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Five reasons to avoid contract recruitment and one reason to change your mind

The UK recruitment industry is a £35.1bn market with contract recruitment accounting for 91% of its turnover. Expanding by almost ten percent last year its growth reflects the changing landscape of work.

With agencies eyeing up the profits to be made in the market we’ve tackled some of the biggest objections to entering.

You haven’t got the time

Time is a precious commodity in recruitment, and one a recruiter is unlikely to part with in order to tie themselves up in admin.

The biggest reservation most agencies have to entering the contract market is the time consumed by administration that goes hand in hand with placing contractors.

It means agencies are either forced to invest in staff to manage the back-office, or sacrifice some of their day to a relentless cycle of processing timesheets, firing off invoices, and chasing up payments.

This might once of been the case, however, technology has now made administration in contract recruitment a thing of the past. Agencies can focus solely on closing deals without having to hire any additional staff.

You make enough money

Recruitment tends to pay well but there are few in the industry that wouldn’t be interested in making more.

As the common stomping ground of the most sought after specialists and higher paid professional workforce, contract tends to draw in higher margins for recruiters.

It offers a more regulated income than it’s perm cousin and in times of economic uncertainty, like the current headwinds we’re experiencing, becomes a far more consistent source of income.

Your clients only need perm

That might be the case… for now, but if the demand does arise will your agency be able to react quickly enough to put the necessary functions in place.

Agencies that cater to both sides of the coin are increasing their marketability by attracting more diverse clients and extending their candidate pool.

Why would an agency avoid putting the measures in place to run contractors at no additional cost to their agency?

You haven’t got the finance to bridge the gap

At the end of the day it almost always boils down to money. The nature of placing contractors means agencies are required to bridge the gap between paying contractors weekly and receiving the balancing payment from clients’ invoices later down the line.

Agencies need seriously deep pockets, or a finance facility in place to bridge that shortfall.

However, many financiers are risk averse to lending, impose a number of limits and charge high costs to advance the money owed from invoices.

Agencies don’t have to settle for the bank’s generic models anymore, there are financiers out there that are solely designed to help agencies access and thrive in contract recruitment.

I don’t want to sell my company

Without a good contract offering behind you, there’s little worth in trying to.

If you intend on selling your agency in the future then your company will need a credible contract book. The quality of your candidates are effectively the price tag on your agency, and by providing an accurate forecast of regular revenue coming into your business you will increase its worth.

Why you should place contractors

The barriers to the contract market have been entirely removed in recent years and access to the right finance made available.

Aside from offering bigger profits and opening the door to a larger business pool, the economic climate we’re entering is built for contract recruitment.

In times of economic uncertainty, businesses tend to apply a belt and bracers attitude towards investment and hiring, but with working demand continuing, businesses tend to lean on the contract market as a safer option.

21 Costs You Can Avoid When Funding Your Contractors

See all the fees you could be charged and how to avoid paying them in our eBook.

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