A really good way of wasting money in your recruitment agency!

Identifying and quantifying the waste of cash

Despite the ready availability of technology for the recruitment industry, some agencies are yet to modernise their systems and processes. Implementing technology to manage processes end-to-end, is a process known as ‘Digital Transformation’.
The use of paper-based, manual timesheet and invoicing systems is often associated with legacy software systems. These might be on-premise systems that require servers, storage, and back up, along with maintenance and periodic upgrades, or they could be a mix of cloud and on-premise tools.
However, using this approach is a source of inefficiency. In a cost analysis, it is possible to directly identify where this wastes cash and quantify how much it dents the bottom line.
There are a number of holes through which the money runs out.

Cost disadvantage of on-premise software compared to online solutions

Buying off the shelf on-premise technology and bespoke database-driven applications is an expensive business. Servers need operating systems, storage devices and back-up devices or services. Typically, the cost can be broken out as:

• Capital investment to buy hardware, software and licenses
• Annual repeating maintenance costs for vendor or third party support
• Periodic (1-3 year) upgrading of hardware, software and licensing
• Software development costs for bespoke applications

In contrast, an online SaaS (Software-as-a-Service), automated back office system requires:

• NO capital investment to buy hardware, software and licenses
• NO annual repeating maintenance costs for vendor or third party support
• NO periodic upgrading of hardware, software and licensing

A common business model for online applications where there is a need for some tailoring to the specific needs of each customer is to charge as a one-off set up fee and then set a fixed monthly cost, based on usage, like a pay-as-you-go mobile phone contract.
Comparing the cost of on-premise to online applications, by one reckoning, an on-premise solution may cost as much as 5 times that of an online solution in the first year.

Cumulative costs of printing timesheets and invoices

A paper based back office workflow for manual timesheet processing accrues significant costs for printing. Essentially, across timesheets and invoices, for every 1,000 mono laser printed pages, a typical cost might be £30. Inkjet printing and using letter headed paper is a lot more, and could perhaps triple the cost.
In comparison, with an online back office system, printing is not an integral part of the workflow. Timesheet data and processes for workers, clients and agency staff are all handled onscreen, equating to zero print costs.

High cost of posting paper invoices

In a paper-based timesheet and invoicing workflow, posting 1,000 invoices using stamps at UK Standard Royal Mail 1^st Class letter post currently costs £760. This reduces with franking services, but still comes out at £650 according to the published tariff.
In comparison, on online system drives a digital workflow in which invoices are delivered by email, equating to zero cost for delivery. This may release further efficiencies from the use of invoice purchase-to-pay systems that increasing numbers of large businesses are now using to improve their own efficiency by speeding up and automating invoice settlement.

Overheads of processing paper invoices

OH! And did we mention the cost of paying people to process timesheets manually, and the detrimental effects of human error? Manual labour overheads include:

• Copy-keying timesheet data
• Deciphering illegible handwriting
• Errors from mis-keying
• Over payment to workers
• Incorrect invoicing

If we contrast this with a good online back office system, typically we find that timesheet processing costs are squashed to a fraction of what they were.

Stop wasting money in your recruitment agency with ETZ

ETZ helps recruitment agencies achieve new levels of efficiency by streamlining back office processes which results in cost reductions of up to 85%. ETZ simply helps recruitment agencies to stop wasting money.
To see how ETZ transforms simply call us on 0800 311 2266 to book a demo.