4 Operational Tasks Critical to Your Staffing Company’s Success

4 Operational Tasks Critical to Your Staffing Company’s Success

When you think of the “business of staffing,” what primarily comes to mind is recruiting talent and finding customers with which to place them. But as any staffing company owner or manager knows, the business of staffing is much more complicated than that (as if recruiting and sales weren’t complicated enough!).

In the staffing industry, it takes more than just successfully recruiting and placing employees to have your staffing company meet your goals. With any business, owners also take on operational duties such as payroll, taxes, insurance, and more. These operational tasks can have just as big of an impact on your balance sheet (if not more so) than sales if not given their proper attention and due diligence.

Click here to read more about 4 operational tasks critical to your bottom line and staffing company success.

1.    Tax Compliance.
There’s a reason they say that the only two guaranteed things in life are death and taxes. There’s no getting around paying taxes, and changes in the tax code can have a major impact on your bottom line in the form of increased taxes or penalties (including interest) if you’re not properly prepared.  

One big change involves the Affordable Care Act. It’s important to keep abreast of deadlines, reporting requirements and more to ensure you’re in compliance and avoid penalties. While this is one of the more highly publicized issues, there are others that are not as widely discussed.

For example, if you conducted business in California, Connecticut, Indiana, Kentucky, New York, North Carolina, Ohio or the Virgin Islands in 2014, you may be in for an unpleasant surprise. These states had FUTA credit reductions for not paying back their FUTA loan or obtaining an exemption. For business owners, that means an increase of anywhere from 1.2 to 1.7% for their Federal unemployment tax liability. Unemployment wage bases will also change from year to year, and state to state.

The other side of the tax compliance issue is tax credits. One of the last acts of Congress at the end of 2014 was to extend the Work Opportunity Tax Credit (WOTC). This is great news for staffing company owners who hire individuals from certain groups who have consistently faced significant barriers to employment. This one-year extension allows taxpayers to claim this credit on their 2014 returns.

It’s unknown if the WOTC will continue to be extended, but it’s important to stay abreast of any tax credit opportunities that may benefit your staffing company.

2.    Risk Management & Worker’s Compensation
Injuries on the job can be a costly expense. That’s why it’s critical to have a solid worker’s compensation program in place to ensure your business is covered in the event of a claim. Your operational profile, risk management program, and loss history are the three main aspects of your business that can impact your ability to get underwriting quotes.  

OSHA has determined that staffing companies and their customers are jointly responsible for ensuring safe working conditions for temporary employees. Your overall risk management plan should include comprehensive insurance coverage for all areas of your business, written safety procedures that are used for training all employees, and customer contracts that cover safety issues.

3.    Invoicing and Portfolio Management
No one likes to see an error on an invoice. It raises issues of trust and accuracy for the customer and can cause payment delays. Depending on how you fund your staffing company, payment delays could result in additional fees or interest on your line of credit. Ultimately, the faster your accounts receivables are paid, the better it is for your bottom line.

In addition, a strong portfolio management program can also help ensure your customers pay in a timely manner. By carefully looking for and identifying warning signs, it allows you to follow up and start conversations with your customer before a payment is delayed.

4.    Funding
Funding is the lifeblood of a staffing business. Ultimately, you need to pay your employees in a timely manner to keep them happy, and in turn, continue to do a good job for your customers. Your funding source can impact your staffing company in a myriad of ways: through their rates and fees, but also through how they extend credit. Having the funding in place can determine if you’re able to take advantage of a big sales opportunity. You may be able to get the employees in place, but if your funding provider is hesitant to extend your credit, then you may not be able to pay those employees.

How your funding is structured can also make a huge difference on your bottom line in terms of extra fees, clearance delays, how their rate is structured, and more.

While staffing is primarily a business of sales, it’s still a business. With that business comes operational tasks that don’t have to be a burden if you’re fully informed, prepared, and aware of their impact on your bottom line.

You can find information about many of these items by visiting www.tricom.com. Tricom actively researches legislative and tax changes state by state, and post updates as they are confirmed. We also have other resources for vetted industry partners, informative webinars, tax tables by state, and more.