Risky Business – the hidden costs of incorrectly paying temporary and contract staff

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The staffing industry can be a risky business! There is nothing riskier than incorrectly paying your contract and temporary workforce. On top of these risks, the recruitment industry payroll areas are heavily regulated and are made even more complex when considering your businesses compliance.

It is no surprise that the “Outsourced Payroll” industry is thriving, this is due to the risks related to temporary recruitment and contract payroll. It may be due to recruitment business owners not wanting to tackle the hassle of interpreting agreements or time sheets in order to pay their workforce correctly.

Let’s go back to the very beginning of the process; how are you calculating your rates? Are they correct from the start? Or are you doing a ‘Crocodile Dundee” and putting that index finger in the sky and taking a semi-educated guess? To later find that you’ve made a mistake! Of course payroll and billing come as one and are joined at the hip, so if your pay rates, allowances and statutory rates are wrong then there is no doubt your invoices to your clients will also be incorrect. This means paying your staff correctly and on time is the #1 golden rule of a successful temporary staffing business, yet so many recruitment and staffing business owners get it wrong on a regular basis.

So, you ask – how can I reduce temporary recruitment payroll errors?Of course the interpretation of the time sheet is critical, but if you have not selected the correct level of classification of the worker, determined which category they actually fit based on their duties or for Mid-executive level placements ensuring that workers compensation or Payroll tax of even superannuation is appropriately accrued you are going to have problems. Disaster beckons!

The impact of incorrectly paying temporary and contract staff affects everyone in the cycle!

Recruitment Consultants/ Business Development Managers / Account managers will be taken to task by your employee or sub-contractor and that is not even considering the wrath from your Payroll Manager and Administration team.

Your clients will probably hear about it first, quite possibly on the Wednesday or the Thursday morning the week after your contractor or temp have started working for you. This will of course will make your organisation appear unprofessional and will cast doubts over your businesses capability to supply a quality service. For agencies operating in the blue- collar space or perhaps in sensitive industries such as government this could be perhaps your worst nightmare with union and ombudsman intervention. It can all get very messy and impact your reputation.

Moreover, the further hidden costs to your business will impact the efficiency, productivity and morale of your team (especially in payroll and admin). The re-work of various payroll components such as taxes, superannuation, re-issuing of invoices, the delay of the cost associated with unpaid or slower than usual payments. These costs are what we call the dark costs of the business, hidden costs may be having an impact that you may not be aware of.

Of course, for years the recruitment industry has continued to survive within these complex environments but it has not been precluded from these types of occurrences. Every business must ensure that they get things right from the very beginning as this will reduce the hidden costs, risks and business impacts by squashing anything incorrect before the quote or contracts leave the front-door!

Ratescalc is here to help

A cloud based technology that can support your existing business by removing some of the manual human intervention that is open to mistakes. Ratescalc.com has been designed by experienced industry professionals that have experienced these problems themselves, run their own businesses and understand the challenges surrounding this complex landscape.

Ratescalc.com could also be the shining light your business needs to broaden its service offering by enabling your business to venture into markets that were previously foreign to you. Supporting all industries, Ratescalc.com can enable any staffing agency that supply

  • PAYG employees in a casual or on a fixed term full-time basis
  • Contractors / ABN holders

Ratescalc.com can also support

  • Group Training companies
  • Australian Apprenticeship Centres
  • Registered Training Organisations

With all modern awards managed within the platform and the ability to support any certified or employment agreement in the market, Ratescalc.com will be your newest best friend, your payroll / finance team will love you for it- we guarantee you!

 

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