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Minimum wage changes prompt cash flow warning for recruitment and labour hire businesses

June 26, 2019

Tips for better cash flow management

 

The 3% minimum wage increase, mandatory in Australia from July 1, has prompted leading business funder Scottish Pacific and RCSA to warn labour hire and recruitment firms about how this compulsory commitment may impact their cashflow.

 

 

Scottish Pacific Business Finance’s head of debtor finance, Wayne Smith, said the ruling, which will impact the wages of more than 2 million Australians, could have a notable impact on the labour sector.

 

“An extra 56 cents an hour to $19.49 may not seem like much, but labour hire and recruitment businesses may have dozens, sometimes hundreds, of temporary staff on their books and the minimum wage increase could impact on both their margin and their cashflow,” Mr Smith said.

 

“Modern recruitment business models are based on providing fast and flexible human resources solutions for clients, but in this rapid-paced work environment sometimes it’s hard for business owners to step back and see if there are better ways to manage the working capital in their business.”

 

RCSA, the peak industry body for recruitment and staffing in Australia and New Zealand, supports the leading staffing firms to ensure they maintain high degrees of professionalism and sustainable business, so they can set the benchmark.

 

RCSA CEO Charles Cameron said it is critical that cash flow is forecast and managed proactively so that standards of service and compliance are never compromised.

 

Helpful cashflow tips

 

Throughout Scottish Pacific’s 30-plus year history, the labour hire and recruitment sector has represented a significant proportion of the client base and this is an industry Scottish Pacific knows well. Mr Smith offered four tips for businesses, to help improve their cashflow:

 

  1. Make sure your funding facilities are flexible. Look at bank and non-bank funding options to find the right fit for your business. Deal with a fu