Blog posts written during February 2018

The cheapest and most successful way to start your agency

Tuesday Tuesday, February 27, 2018 by Administrator

Measure Success

Let us face it the success of your start-up agency will be measured in two key ways at the end of your first year: The number of bookings you are making (People Planning) and the balance in your bank account.

The challenge you face is maximising the net profit for however many shifts you supply and one of the major drains on this profit is the cost of paying staff often before the customer pays you. Cost of paying staff? Surely that is their (net) pay plus company NI, statutory company Pension contributions, expenses and the like?


Bottom Line vs Headline Rates

In your company accounts bottom line / end of year, the cost of paying staff is the cost of the (optional) accountant who calculates their wages and the cost of borrowing any money (you don’t have) to pay them before the invoices are paid.

You should work out this bottom line cost when considering how to finance the bridge between payroll going out and invoices being paid. Finance companies, umbrella companies and the like are very good at headline rates. Headline rates are often calculated on the total amount borrowed rather than the day by day needs. When you sit down and calculate how much you actually pay them, an approved bank overdraft/loan is often significantly cheaper as you are only paying for each day you need to borrow and there are around 30 of those in a month.


Simple Example 1:

Your total wage bill for a month is £10,000.

A finance arrangement charges a headline rate of 2%. So before they pay you they pocket £200 per month. Over 12 months this is £2,400. To calculate the REAL interest rate or annual percentage rate (known as APR) you simply take the total annual charge and the average annual loan and this works out at a whopping 24%.


Simple Example 2:

Your total wage bill for a month is £10,000 (the same).

You arrange either a secured bank loan (they have the right to sell your house if you don’t pay it back) or an unsecured loan. Banks normally cream £100 or so off the top as an arrangement fee. They then charge you 7-10% on a secured overdraft or 20% on an unsecured one (you need to shop around the banks for the best deal). So you wage bill is £10,000 for the month, Each week your payroll is £2,500 (ish) and your customers pay you 2 weeks after invoice. Since you run your payroll and invoice at the same time (you can run invoices midway through a week and payroll at the end if you want). You need to borrow two weeks of pay. So that is £5000. So you have borrowed this for a year and you are paying either 10% for a secured overdraft and that comes to £500 or 20% unsecured. So that comes to £1000. This is nearly £2000 less than the finance arrangement on a secured overdraft or £1000 in your pocket on an unsecured overdraft.

It gets better: If your net margin (invoice value minus payroll, payroll costs and other overheads) is 10%. This means (for example 2) you have £1000 profit, so actually the following month you only need to borrow £4000. Your overdraft interest is now only £400 secured or £800 unsecured. The month after that £300 and £600. After about 6 months you should not need an overdraft. You borrowing costs may be as low as £200 secured or £500 unsecured. Of course you may want to grow a bit, but you can double (or more) your staff and still stay within the overdraft agreement.


Small print when dealing with Neutral Vendors.

You can legally charge them interest after 2 weeks and any T&Cs you sign cannot invalidate this legal right You should point this out to any intermediary neutral vendor when signing a contract with them which states any variable period in excess if 14 days. If you don’t: it doesn’t matter (it’s a legal right as a small company and they know that). If they argue then you trump that taking it up with the organisation they are contracted to supply that they (the Neutral Vendor) are operating outside the law. Always remember that you have the staff they need.


Millage may vary


The figures in this article are examples only. Interest rates and charges do vary with time and from bank to bank and across payroll and factoring services.


We hope this article helps you start a successful agency. Our software can help you keep your costs at a minimum once free PAYE software is not an option and Invoice and Pay calculations are taking you a lot of time. Or we can help you when messaging employees and customers and compliance checking becomes time consuming.


Why you shouldn’t use WhatsApp for your business messaging if you value your business….

Wednesday Wednesday, February 7, 2018 by Administrator


So you’re using WhatsApp for messaging your agency workers jobs and stuff. You have set up a WhatsApp “private” network. WhatsApp is free. So what could possibly go wrong?


First a bit of background (because we have to be quite careful but I’m sure you can read between the lines!): WhatsApp used be a subscription service: a huge $1 per user per year. Now admittedly there were about 700 million reported users so that’s $700M per year revenue. Probably only the likes of Mark Zuckerberg would describe this as “limited”. So Facebook made the app free and now there are reportedly 1.7 Billion users.


Let’s face it Mark Zuckerberg is no slouch when it comes to monetising “free” apps such as Facebook. Does he know something about WhatsApp data security that we don’t or is there something else hidden away in the small print?


Monetising apps can be done in quite a few ways.


One seldom highlighted way to monetise a service is to use an analysis of who communicates with whom and thus determine “valued” groups or networks.

This is known as “Traffic analysis”. It’s a way of extracting information from messages without knowing the content of the message. Sounds bizarre: is this unrealistic or low value? Consider: “Traffic analysis” goes back over seventy years in espionage terms: when the Germans listened to Radio operators in the Allied Bomber force making test transmissions from their aircraft radios. So what? Well it turned out radio operators only warmed up their sets and made test transmissions when they were due to fly that day: essentially this test warming up of radios gave a couple of hours warning and said “prepare for a bombing raid” i.e. please prepare you fighters!

Of course Bletchley park did much the same in reverse when they could not read enemy messages.

To the best of our knowledge “Traffic analysis” is so valuable that still subject NSA non-disclosure agreements.

Another example is very recent. From this headline: Fitness app Strava lights up staff at military bases (in this case individuals were communicating with themselves).

So how does this affect any employment agency communicating to its staff via a private WhatsApp group?

Whist a message carrier (such as WhatsApp) may not divulge or break secure messages; there is certainly information to be garnered from the identity of the participant members in any group. Could through your use of WhatsApp group could Facebook determine a list of your staff? If they can determine a list of your staff could WhatsApp monetise that list by hitting your staff’s Facebook pages with overly well targeted job adverts for rival agencies? Would a rival Agency pay for such targeted advertising? Not a message decoded: just who communicates with whom also know as  “Traffic analysis”!


Recent examples of Traffic Analysis


Fitness app Strava lights up staff at military bases:


Image copyright Strava Image caption The movements of soldiers within Bagram air base - the largest US military facility in Afghanistan


Strada 2


An image of the Pentagon on the Strava heatmap: here is the Pentagon and there is frequent traffic to these buildings.


Strada 4


Ditto GCHQ Cheltenaham


Strada 3




Links for more information


Fitness app Strava lights up staff at military bases: The BBC 

Traffic Analysis

Strava fitness app 

Fitness tracking app gives away locations of top secret Military basis The Gardian

Strava users, in midst of privacy problems, are reporting that one of the app’s top features has been disabled: The Verge

Bletchly Park



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