Debt Collection For Recruitment

Recruitment agencies provide a fantastic service, helping businesses all over the country find permanent and temporary workers to fill empty vacancies. But sometimes recruiters will face problems when it comes to clients paying invoices on time – or even trying to get out of paying them altogether. It’s a growing issue in the recruitment sector, and something we’re seeing a lot more claims for. But why is that, and how can recruiters ensure their invoices are actually paid?

Common Recruitment Debt Collection Issues

As with any industry out there, recruiters face their own pitfalls around payments. Most of the issues we encounter when working with recruiters boil down to a dispute of one kind or another, which is unsurprising when you’re working in the field of people and people management. Here are a few of the most common issues we see when working with recruiters to collect overdue payments:

Timesheet problems: If a recruiter assigns a temporary or contract worker to a client, they’ll usually be required to submit timesheets. The recruiter will then use those timesheets to work out how much they need to be paid and invoice accordingly. But if the employer doesn’t sign off the timesheet, it’s incorrect or the employee’s performance wasn’t good enough, this can cause delays to payment while discussions are had.

Disputes over job roles: If a recruiter puts a candidate forward for one role but they are then hired for another, this can cause a few problems, especially if the new role is for a higher salary or hourly rate. Because most recruiters work on a percentage, this means their rate goes up, and the client gets a shock when the invoice turns up.

Temporary-to-permanent roles: Temporary roles have an expiry date, and the recruiter has usually worked out their fees to match. If the business then chooses to take on that temporary worker and hire them in a full-time role, the employer is expected to pay a finder’s fee to the recruiter. But sometimes employers will try to avoid these fees by not telling the agency what they’re doing, or just refusing to pay the invoice.

Disagreements around finding employees: Employers may sometimes find their successful candidate through more than one channel, including the recruiter. Which means they may refuse to pay the recruiter, insisting they found the employee through one of the other sources.

Preventative Measures

So the real question is, can recruiters do anything to prevent these problems from happening? After all, the best way to manage late payments is to prevent them in the first place, and there are a few key things you can do to avoid both the dispute and the late payment that comes with it.

Make Sure Your Terms and Conditions Are Clear

The foundation for successful debt collection for any business, but especially for those in recruitment. And it’s something you need to do before any candidates are placed, or even interviewed by the client. Take a good, long look at your terms and conditions, and make sure they are fit for service. They should be clear and comprehensive, and set out expectations for both clients and candidates. In particular, make sure they explicitly outline payment schedules, invoicing procedures and the consequences for overdue payments. When working with a new client, make sure they sign or give you some form of written acknowledgement that they have read and agreed to these terms. This stops any genuine misunderstandings, and lets them know that you won’t be letting them wriggle out of paying.

Invoice Promptly

Don’t drag your feet when it comes to invoicing. As a recruiter you’re expected to deliver candidates quickly to fulfil the role, so when you do fill that role, you deserve to be paid. If you haven’t, make an effort to streamline your invoicing process so that invoices are sent out once a placement is successful. This is one area where automation and AI tools are invaluable, freeing up your time and making sure invoices are raised promptly, giving you plenty of time to manage any queries.

Have Regular Follow-Ups

Most recruitment agencies will work on a commission basis, which means you only get paid once the work is already done and the candidate is secure. This is where your follow-up process is important. Not only do regular follow-ups help improve your relationship with the customer, but they also show that you’re serious about getting paid for it too. Have a system in place for both satisfaction and payment follow-ups, and keep it consistent.

Keep Good Records

If you do have to go down the debt collection route, then you will want all of the supporting evidence you can get in your corner. This not only helps reinforce to the customer how seriously you take non-payment, but if the debt should reach the courts, a clear audit trail will make it much easier for you to file and get a successful outcome. So, make sure you maintain meticulous records of all communications, invoices and agreements made, particularly when it comes to outstanding payments. No detail is too small here, and it can all help if an invoice is disputed.

How Can a Debt Collector Help?

If your recruitment agency has experienced any of these problems, it may seem hopeless. You might have exhausted all the avenues you can think of to enforce payment, and still be waiting for the funds you’re owed to hit your bank account.  But there are other ways to pursue it and ensure your invoices get paid on time, every time. A professional debt collection agency (like us) will help you recover all money owed to you through a variety of channels, from simply sending letters to starting court proceedings.

To find out more about how a debt collector could be a valuable partner for your recruitment business, just get in touch with us today and book your free consultation.