Tips to avoid revenue loss due to progressive discounts

There are times when IT staffing companies have to offer their customers progressive discounts to ensure continuity of business without break. Primarily progressive discounts will be offered when the demand for consultants who are in the company’s payroll and keeping them idle will lead to a loss. Moving consultants around to places where there is a demand not only minimizes loss but at times may help the staffing company to breakeven.

During good times it may be tempting to deploy all resources in the most profitable locations and get optimum returns, but keeping customers in less paying areas as a consolation buffer makes sense – this will reduce your profit level, but not to the extent of driving your balance sheet into the red.

Here are a few tips to minimize revenue loss when your business has to take the necessary steps to give progress discounts just to stay afloat.

  • Take stock of all the consultants in your payroll and segregate them based on their worth in the staffing industry and how much potential they hold to generate a profit for you. Don’t forget to assess the potential of each consultant and how much they are a preferred talent in the market segment where you operate. Broadly classify them as highly, moderately or lowly preferred talents and how easily they can be deployed. Then write a contingency plan showing where and how many of each category can be deployed and the profit potential each has for your business. Keep three scenarios handy – high drop in demand; moderate slump of demand and no appreciable drop of demand. Do several mock deployments and keep the plan ready when it is time to execute.

  • IT staffing companies are taking advantage of CONSULT invoicing automation tool to study different models of progressive discount scenarios. In each scenario you can vary the consultants’ payout rates, subcontracting firm rates, tax-related location advantages each state offers, long term or short term contracting advantages, choosing between in-house and subcontracting options and hundreds of other options to find the best one that makes sense to your business’ size and profitability model. CONSULT though primarily developed as a tool for automating the invoicing process is also finding an important role for financial analytics in the IT staffing business. Take advantage of the tool and do some experiments and discover for yourself some miraculous ways of giving discounts and at the same time making some handsome profit as well.

  • IT staffing companies should consider adopting lean management principles especially in their accounting department. Accountants should consider using CONSULT for automating the invoicing process to cut down cost and increase productivity multiple times. Using CONSULT, you or your accountant can reduce timesheet processing by automating the submission process. A/R team can use payment reminder automation for getting paid faster. Your analytics expert can use it for calculating valuable financial ratios to locate revenue leak points and plug it with proper remedial measures. CONSULT is a multi-utility invoicing software specially made for IT staffing companies.

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