Why Recruiters Should Use a PSL

A preferred supplier list, or PSL, is a list of pre-vetted suppliers that you as a recruiter work with. By using a PSL:

  • You can maintain control of your supply chain,
  • Protect yourself from compliance issues,
  • Improve efficiency
  • Concentrate on your core business in the knowledge that you’re in safe hands.

Why should recruiters use a PSL?

The main advantage of using a PSL is that it puts you in control. It means you’ve chosen all your suppliers deliberately, which can improve many aspects of your business. The alternative is to allow individual contractors to choose their own suppliers without guidance, which could leave you dealing with hundreds of different companies, about which you know virtually nothing. From an efficiency and compliance point of view this situation is obviously less than ideal.

Why recruiters should care about compliance.

The term “umbrella company” is not protected, and not everyone using it is capable of, or interested in, doing things properly. We’re still hearing about “umbrella companies” who are, in reality, little more than risky tax avoidance schemes. These companies represent a serious financial, legal and reputational risk for any recruiter or contractor who gets involved with them.

A genuine, compliant umbrella company will offer employment. It’s the ability to combine the flexibility of contracting with the convenience and security of employment that makes umbrella companies attractive to your contractors.

 As an employer, they have a host of legal responsibilities, including but not limited to:

  • Running payroll correctly, including the deduction of tax and NICs, and correct reporting to HMRC.
  • Ensuring contractors have access to holiday pay. 
  • Correctly administering statutory payments for sick pay and maternity/paternity pay.
  • Provision of a compliant workplace pension scheme for all qualifying employees.
  • Demonstrating compliance with the Agency Workers Regulations.
  • Verifying contractor expenses and ensuring they are all allowable.

If you trust the wrong company and they get any of these things wrong it could cost you money, lose you contractors and clients, and damage your reputation. It’s always been risky to work with suppliers without properly vetting them, but from the end of September 2017 that risk will get even more severe.

Why supply-chain compliance is more important than ever.

 From 30th September 2017, the new criminal offence of failing to prevent tax evasion comes into force. This means that a recruiter can be held criminally responsible if their suppliers help contractors to evade taxes, even if the recruiter was not involved in the evasion offence itself. If there was any doubt, taking control of your supply chain with a PSL of vetted suppliers is no longer just a sensible precaution, it’s a vital and necessary step that recruiters must take to protect their business.

How can a PSL help improve efficiency?

Without a PSL, you’ll be relying on contractors to source their own suppliers and they’ll do so using their own criteria, with varying levels of care. Aside from the fact that they’ll almost certainly encounter the wrong kind of company at some point during their search, this will leave you working with many different suppliers and you won’t be able to maintain much of a relationship with each one. This means:

  • Vetting each one for compliance will be extremely time consuming. This will either slow down your contracts process, potentially losing you business, or leave you at risk.
  • Each supplier will have their own processes for contracts, invoicing, emergency payments and contractor queries. Each of these will have to be managed by your staff, at a cost to your business.
  • Your accounts team, your contracts team and your consultants will have a different list of contacts, and a different set of relationships to manage, for every supplier. This will make queries difficult to resolve, and they will be common due to the many different processes involved.

The day to day reality of managing contractors makes the “hundreds of suppliers” situation extremely inefficient and chaotic. In a competitive market where recruiters often struggle to retain contractors and clients, this kind of chaos can really hurt your business.

By contrast, imagine that you had just one trusted supplier.

  • The process of vetting your supplier is already complete, so you don’t have to choose between efficiency and protecting your business.
  • Your contractors have no research or work to do – simply pass them into your supplier’s steady hands.
  • A close partnership will allow you to integrate your systems, creating seamless processes for contracts and invoicing.
  •  Your staff have one set of contacts, and can form close working relationships with them. Robust lines of communication make issues rare and easy to resolve.

You’ll save time and money, and your contractors will have a better experience, leaving them time and space to do a better job for your clients.

What should you look for in a supplier?

The most important things a supplier can be are trustworthy and expert. Employing contractors is not a simple matter, and it gets more complex all the time as legislation changes and the administrative burden on employers increases.

You need to be able to trust that your suppliers have the knowledge, the ability and the desire to do things properly so you can concentrate on placing contractors with your clients.

  • We recommend that you only consider working with FCSA Accredited Members as this is the best way to ensure a compliant supply chain.
  • Look for established companies, who will have experience of adapting and adjusting to new legislation and changing industry circumstances. 
  • Take the opportunity to choose a supplier who will help you to retain contractors. Look for a company with quality and service at the heart of their operation, who can demonstrate that they care about your experience, and about your contractors' experience too.

Why choose Orange Genie?

Orange Genie support UK contractors with a full range of compliant solutions, including umbrella employment, specialist accountancy services, and CIS solutions, so whatever the circumstances we have the best solution for your contractors.

Our expert team will ensure that each contractor gets the best possible advice and support throughout their contracting career.

After more than a decade supporting recruiters we’re established industry experts with compliance at the heart of our business and a well-deserved reputation for excellent service.

As FCSA Accredited Members we’ve demonstrated a clear commitment to doing things properly, and we’re regularly reviewed against FCSA’s rigorous Compliance Code. You can find a full list of our industry accreditations, here.

If you need help or advice creating your PSL, or if Orange Genie can help in any way, please contact us on 01296 468483 or email recruiters@orangegenie.com

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