How to Improve Payment Performance in your Recruitment Business
The Recruitment industry can be extremely tricky when it comes to effective credit management due to the high volume of negotiations that occur between yourselves and your clients.
Having strict policies and procedures in place across the business can save you a lot of time and energy when collecting payment or indeed taking legal action. Here are a few tips that I have had found to Improve Payment Performance, from my own experience as an ex credit manager for a national recruitment company, having provided credit management consultancy and outsourced collections to a number of different recruitment firms.
Policy and Procedure
A firm collection strategy, that prioritises working closely with the sales department, is highly recommended; your sales department will have already formed a business relationship with the customer and will therefore be able to provide you with vital information you may need or indeed help you with your enquiries.
In my experience, understanding each individual customer’s invoice authorisation process helps greatly, as this will allow you to contact the appropriate person directly when chasing for payment or dealing with any disputes. Using Late Payment Legislation as leverage, in my experience, works very well, when used in the correct way, in dealing with overdue invoices.
Drawing upon my own Recruitment background, when working with a global provider of skilled labour to the Oil & Gas industries, the issue was not credit risk but the non-adherence to the customer’s invoicing procedures which tied up a great deal of debt in uncollectable, disputed invoices. The solution was to work with all areas of the business to put in place a procedure to ensure invoices where correct first time and then constantly monitor and review all disputed debt, therefore recognising any training needs.
Acceptance of T&Cs
In a fast moving market place, recruiters rely heavily on their terms and conditions; therefore we highly recommend you ensure that you have an adequate procedure in place that can demonstrate acceptance by ‘conduct’ in the event that signed terms are not received.
When working for a national recruitment firm, a large part of my role was taking customers to court. Being able to demonstrate acceptance by conduct meant we had a 100% success rate in defended claims.
We work for a lot of Recruitment companies at CMG UK, and one of the main failings we find is the significant amount of verbal negotiation that takes place. Whilst it is important to build and develop a positive business relationship with your client, and we recognise this is best done by phone or face to face, it is equally as important to confirm all negotiations in an email subsequent to any discussion, ideally getting the other side (your customer) to agree to the content of the conversation.
With the recent hike in court fees, it is best to negotiate as much as possible prior to issuing court proceedings. Being able to demonstrate to your client, in a well-reasoned letter, that you can prove your terms and conditions were incorporated into the conversation, and that discussions were confirmed in writing, may mean the difference in you being paid quickly or having to go through protracted and expensive court proceedings. The well-reasoned letter also demonstrates you have complied with the court’s pre-action protocols should negotiations fail.
In summary, meaningful credit policies and procedures is a must for any business, but particularly for recruitment businesses. We recommend the procedures are rolled out to all areas of the business and are constantly reviewed to keep them up to date and relevant.
If you would like information on our services please call 03332 413 203 or email contact@cmgroupuk.com.
