Payments Industry, Employment Services

How competition in employment services is driving payments innovation

Modulr By Modulr on 24 July 2019   •   3 mins read
<span id="hs_cos_wrapper_name" class="hs_cos_wrapper hs_cos_wrapper_meta_field hs_cos_wrapper_type_text" style="" data-hs-cos-general-type="meta_field" data-hs-cos-type="text" >How competition in employment services is driving payments innovation</span>

When it comes to employment services, competition is now greater than ever. With an estimated 30,430 recruitment businesses operating in the UK alone, it’s easy to see why the competitive landscape is so tough. As you can imagine, with so many players operating in the space, it is becoming increasingly difficult to differentiate and maintain current profit margins.

With these challenges in mind, forward thinking employment service providers are innovating across their offering in order to drive new capabilities and tap into new opportunities. They say if you’re not moving forward, you’re moving backward, and in the world of employment services, this has never been more accurate.

Many recruitment companies are turning to the opportunities presented by payments to help them reduce costs, improve logistics and enhance their offering.

Here, we explore the key trends in the industry that are driving this transition, and discuss how these payments evolutions are delivering significant benefits.

With new regulations the volume of payments required is increasing

Employment regulations are always changing and more often than not, they bring with them additional costs and logistical challenges. The likes of IR35 regulation amendments and salary sacrifice rule changes are having a major impact on all parties involved in the employment services sector.

By increasing the volume of PAYE and NIC payments required, costs are ballooning, and this is being further exacerbated by growing reporting requirements and changes to the flat rate VAT scheme.

With all these variables in a constant state of transition, payroll processing, contracts, due diligence and audit processes are all becoming increasingly challenging, and expensive.

Skills shortages are making it harder to find candidates and tightening margins

With a chronic shortage of key skills across multiple sectors and greater competition in the war for talent, finding in-demand high-quality professionals is getting harder, and more expensive.

As such, margins are being further squeezed as the cost of sourcing is dragging down profitability. This is an unavoidable reality of the market and so employment service providers are seeking to lower costs elsewhere.

In addition, they’re also aiming to develop competencies that make them a more attractive proposition for key talent, for example, offering instant payment for their work. This is where innovative payment solutions can come in and help employment companies achieve their ambitions; by unlocking new capabilities that deliver value.

With margins squeezed, many employment services companies are turning to payments as a means to reduce their own costs and release some of the pressure on profitability. By amending the way they operate with payments, the opportunity arises to not only improve commercial performance, but also offer enhanced functionality, delivering great value to all parties in the market.

Pressure is the catalyst for change and in the employment services sector, the pressure to compete is higher than ever. As such forward thinking employment organizations are looking to payments as an opportunity to remain competitive, reducing costs, maximizing efficiency and driving critical new capabilities.

See how your business can turn payments into a competitive advantage in our payments in employment services guide, download here.