Recruitment Backdoor hiring- episode 6
This instalment shows how devious some debtors can be when trying to avoid paying fees for backdoor hires.
As previously employed as a Credit Manager by a national recruitment company and working for many recruitment firms since setting up CMG UK we have a vast amount of experience in making sure our clients get paid.
This instalment highlights the need to confirm all conversations in writing with the candidates, as well as customers.
The Debtor – Consultant Surveyor and Project management practice working in industrial and commercial construction
The Role– Qualified and experienced Quantity Surveyor
A CV of an experienced Quantity Surveyor was sent to the debtor, with their terms and conditions.
The Director of the debtor responded questioning our client’s fees, our client offered a lower introduction fee but didn’t receive a further response.
Some months later if was found that the candidate was working with the debtor. An invoice was sent for the full contractual fee for the introduction.
The debtor said they had procured employment through another agency. And alleged our client hadn’t even met the candidate and would defend any legal proceedings very vigorously.
The candidate however was an ex-colleague of one of our client’s Directors. The candidate had previously confirmed he had not put his CV on any websites and was happy to leave the recruitment process entirely to my client. The candidate did however confirm he was approached out of the blue by another recruitment agency, that was known to have worked with the debtor previously.
A well worded letter before action was sent to the debtor detailing all evidence our client would rely on in court. The letter set out clearly that our client’s terms had been accepted by conduct and therefore they were bound by those terms.
Copy emails were included with the letter, along with details of interest, compensation and additional collection costs, which increased the debt substantially.
The debtor responded with a Without Prejudice offer of settlement which equated to the discounted value that our client had offered initially, and court action was not required.
Important points
- Keep detailed notes & emails not only with your prospective client but also with the candidate. Confirm conversations in emails.
- Make sure you always send your terms and conditions with any CV’s and refer to the terms being attached to the email in the body of the email.
If you are currently experiencing a situation such as described in this series of blogs, you might want to consider outsourcing your credit control to us.
We can also provide a review of your systems and processes and assist you to strengthen underperforming areas. Furthermore, we can coach your staff to ensure you will always get paid for any back door hiring, whilst also promoting best practice. We can also assist you with specific back door hiring debts
Please contact us to discuss our services further on 03332 413 203. contact@cmgroupuk.com
Look out for our next case study with more advice to help you get paid for back door hiring.
Final episode
As previously employed as a Credit Manager by a national recruitment company and working for many recruitment firms since setting up CMG UK we have a vast amount of experience in making sure our clients get paid.
This is the final instalment of this series of blogs, so I thought I would share a couple of examples where we couldn’t help our client.
Example 1.
Our Client: Recruitment firm providing chefs and skilled kitchen staff to pubs and restaurants.
Debtor: Gastro Pub
The position: Head Chef
After supplying a Head Chef on a temporary contract for several months to a gastro pub, the Chef told our client he had to go home to sort out family business and wouldn’t be available for work for a few months. Around 3 months later, our client discovered the worker was now working directly for the debtor and seemly had been since leaving our client’s employment.
Our client’s contract explained they were entitled to charge a fee if the worker is taken on by the company within 8 weeks of him leaving our client’s employment.
Although we could prove the Chef was currently employed by the debtor, our client did not have any proof the Chef was employed directly within the 8-week period. We explained to our client that the burden of proof is on the Claimant (our client) to prove the Chef was employed within the 8 week window, not for the debtor to prove he wasn’t. Therefore, we could not proceed with further action.
Lesson– Our client has substantially increased the time limit for being able to charge for a temporary worker being taken on directly by a client.
Example 2.
Our Client: Permanent recruitment firm to legal, property and construction industries.
The Debtor: A national, well known high street estate agent.
The position: Building Surveyor
The debtor failed to pay our client’s fees for the placement of a building surveyor.
When passing the debt to us, we asked our client to confirm the legal entity of the company they were contracted to as the debtor was a franchisee. The name they had on the invoice was only the franchise trading name.
We worked with our client to attempt to verify the debtor’s full name. Email correspondence with the debtor did not have a signature confirming full registered name, or company registration number. The person our client had discussed the position with, was not registered as a director at Companies House. The franchisor was reluctant to release any details of the franchisee to our client.
Our client eventually found out the name of the limited company behind the franchise. Unfortunately, that debtor had recently gone into receivership.
Lesson: We now credit check all out client’s potential new customers companies and confirm full legal entity name at the outset. We also provide a monitoring service for our client so if their customers credit ratings change, we alert them immediately.
Outsourced case study
Finally, a case study on how we helped our client when they outsourced their credit control to us.
Our Client: Recruitment firm providing temporary workers to the hospitality, warehousing and commercial industries nationwide
Size: £12m turnover with exponential growth, 650 live accounts
Form of finance: Confidential Invoice finance
Issue
- Debtor days of 72 and increasing.
- The Invoice finance company were considering turning the finance facility to a disclosed factoring arrangement, which our client felt would look unprofessional to their customers and would result in higher finance costs.
- Many customer accounts were in the name of trading names rather than legal entities meaning any legal action taken would be unenforceable
- Credit checks not completed on any customers
Solution
- Agreed proactive and consistent collection strategies with our client to include a suspended account process for delinquent debtors.
- Advised on improving onboarding process for new customers
- Assisted in successfully taking legal action on delinquent accounts.
- Delivered training courses to our client’s sales and account manager teams to make sure they are more commercially aware for front end process. This would ensure we could collect payment more easily.
Result
- Debtor days brought down to 30 days over 6-month period and maintained
- A significant reduction in bad debt write-off
Summary of points to remember
At the end of this series of blogs aimed at the recruitment industry, we have summarised some tactics to make it easier to get paid quickly.
- Make sure you always send your terms and conditions with any CV’s and refer to the terms being attached in the body of the email.
- Be aware of the ‘Conduct of Employment Agencies and Employment Businesses Regulations 2003’ and be able to prove you have complied with these regulations if challenged
- Keep detailed notes & emails not only with your prospective client but also with the candidate. Confirm all conversations in emails.
- When agreeing a reduced permanent placement fee, always refer to the deduction as a ‘discount’ on your standard fee, and make sure your terms and conditions allow you to claim the balance between discounted and standard fee, if your invoice is not paid to terms.
- Being aware of the court’s pre-action protocols for debt recovery and comply with it.
If you are currently experiencing a situation such as described in this series of blogs, you might want to consider outsourcing your credit control to us.
We can also provide a review of your systems and processes and assist you to strengthen underperforming areas. Furthermore we can coach your staff to ensure you will always get paid for any back door hiring, whilst also promoting best practice. We can also assist you with specific back door hiring debts
Please contact us to discuss our services further on 03332 413 203. contact@cmgroupuk.com
