Credit Control in your Recruitment Agency: 8 clear steps

Recruitment Startup Advice
Credit Control in your Recruitment Agency: 8 clear steps

March 8, 2021

Credit Control in your Recruitment Agency: 8 clear steps

Ah, credit control in your recruitment agency.

Picture the scene; you start your own recruitment agency, you win your first client, you agree on terms of business, you spend hours upon hours, days upon days, weeks upon weeks, understanding the role, the company, the culture & finding the right candidate for the position. You shortlist candidates for the role, go through copious interviews, liaise with the client around feedback & finally, find the “perfect candidate”. You agree a start date, the candidate is happy, the client is happy, you send your invoice (with 30-day payment terms), 30 days go by & then, nothing.

The candidate is happy but the client is quiet, not responding to your calls, emails, carrier pigeons; they’ve gone AWOL.

Welcome to credit control within your recruitment agency.

Over the years, the Isotope team have had the misfortune of working with diligent & exceptional clients who have had the unfortunate experience of dealing with non-paying clients. The only silver lining to this is that the credit-control team here at Isotope (who work with all our clients when it comes to the credit-control within their agencies) we’d have to be idiots to have not picked up a couple of things over the years when it comes to effective credit control.

So, what do we advise? If you’re a recruitment business owner who has legitimate fees owed to you, what’s the best course of action? Well, this is what we are going to cover in this blog.

“You can never categorically ensure against non-paying clients, but you can ensure you mitigate as much risk as you can for you & your agency.”

& this is through a number of pre-emptive steps that we would advise every client of ours to ensure they follow.

1) Ensure terms are signed or agreed in writing; not just verbally. Obvious we know but it’s amazing how often this is overlooked.

2) Ensure that the correct invoicing procedure is followed – everything from the correct amount, PO added if required, sent to the right person within the client organisation or uploaded via their online portal if they have one, etc. Ensure you talk to your accountants to have a clear invoicing procedure for each client you work with & not a “one sizes fits all” approach.

3) Stay close to the client and candidate during the first few weeks – certainly until the invoice is paid and we’d recommend keeping in touch until the end of the rebate period. This will ensure that, if a problem is looming, the recruiter knows about it in good time and can take action.

Your Recruitment Agency’s 8 step Credit Control Procedure

So, let’s imagine your client has not paid your invoice. Here are the reactive steps we would advise our clients (with our help of course) & any recruitment agency in this unfortunate position, to follow to ensure legitimate payment of a legitimate invoice.

1) Upon confirmation of a candidates start date, raise the invoice on the same day & send to the client; ensuring that you follow the right & previously agreed invoicing procedure for this particular client.

2) Confirm receipt of invoice with client via email.

3) Send a 7 day reminder before the due date to ensure the client is aware of the approaching due date.

4) Send a further reminder 2 days before the due date to, again, ensure the client is aware of the approaching due date. This can done either by yourself or by your accounts team.

5) Send a final reminder on the due date. If you contacted the client 2 days prior, perhaps ask your accounts team to contact the client this time to show that there is transparency within your recruitment agency.

6) 2 days after due date

If the invoice still remains outstanding 2 days after due date, contact client to find out why it’s not been paid – are they working to different payment terms, do they do one payment run per month, is there an issue with the candidate or a discrepancy with the invoice? Hopefully any issues will have been raised following your earlier reminders, but sometimes that isn’t the case. If they are committing to pay, but at a different date then diarise that date and follow the same procedure. If there is an issue then, of course, this will need to be resolved.

7) 7 days after due date

If the invoice still remains outstanding 7 days after due date and you haven’t heard from the client or they have refused to pay outright or the issue cannot be resolved with the client then a 7 day letter would be sent. The 7 day letter essentially gives them 7 days to pay, failing which you will proceed immediately to court action without further recourse to the client. Which is the legal term which, essentially, suggests that you will have to take them to court should the invoice remain unpaid.

8) Small Claims Court

In the unfortunate event that the 7 day letter goes ignored & the invoice remains unpaid, the next step would be to submit a claim via the Small Claims Court against the client for the invoice amount, plus interest, plus costs. It may seem extreme however what you would hope is that such a claim would prompt the client to talk with you (although we are sure you might be rightfully cynical by this point!); but in our experience, such a claim tends to prompt a discussion where the payment is either made in full or you agree a payment plan over the coming weeks for the monies owed.

Final thoughts

Look, we get it. Credit control within your recruitment agency is never enjoyable. The chances are you started you start your own agency because you love what you do & the clients & candidates you work with & therefore the mere thought of an invoice not being paid, it somewhat alien to you – unfortunately, it happens.

However with the right credit control procedure supported & administered by an experienced team will ensure that, while of course you may during the lifetime of your recruitment agency experience credit control issues, you have a clear 8-step plan to overcome any tricky clients.

Does Isotope offer credit control services as part of our exceptional on-going support offering to our recruitment agency clients? Well, of course.

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