Finance is one department that commonly works in isolation – perhaps because traditionally there has been a degree of confidentiality about the information they have access to. Elements such as payroll are understandably kept secure. The same can also be said of business management information about sensitive areas such as profit margin, cashflow and bad debt.
Instability across the recruitment sector
During the pandemic crisis years of 2020 and 2021, every firm (and its clients in every sector) were faced with unprecedented events that impacted what work could be done as well as how and where it was done. The recruitment sector saw wild fluctuations in activity and unexpected increases in demand. The prolonged labour shortage continues. For those operating in the temporary segment, demand from some key sectors spiked – warehousing staff are one example. And for permanent placements, it is widely reported that the ‘Great Resignation’ continues and has resulted in a huge uptick in vacancies needing to be filled.
The one common theme in all of this is that behaviour has changed. It quickly became impossible – and foolish – to continue to operate as before when so much was – and continues to be - in flux. The recruitment firms that have weathered the storm are those who have been able to stay abreast of changes from multiple sources and adapt quickly.
Finance has a significant impact on customer relationships
Maintaining positive customer relationships is not only vital for current business performance – it also helps to protect and ensure future growth potential for the firm. When the entire customer base – and indeed your own business – is facing entirely unexpected and unwelcome business disruption, it’s no surprise that usual practices fall by the wayside. Customers who previously were regular and timely payers have experienced difficulties. Organisations that previously were financially stable have had to make significant changes themselves. And suddenly, recruitment firm Finance Directors have begun seeing late payments and an increase in bad debt. Recruitment businesses are not alone – in January 2022, the Small Business Index (SBI) shows a third of small firms have been impacted by poor payment practices in recent months.
When the economic landscape transformed during the pandemic, the problems were widespread. Even now, as COVID-19 is in retreat and businesses attempt to recover and move forward, challenges remain. In this climate, it’s even more important for Finance to tread carefully.
Late payments and bad debt can quickly sour client/agency interactions and impact longer-term sales and cashflow. Of course Finance must take action to deal with non- or late-payers, but this must be done with an enhanced understanding of the issues at a deeper level, rather than simply running the usual alerts and chases.
Business information can reveal new strategies
Finance leaders should be encouraging their staff to dig into the data, make use of risk management tools and information, and engage internally with consultants to understand customer circumstances.
With the right data and tools, an internal Finance/Sales task force can both bring their unique perspectives together to protect the sales pipeline and ensure that communications with and about specific customers are productive. A joined-up view across CRM and Finance data will help all parties to navigate current risk and cashflow problems more effectively AND protect longstanding client relationships and the future sales pipeline. And additional credit and risk information from third party sources such as the Business Health Dashboard, powered by Experian, will help to build the current picture and ensure appropriate and achievable financial and payment terms are agreed at the outset.
We are market leaders in software and tools for the Recruitment sector. Our Recruitment CRM and Access Financials software can work in tandem and deliver a joined-up solution for your business that helps your people work more effectively. Our new Access Business Health Dashboard which is powered by Experian gives you a significant advantage but offering easy access to credit risk management data. Why not talk to us today about how we can help your Finance team deal with heightened credit risk?