Battling the Back-Office Pile-up Clears a Path to Success

By: Larry Holstein
Date: 11/1/2007

As first published in:

Freedom to Grow: When does it make sense to consider full-service support from your funding provider, and where do you turn?

Making the leap from a factoring arrangement with your funding partner to that of a full-service arrangement can have a profound impact on your agency's productivity and profitability. There are two perfect times to consider "going full-service" and outsourcing back-office support functions: when business is booming and when business is faltering.

The first theory suggests that the time to investigate such support is during a period of growth. Take the opportunity to reap the benefit of an increasing profit margin to investigate other ways of increasing your bottom line.

Conversely, the other argument suggests that the most appropriate time to make such a move would be in response to a lagging market as a way to identify ways to increase efficiency, marketability, and ultimately profitability.

There's never a wrong time to do things better than you did yesterday, and better than your competition. Chances are, you entered the industry of temporary staffing for reasons other than an unwavering interest in solving mysteries of missing paperwork, cash flow management, dealing with payroll discrepancies, or navigating the intricacies of tax preparation, billing and reporting requirements. The right time then, is whenever you decide that productivity could improve if only your team could forge ahead of the paperwork and ancillary tasks that may be bogging down processes and dragging down team morale as well.

If you're unsure about which services could better be performed by a contracted service, evaluate the cost and return that your company currently maintains. If your agency's true strength lies with identifying, cultivating, recruiting, and retaining the best talent, then shift the back-office support services to an equally competent agency who has a stellar reputation in funding and office solutions for temporary staffing agencies. Your foremost responsibility is to present the most desirable temporary talent pool to the companies with whom you contract. If back-office burdens are hindering that ability and if your growth targets have taken a backseat to the back-office you may want to consider changing the way you manage those tasks.

Some of the most commonly and wisely outsourced functions for staffing firms include:

• Payroll services for temporary and staff personnel
• Temporary employee invoicing
• Management reporting
• Accounts receivable factoring
• Payroll tax filing and payments
• Credit and collections assistance
• Funding Workers' Compensation Insurance
• Software technology installs and maintenance for back-office support

Luckily, help in those areas is not hard to find. But like any partnership, research and more research can ensure that back-office outsourcing yields its anticipated benefits.

Once you've made the commitment to battle the back-office pileup, the next important step is preparation. Forge ahead with all the certainty you can muster, but before contracting with a firm, consider the following:

Will the agency treat your business as though it were their business? Transparency in the field of temporary staffing support is essential. Likewise, customer service must be exemplary. You want to know that your customers are being treated with the same level of respect and service that you provide. If you're not impressed by the way a prospective agency treats you then chances are that they will not meet the expectations you've established with your clients. It's a competitive business, so if that happens, move on.

What role does technology play in the support provided? The old adage holds true here: Technology is a wonderful asset but it has to work. You want to be sure that any software requirements don't surpass your agency's capabilities. If your agency has limitations in this area, a savvy back-office solutions support provider will be able to help you overcome them. A true software solution will be one which matches the capability of your team while also achieving results.

Is multi-faceted always better? Despite a seemingly common trend across industries in this country, bigger isn't always better. If payroll temporary service support falls too far down on a provider's list of so-called expertise, dig a little deeper to ensure their industry knowledge is both thorough and up-to-date. There are many reputable agencies who offer services solely to temporary staffing firms. The expertise that they leverage will likely be far superior and therefore they will be more attuned to your goals and challenges.

Track records always count. It seems rudimentary but the breadth and depth of service needs to be complemented by a proven track record. Trust a company that has enjoyed a long track record of success; and don't hesitate to ask for references and case studies. As outsourcing gains in popularity it is important to be more scrutinizing than ever.

Volume pricing. Bundling of services may be more cost-effective so ask about a full array of options, but stay focused on the needs that will truly enable your business to blossom.

How does insurance factor in? Temporary staffing agencies face a unique challenge when it comes to Workers' Compensation coverage. Look to see if a captive insurance program exists which provides coverage at a greatly reduced cost. This arrangement is especially appealing to agencies once thought to be too small to be considered a candidate.

Is the time right? If outsourcing is a new concept, interview potential agencies. Be candid about your company's performance, its strengths and its challenges. Leverage the expertise of these companies to help you determine the right path for your business's future.

Do you stay with who you know? There's something to be said for being loyal to the funding partner you have, if they've been good to you. But just be sure that their full-service offerings are as competitive and thorough as their factoring ability. Like any industry, there are a handful of companies that lead the pack in innovation, customer service, and pricing. Look around before pledging this additional allegiance.

Giving up the reins is difficult to do. But outsourcing such services is not as taboo as it used to be. More and more, companies are embracing the concept of investing in support services as a way of growing their businesses. By focusing on your company's key mission and becoming the best at that, success is very much within reach. Achieving that success may require that you redirect your team back to the original purpose of the company. You may be surprised when that change is met with overwhelming enthusiasm and energy.

Eliminating the clutter can elevate a company's morale almost immediately. No longer is it admirable, or profitable,for most companies to perform the full range of business services necessary to exist. Imagine if every widget manufacturer created and executed their advertising campaigns without the skillful benefit of a clever, creative firm? None of them would likely stand out and none would likely claim a lion's share of the market. Reclaim your stake on the temporary staffing market by refocusing on the mission and re-allocating the time previously spent on back-office endeavors.

Whether you're reaping the reward of years in the business, or just ramping up, take a moment to consider if your agency's time is being invested back into the mission of your firm, or to its maintenance. Regardless of your company's current profitability, if a disproportionate amount of time is being used to track down missing invoices, manage accounts receivable, or handle payroll problems, then you're losing out on time that could be better spent seizing new growth opportunities and developing your company's talent portfolio to its fullest potential.

Larry Holstein is the founder and president of TemPay, Inc., a national, privately held, financial services and management company which exclusively serves the temporary staffing industry. He can be reached at (216) 283-6666 or by email at lholstein@tempay.com

For a full listing of services and benefits available, visit www.tempay.com, or better yet, speak with one of our knowledgeable experts directly by calling (866) 6TEMPAY (866-683-6729) any weekday between 7 AM and 7 PM, Eastern Time.