Top Tips for Late Payment Resolution in Recruitment
Late payment and poor payment practices are not issues that are isolated to a particular industry, these issues will affect businesses across all industries throughout the UK and worldwide. However, certain industries tend to be more susceptible to specific issues that result in delayed payment. For recruitment companies, issues such as ‘behind your back’ or ‘back door’ practices (i.e. when candidates that have been introduced by a recruitment company are hired by the client without payment of the fee), can result in a tremendous amount of time and money being spent in chasing the money owed to the recruiter.
There are a number of aspects that can cause late payment for recruitment companies, some that can be easily avoided by the recruitment company themselves having the adequate processes in place to combat potential late payers.
Why is effective credit management in recruitment important?
Effective credit management is essential in any business, however it is particularly important to recruitment companies (especially those that offer temporary placements), in order to ensure that cash flow remains positive throughout. This will not only ensure that you have all the funds necessary to continue running your business, but also to free up and increase your working capital so that the business, therefore, has the means for expansion.
The tricks to late payment resolution in recruitment
Ensure T&Cs are made known to your client
Ensuring that your T&Cs have been ‘made known to’ and ‘accepted’ by your customer is mandatory. Most recruitment firms are aware that they need to send their terms and conditions with a CV. However, I have seen several occasions where the terms were just attached to the email and not referred to in the body of the email. The Client has refused to pay the permanent fee, using as a defence that the terms were not ‘made known’ to them.
This issue can be rectified by ensuring each email sent with a CV says ‘please see attached our terms of business’ or similar wording.
Acceptance of terms
Whilst having your customer to sign acceptance of your terms is the ideal, you can also rely on acceptance ‘by conduct’. For example, if you send your client a CV with your terms and they do not respond, but go on to interview and subsequently employ your candidate without your knowledge; they have accepted your terms by the conduct of interviewing your candidate.
Confirm all verbal conversations
From my experience verbal negotiations occur quite frequently in the recruitment industry, which is understandable to a degree as it is important to build positive relationships with your customers; however, if verbal negotiation has occurred, back it up with an email outlining the points discussed. This way both parties have the opportunity to see their agreement in black and white, and give the other party the opportunity to respond should there be any misunderstandings.
Reduce risk of disputes
Disputes can severely affect when and if you will be paid; gaining the right information, conveying this to all appropriate departments across your business and ensuring continual contact with your customer is essential. From my recruitment background I have seen many companies failing to adhere to their customers’ invoicing policies; this is the most common dispute you will come across, one that is easily fixed and will significantly increase how quickly you are paid.
Proactively chase
It may sound like a simple piece of advice, but one many businesses tend to overlook. Planning how and when you should chase for payment will save you a lot of time and effort in the long run. Diarise when you will begin to chase for payment, perhaps before the due date if it is a new customer or an unusually large invoice amount.
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