative solution for your business. 
2. Payroll Errors
   Recurring payroll mistakes is a clear indicator that you may need help. Typically, there’s no such thing as a “small payroll error” — even the slightest miscalculation can make a huge impact on an employee and eventually could undermine trust in your business. Don't forget, payroll mistakes will generally affect Bill Rates and recruiter profits. 
3. Missed Tax Updates
   Tax legislation is constantly evolving, making it easy to miss an update — especially if you’re busy running your business. Many staffing agency owners don’t realize that they’ve fallen into noncompliance with their tax practices until after they’ve received a notification (or penalty) from the government. Outsourcing to an experienced payroll provider instantly eliminates the need for you to know or understand the latest tax laws. 
4. There’s Never Enough Time
   Time collection and payroll process is a weekly event. Carefully tracking and managing payroll for every worker is a full-time job in itself. Every minute spent scrutinizing payroll is time spent away from building your business. Spending time managing the payroll process (unless you have professional payroll experience)  instead of building your headcount is a clear indication that you may have a problem.
5. Business Growth is Impacted
   Some staffing agencies may successfully manage their payroll process when they first start out — until their operations begin to grow. If your staffing agency is starting to expand its operations, it's time to consider supporting that growth. Outsourcing this function now will ensure you have the support and infrastructure needed as you scale. Depending on your business,  a payroll partner can cut the time and resources you spend on payroll and invoicing functions by 70-90%.

6. No HR Assistance
   Have you noticed other back-office functions, like HR, falling through the cracks as your staffing agency grows? Onboarding, background checks, tax filings, reporting, PTO etc.  — all of these things fall under the HR umbrella and can directly impact time management and overall operations.

Outsourcing Payroll Alone is Not an Effective Strategy for Staffing Agencies

Many business owners don’t realize that a payroll-only solution is not an effective strategy for staffing agencies. Payroll directly feeds into other functions in the organization, making it essential to implement a full-service back office solution that includes HR. Enhanced HR capabilities for your scaling business can absolutely impact your ability to grow. Working with an experienced vendor that offers a comprehensive, integrated back-office solution can provide the support you need as you grow.

If you have a payroll problem, you have a back-office problem.

The Back Office from Headcount is your solution. Our full-scale back office services deliver the infrastructure your staffing agency needs, no matter which direction your business is scaling for payroll peace of mind. Click here to schedule your free consultation today.