Paul Thompson analyses how the Budget statement will affect the SME Recruitment market

Voyager Softwareís Sales Director, Paul Thompson analyses how the Budget statement will affect the SME Recruitment market.

There was a great deal of expectation surrounding the Governmentís pre-budget statement yesterday, and with the Chancellor promising ìwide ranging measuresî and a ìcomprehensive plan to support business and the economyî, many were hoping that he would provide the drastic measures needed to safeguard SME businesses in these uncertain times.

As Sales Director to a software firm supplying the SME recruitment market, and with a background at the sharp end of the recruitment industry, Voyager Softwareís Paul Thompson is ideally placed to sort through the Chancellorís plans to stimulate the economy and discuss how they will affect Recruiters and the companies they service.

ìWe all know that cash flow is the lifeblood of an SME recruitment business and this was the main thrust of the Chancellorís new measures.

ìFirst the good news. From now on, recruiters can spread their tax obligations (including corporation tax, VAT, National Insurance and Income tax) across monthly instalments, rather than in one cash flow stripping whack.

ìFurther to this, the government will now allow recruiters to offset losses against profits from the last three years, rather than only the previous year. So if 2009 turns out to be the challenge that is widely predicted, many recruitment firms will be able to claim a tax rebate going back as far as 2006/7.

ìThe Chancellor will also make it easier to get credit through a small business finance scheme, pledging 1 billion for small businesses to be made available in loans from 1,000 to 1 million.

ìThey have also promised that state owned banks will pledge not to increase interest rates for SME overdrafts for at least 1 year – although with interest rates predicted to drop to 0.5% by the end of 2010 this may not be quite as generous as some may think.

ìThe Chancellorís much trumpeted reduction in the rate of VAT to 15% for the next 13 months will have very little impact on the wider economy – with shops reducing prices by 20% to make a sale, I canít see how much use a further 2.5% will be, except for recruiters supplying financial institutions. Otherwise itís good news for printing companies, maybe, but it will be more of a hindrance than a help to the recruitment industry at large.

However, with the increase in small companiesí rate of corporation tax, deferred to an as yet unspecified date, many will still breathe a sigh of relief.

ìAll this expenditure has to be recouped from somewhere, and with National Insurance contributions set to rise in April 2011 by of one percent for both employees and employers, the smart operators are bound to replace administrative staff with software packages, such as Voyagerís Mid-Office product that will effectively slash employerís wage bills by an average of 20k per year, per employee.

ìSo itís not all doom and gloom. The Chancellor was at pains to point out that that there are still 500,000 job vacancies in UK, and with the Prime Minister declaring his intention to build his way out of the oncoming recession with a variety of road widening schemes, the outlook might be significantly brighter for those Recruiterís operating a Construction division.î

For details of how Voyagerís software packages can help take the bite out of the credit crunch, visit www.voyage.co.uk or contact Paul on 0800 008 6262.