Things to Keep in Mind for Positive Cash Flow in Recruitment
Issues for cash flow in recruitment
SMEs within the UK are owed billions in late payments; this is an issue that is affecting all industries, in businesses of all sizes and is likely to continue for as long as businesses continue to provide credit.
Recruitment companies are particularly prone to issues regarding late payment and invoice disputes, to the detriment of the cash flow of a business, therefore steps need to be taken to reduce the risk of these issues.
By implementing small but vital changes to your processes, you will reduce your risk of having the issues that invariably affect cash flow.
Terms and conditions
Your terms and conditions should be fit for purpose; I have come across many businesses that do not have the correct terms suitable for their business and wouldn’t provide the right kind of leverage if used to encourage payment from a late paying customer.
T&Cs for recruitment should cover a number of things, including: fees, late payment interest and the length of time after which a candidate has been introduced and subsequently hired can fees still apply. This should provide backup when issues arise such as back door tactics, in which you have introduced a candidate and they have been hired without your knowledge, particularly if the issue warrants court action.
Your terms must be made known to your client; often companies will attach terms to an email and think that is sufficient, this is not making your terms known. Instead, you should attach them to an email and state that they are attached for their attention.
If receipt of your terms is disputed, you will have to prove the terms have been received, for example your customer responding to the email to which the terms were attached. Or the terms are attached to the only email identifying the candidate (CV with candidates name), therefore, any questions about that candidate or a request for interview can demonstrates there is no doubt that your customer has received your terms.
Getting your invoicing right is the first hurdle to overcome, and businesses often fail in doing so with mistakes that can be easily corrected; for example, does your customer require a P.O number? Are the rates correct? Are you sending them to the right person to approval?
One of the most common tricks to delay payment is your customer stating they haven’t received an invoice; therefore you should do what you can to discourage them from using this excuse, i.e. forwarding the email originally sending the invoice, to demonstrate they have previously received it and therefore stop them from re-dating the due date from when they received the 2nd copy of the invoice, For high risk and new customers, phoning the following day to ensure the invoice has been received and all details are correct can significantly reduce payment delays.
With recruitment companies I have found that actively chasing for payment, regularly and politely, is a great way to ensure your customer pays you on time. Deal with queries quickly and keep your client up to date to maintain a positive relationship which will encourage them to pay you more quickly once resolution is found.
We help a number of recruitment businesses to maintain positive cash flow, if you find it difficult to tackle late payment, invoice disputes, or you often have issues with ‘back door’ hiring take a look at how our outsourced collections service could be the ideal solution. Alternatively, for more details of our services contact us on 03332 413 203 firstname.lastname@example.org