This data could save your Recruitment Business.

This one is for Owners and Managers of recruitment companies.

It’s not usually the part of your job you love.

You are not really that interested in it.

But you need to pay attention. It could save your commercial life.

Credit and Risk management.

Many of us are struggling to break-even. Revenues are patchy. Cash is being depleted. Challenging periods lie in wait. Clients are slow to pay, and some are in danger of not surviving themselves.

So I turned to my mates at APositive.

What should we be watching, I asked? What plans can we put in place?

Cameron Buckley and Danny Marlow were quick to point out that being aware of the heightened risk is only the start. The next steps are to make sense of your risk profile and then have a plan to manage it.

The lads at APositive have produced a macro risk dashboard specifically for the recruitment industry, but also suggest it could easily be adapted to assess the sectors that you are servicing as well.

I like the dashboard. It’s simple, and even I can follow it.

It focuses on eight key metrics or policies. Most of them are in some way interconnected, and we look at the past, present, and future using publicly available data from credible sources.

Starting from the top ;

JobKeeper and Tax Deferrals – it’s been well documented that stimulus packages like Jobkeeper and tax deferrals (In Australia. Most countries have something similar) all have an end-date and are being progressively wound-back.

Insolvencies – Despite an increase in Zombie firms, insolvencies are currently 50% lower than the same time last year, which is directly attributed to the relaxed insolvency laws, which are now being extended to early 2021.

Payment Days – Outstanding invoices have unsurprisingly increased, with one of the reputable credit agencies releasing a report that showed that they have increased by 342% to the same time last year. They are now an average of 49 days overdue. (Contact Cameron Buckley if you want a copy of the full report)

Unemployment – is a lag indicator. Prior to the recently released stats that showed unemployment decreased from 7.5 to 6.8%, the ABS forecast in August was that it would peak at 9.25% in Dec, which is nearly double the same time last year. (Australia)

Job Ads – Seek (Australia) released their latest job ads a few weeks ago. At a national level, it was down by 29% V’s Feb 2020. At a state level it was as low as 1% down in WA, 2% down in SA which is a stark contrast to VIC at 55% down.

Payroll – The ATO shares an aggregated STP data periodically. Their last report showed that jobs were down by 4.9% and wages down by 6.2% compared to March 2020.

Market Size – SIA predicts that the Australian recruitment market will contract by 26% in 2020 followed by a 16% bounce-back in 2021

There is now a much greater need for recruiters to look at the financial history of a client, but also to drill down into the performance of industries from a credit management perspective, says APositive founder Danny Marlow.

Credit reports are still relevant but not as valuable, as they have been in the past because historical performance is no longer a robust future indicator for specific industries and businesses.

A broader range of business intelligence is available, including credit insurance claims, which “bring some pretty good intel to the table”.

Marlow recommends delving deeper into prospective clients’ business, to understand risks “case by case, customer by customer“. He asks, “are you going to sleep well at night based on the intelligence you’ve got?”

The final tip from APositive. Organisations using digital timesheets are being paid 20% faster than those using manual processes because they can be verified more quickly.

Lots to ponder. Plenty to act on.

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Now is a good time to read ‘The Savage Truth’. Full of lessons about surviving recessions, but also on how to take advantage of the recovery. Get it here

(All proceeds of my book sales in 2020 go to the Australian Bushfire Relief Fund)

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