The Debt Recovery Problems Faced By Recruitment Agencies
Recruitment agencies can suffer from the actions of those clients who try to avoid paying their invoices on-time or at all. Here are four factors you may experience.
1. Weekly timesheets
Temporary or contract workers who are assigned to jobs by your agency are required to submit timesheets showing the number of hours worked so that you can calculate the pay they are owed each week. But a number of problems can arise with timesheets:
- The employer’s representative may not sign the timesheet → if you receive an unsigned timesheet take additional steps to validate the hours by emailing the customer
- The number of hours claimed may be incorrect → ensure your Terms & Conditions (T&C’s) make it clear that hours recorded on the timesheet will be deemed correct
- The performance of the worker may be deemed to be unacceptable → ensure your T&C’s make it clear that you are acting as an agent, offer no guarantees as to the performance of the worker and set out the procedure for your customer if they are dissatisfied with the work.
In all of these circumstances the employer may try to get out of paying the agency. Get Lovetts 10 free tips for effective debt collection here and drastically improve your credit control procedures.
2. Dispute over the job role
In some cases, an employer may take on a worker for a permanent role for which they were originally not put forward. This can mean that the hourly rate due to the employee may be higher than that paid for the original role.
In effect, the employer is getting a more expensive contractor than they paid for. Although the employee won’t be out of pocket, your agency could be → ensure remuneration is clearly defined in the T&C’s for the purposes of calculating the introduction fee.
3. Dispute over payment for a temp to permanent appointment
There may be occasions when you supply a temporary or contract worker to a company for a set period. On conclusion of that period the employer decides to make that person a permanent employee. In these circumstances it is usual for the employer to pay the agency a finder’s fee and this should be included in the original contractual agreement → ensure the T&C’s set out the Transfer Fees payable when a candidate goes from temporary to permanent and define the qualifying period for payment of a fee when a temporary worker is supplied.
However, some unscrupulous employers may seek to take on temporary staff permanently without telling the agency, thus avoiding the fee.
4. Disputes concerning the original finder of an employee
Sometimes disputes arise because the employer has found the successful applicant via more than one channel. In these circumstances, the employer may refuse to pay the agency a finder’s fee and will say that they found the staff member through an alternative source → ensure the date on which a candidate is first introduced to the customer is documented in case a dispute arises.
5. How a professional debt recovery firm can help
If your recruitment agency has suffered from any of the above situations and you’ve been unable to recover the money you are due, you should speak to a solicitor who specialises in debt recovery without delay. Through a process of letters and telephone calls, an experienced solicitor uses contractual law to ensure that you receive the money you are owed in full.