Overdue Invoices? Here’s How to Collect Your Placement Fee!

A client recently asked me: "Can you give me some insight into how to collect a past due balance from a client while still maintaining a lucrative relationship?"

Sure thing - I had this one recently myself! And the client was in another country which made it a little more challenging.

I don't know what you've already done to collect the invoice, so at the risk of stating the obvious, here's the IDEAL process:

1. Fee agreement / terms agreed up front, in writing, stating your Settlement period which is typically 14 to 30 days from the date the candidate starts the job.

**If you offered a discount from your full fee to win the business, make sure your terms state that late payment will result in the full fee being payable!**

2. Invoice is sent on time, clearly stating the due date, with text reminding them that your rebate/guarantee period (if you have one) only applies if the invoice is paid on time, reminding them that the discount (if applicable - don't mention it otherwise) will be lost if the payment is made after that date, and reminding them of the rate of interest on late payments.

3. A call or email to verify they received the invoice -- so they can't later claim "we never received it please send us a copy."

4. About 7-10 days before the invoice is due, a very friendly/polite "courtesy call" to remind them the invoice will be due for payment in X days and you want to make sure they retain their rebate/guarantee/discount.

5. At 11am-12pm on the day the invoice is due to be paid, if you haven't already received payment, a very friendly call to remind them that the invoice is due TODAY and you're checking to make sure the payment has been initiated and funds will reach you by 5:00pm today.

6. 1 day late - Follow up again, by PHONE (not email), still very friendly, non-confrontational. Ask them to double check the payment has been sent. Explain you will honour the discount (if you gave one) provided you receive payment today.

7. 3 days late - still no payment. Escalate to the issue up the chain of command in the finance department, ask to speak to the Finance Director.

8. 7 Days late. Call the hiring manager / decision maker, explain the situation and ask him/her to chase it up for you. Be POLITE, PROFESSIONAL AND PERSISTENT. Keep calling and emailing the finance department.

9. 14 days late - Send a new invoice for the FULL fee (e.g. 30-33%). That should get a reaction!

10. 30 days late - letter (not email) to the finance department and CC your hiring authority and/or HR contact, use stronger wording but still diplomatic.

11. 45 days late -- another letter, stronger wording still. Explain you have put all pending searches on hold and can't accept any further search assignments from them until the outstanding balance is settled.

(You might be afraid to do that because of the value of the searches in progress, but realistically if you're not getting paid for your work then the value of those searches is zero.)

12. 60 Days, stronger letter explaining that the next step is passing the matter to your Legal Department unless the payment is made within 5 working days.

At this point your candidate started 90 days ago. The invoice is 60 days late, this is not looking good.

13. Still nothing? Get your lawyer to write a letter. If you're based in the US, here's a lawyer who specializes in our field:

http://www.fordyceletter.com/jeffs-on-call/

If you're in the UK, try Lawspeed who are solicitors for the recruitment industry.

14. Don't be afraid to go to court, provided the legal costs will not exceed the outstanding fee. Obviously seek qualified legal council -- disclaimer I'm not a lawyer! But here in the UK my clients have informed me anecdotally they have a high success rate of getting fees paid, at the full 30-35%, in court. Make sure you have the paper-trail of agreements, interview confirmations, offer letters, and copies of all correspondence between you and the client.

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One final note. Are you sure it's a lucrative relationship? Late settlement of invoices doesn't make them a quality client in my book. I guess it depends if they're usually on time, and this invoice is an exception, or if they're usually late.

Remember, "The sale is not made until money changes hands."

Good luck!

Mark Whitby
 

Mark Whitby is one of the world's leading coaches for the recruitment industry. Since 2001, he has trained over 10,000 recruiters in 34 countries. Mark has helped recruiters to double or triple their billings and owners to increase their team's sales by 67% in 90 days.

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