Posted by FedMan on October 20th, 2017

Debt Collection for Recruitment Agencies

Debt Collection for Recruitment Agencies

Recruitment agencies, just like any other businesses, rely on invoices being paid in a timely way to ensure that they are able to pay their staff and keep their doors open. In this industry, owed monies usually take the form of unpaid retainers or commissions that client debtors try and wriggle out of. This is when a specialised service that provides Debt Collection for Recruitment Agencies can assist.

Debtors can often hide behind alleged ‘breaches of contract’ and drag the process out, in a hope that the recruitment agency in question gives up, thinking that it might turn out to be a long and fruitless task to pursue it.

Litigation

When solicitors become involved and the matter reaches the small claims court, the unfortunate fact is that by this point, the recruitment agency chasing the debt might have a fighting chance to recover the money owed, but will have little or no chance of being reimbursed for the costs associated with that pursuit. It’s fair to say that once the case has reached court, the time for recovering all that is owed, might have been and gone.

As well as the huge expenses associated with Legal action, there is also limited chance of the debt even being paid as most judgments are reported to go unpaid in the United Kingdom.

Specialist Debt Collection

A recruitment debt collection agency that specifically deals with errant debt in the recruitment field will have detailed relevant knowledge on how best to proceed in this kind of case to achieve the best result for the client.

For example, a specialised debt collection firm of this type would know the processes involved within a standard recruitment process therefore eliminating the chances of smokescreens from the debtor.

Also, something that should be considered is the professionalism of the recruitment agency. Brand reputation is everything in the recruitment industry so they will wish to be seen to be working with a Professional accredited debt collection agency, not some back street chancer whose overly aggressive practices could get them into trouble.

Assistance in Small Claims Court

Specialised recruitment industry debt collection professionals can also assist in determining specifics relating to contractual disputes between the parties. Issues such as:

  • Was the contract broken by the debtor or the client?
  • Was a suitable time of contract cancellation observed?
  • Were reasonable attempts made by the the client to resolve the issue amicably?

As many of the issues relating to debtors in the recruitment field will have underlying similarities, a specialised collection agency can provide valuable insight into how to claim successfully.

These questions should be asked at outset to establish the merit of the debt claim.

Cost Effective

Where the debt is disputed and legal action necessary, A  collection agency can arrange a low fixed cost claim, which can be provided at a much lower rate than normal. The standard cost of a solicitor can be as much as £400 +VAT per hour, which can be as much ten times that of the service provided by the agency.

The Prudent Route

If you try and tackle late paying clients yourself, you may be successful in the long run (although this is far from guaranteed), but at what cost? The stress, time out of your business and potentially low award at the end of the process can leave you wondering why you bothered.

A professional debt collection agency can take the worry out of the situation and keep you updated throughout. The accreditation a good agency will hold also ensures that you can rest assured that no untoward methods are used in pursuance of your owed monies and that the reputation of your business will remain intact.

Can you afford not to involve the professionals in this scenario? For the good of your sanity and your business, we think the answer to this question is no, you can’t.

First choice solution

Court Action should always be viewed as a last resort.  Less than 1% of the Recruitment Agency debt Collection claims dealt with by Federal Management ever requires court action. However, when it is absolutely necessary, it provides peace of mind to know it can be done on a low fixed cost basis with commission payable only from successfully recovered monies.

To find out more about our expert pre-legal debt collection services, call our New Business Team today on 0333 043 4420 for a free pre action assessment.

We have helped thousands of recruitment agencies over the past 14 years and have the dedicated know how to give your business the edge when it comes to non paying clients.