Recruitment agency debt problems

Recruitment agencies provide a useful service for businesses across the country. They are used to source candidates for both permanent and temporary roles, as well as dealing with the payment of temporary and contract workers. When clients don’t pay on time it can result in recruitment agency debt problems.

 

The role of recruitment agencies

Recruitment agencies are instructed by their clients to advertise and fill vacancies. They will typically have a list of prospective candidates on their database to contact. Recruiters will source suitable people and arrange interviews, with a fee being paid by their client. For some contract and temporary roles, the agency manages the whole process, including time sheets and pay.

This wide range of roles means that there can be considerable fees due from their clients. It’s important that they manage their cash flow effectively and keep up to date with debtors. There are a number of factors that can prevent clients from paying their invoices on time.

 

The type of recruitment agency debt problems

Even within small agencies, there needs to be someone who is in charge of chasing overdue invoices. This process should to be started as soon as possible, in order to resolve any potential disputes and keep the cash flow coming in.

 

Timesheet issues

Where a contract or temporary worker is employed via a recruitment agency, they will typically have to complete weekly timesheets. This shows the number of hours they’ve worked and can then be used to calculate their pay. However, this system isn’t without its problems.

The timesheet may not have been signed by their line manager. This means it will need to go back to the client for authorisation. It’s important that the terms and conditions for a recruitment agency highlight that all hours on a signed timesheet will be taken as correct. This prevents any disputes with the number of hours worked by an employee.

Another way a client may get out of paying an invoice is to claim they were not happy with a worker’s performance. It should be made clear in your terms what the process is for a client who is unsatisfied with the standard of work.

 

Disputes over the fees owed

Where a recruitment agency provides a client with a permanent member of staff there can be disagreements over the amount of fees. This can result in the agency having to recover unpaid debts. Ensure that you have a signed set of terms, which clearly set out how the fees are calculated.

 

Disagreements over finder’s fees

Job seekers often sign up with more than one agency and could be referred to an employer through two or more channels. If they are successful in gaining a position this can then cause a dispute over which agency receives the finder’s fee. It’s important for recruitment agencies to keep documentation regarding when a candidate was referred to a client, to minimise invoice disputes.

 

Problems with temp to permanent roles

There are occasions where a worker is taken on in a temporary capacity first, before being moved to a permanent contract. The client should then pay a finder’s fee to the recruitment agency. However, they sometimes try and get out of this, which causes debt recovery problems for recruitment agencies. They may also not tell the agency that they have taken the employee on permanently, thereby avoiding any fees.

 

Helping recruitment agencies with debt recovery

Often a recruitment agency is focused on sourcing new candidates and filling available positions. This can mean their own cash flow can suffer when invoices are paid late.

At CEA Limited we work with all our clients, including recruitment agencies, to successfully chase overdue invoices. The sooner we are instructed, the quicker we can recover unpaid debts and get you the money you are owed.

Whether you are a small or large recruitment agency, our specialised team of debt recovery agents can help you collect late paid invoices. Contact us today to discuss your needs.