TECHNOLOGY JOIN THE REVOLUTION
Rick Stoor, Managing Director of Templa, explains why cleaning companies should not feel that integrated software systems are inappropriate for them.
Outside the world of cleaning, big corporations use integrated software systems like SAP or Oracle to manage their businesses. Why? Because they have huge volumes of transactional data moving through the business, internally and externally, across business units and clients. If that data was all held in unconnected systems, for example one system for managing product costing and another for client billing, they’d need to find ways of interfacing those systems to ensure the correct data was being used for each transaction. They’d also need armies of management accountants to pull data from the disparate systems to perform meaningful business analysis. Otherwise they’d find it impossible to make business decisions.
So why does the cleaning industry need a joined up system? Cleaning contractors are so much smaller, I hear you say. The answer is that cleaning contractors have a lot more in common with big corporations than you think.
COMMON FEATURES OF CLEANING CONTRACTORS
AND LARGE CORPORATIONS The most notable similarity is the amount of staff. Here’s a statistic. In the UK, the average turnover of a medium to large company (defined as having more than 50 staff) is £63m per annum, and its average number of employees is 335, backed up by a sizeable HR/ Payroll department. Compare that to a cleaning contractor with 335 staff and a turnover of around £3.4m. Then ask yourself whether the staff in a cleaning contractor need any less administrative support than in the average medium to large company.
The answer, of course, is that despite there being far less money available to fund the department, for several well documented reasons administering the 335 staff in a cleaning contractor actually requires far greater support.
58 | Tomorrow’s Cleaning These are:
1. Staff often work across different locations at different pay rates, as well as covering for each other.
2. The contractor requires a plethora of documentation in the form of timesheets, training, and right- to-work entitlements in order to manage payroll and comply with company/client requirements.
3. Staff’s holiday entitlements and accruals, pension entitlements and sickness are particularly difficult to manage.
“The larger cleaning contractors become, the
keener they are to find an IT solution for managing and integrating all these requirements”.
And all of this before you consider that staff turnover is more than five times higher in cleaning than in the average UK company, and that absence rates are considerably higher too. So the cleaning contractor with 335 staff could actually be administering nearly 570 individual staff members in a year, equivalent to an average UK company with a turnover of nearer £100m.
Looking at the statistics below comparing the cleaning industry to UK industry at large, it raises the question: How do cleaning contractors manage this disproportionate burden? How can they effectively control the cost of staffing with such a small office resource?
Annual revenue per employee Staff turnover
Staff absence days
£199,000 9.9% 2.3%
No. of staff per HR/Payroll employee 70 VARIATION BETWEEN
CLIENT CONTRACTS Then there’s the complicating factor that no two client cleaning contracts are the same. Each one varies by cleaning machinery and products deployed, third party suppliers and subcontractors used, frequency and type of one-off work, re-charge mark-ups, quality auditing schedules, invoicing requirements, reporting protocols, pricing anniversaries – the list goes on. This requires substantial back office processing to ensure that clients are invoiced in full for work done whilst remaining satisfied with the service.
So it’s no surprise that contractors often move to larger premises just to keep up with the growth in administration that comes with business expansion. Yet margins are constantly under pressure from clients, squeezing the overhead needed to manage the huge information flow created by staff and contract administration.
And this requirement shows no sign of receding. So the larger cleaning contractors become, the keener they are to find an IT solution for managing and integrating all these requirements. In fact the two most common reasons for purchasing integrated software are to manage payroll better and to keep general administration costs under control whilst revenue rises.
THE NEED FOR SOFTWARE INTEGRATION TO MANAGE
THE BUSINESS To be effective in controlling the cost of overheads, software systems need to be both integrated internally as
All UK companies with 50+ staff
UK Cleaning Industry
£9,800 70% 5.2%
250-500 (estimated)
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