Hi folks, now that Thanksgiving is behind us, time to focus on your funding and back office for the new year. Here’s a little piece I wrote for the November issue of the Tempworks newsletter. Enjoy and call me to discuss it at 516-424-5500.
Outsourcing Makes Sense, Outsourcing to Outsourcers Could Spell Disaster
By Jack Terrana, VP TempWorks Venture
I have been around the payroll funding business for close to 15 years. My first job was with a one-time market leader who, at the time had no idea that they would one day be seen as a ONE-TIME market leader. Their service was good, not perfect. Their people were dedicated and professional and more than adequately met the demands of the customers. But like an engine losing oil, when the damage is done, it’s really done.
At the time, a big selling point was “nothing is outsourced” and it was a strong selling point in 1995. Hard to believe it still is in 2010!! Harder to believe that the majority of the payroll funding companies still outsource the very functions that busy staffing professionals turn to them for. Outsourcing to an outsourcer that you don’t control could spell disaster for your business. How? Let us count the ways.
This article has been sitting in my craw for almost 10 years, when I departed the “nothing is outsourced” shop for an “everything is outsourced” shop. So in the new scenario, I would sell the funding and back office services to the client. Here’s where you need the whiteboard to follow along. The funding co would provide the money for payroll that they would send to the staffing firm. The staffing firm would move the money from operating account to payroll account (no wires were allowed to go to the payroll account) where ADP would draft it. Simple right? No. I haven’t yet mentioned the staffing software company that had a relationship with the funder and ADP. Confused yet? .
Ok so to recap, fundco lends money to staffco, payrollco drafts money and cuts checks. Where’s softwareco? Not sure. They are providing software that tracks applicants, searches and retrieves data, parses resumes, a CRM, an ATS, all of the above. So, applicant (think payroll) and client (think billing/collections) data goes into the software yet all payroll and systems outside of the software and operating system control billing and collections. Think this is painful to read? Writing it is pretty miserable too. But neither is as bad as having to actually run your staffing company in this triple vendor hell of a nightmare.
So, without further adieu (read boring techspeak), I give you simplicity. Easy to follow, easy to comprehend and even easier to operate (and scale) your growing staffing company.
Before you choose a funding company, ask the easy question, do you outsource any of this? Do you own/maintain/support the operating system? Do you keep separate agings? Is the payroll and other key data accessible from a single system? The answer should be “yes”. If it isn’t, that company is operating as it had 10 years ago.
