When an agency makes a placement, there is an element of elation in helping the client and knowing that a fee is due. However, until the client puts the money into the agency’s bank account, the placement is not complete.
Most of the time, clients will pay on-time based on the terms of the contract but there are also occasions where clients will want to hold onto their funds as long as possible instead of paying their creditors.
Whilst there is no way of guaranteeing payment, there are several ways of mitigating the risk of late payment and below are 6 proven tips that agencies can use to help get their invoices paid on time:
CREDIT CHECK THE CLIENT PRIOR TO PLACEMENT
Performing a credit check on a client as soon as you get a sniff of a placement is ideal, but it will not guarantee payment. However, the information provided on a credit check will give you an indication as to whether a client has a history of slow/non-payment or if they are in financial difficulty as a company.
ASK THE CLIENT ABOUT THEIR PAYMENT PROCESS
When the placement has been made, it is best to ask the client what the process is to get payment within the terms set. There may be a requirement to put a PO number on the invoice or an online portal to upload the invoices to or there could be a template that needs to be followed. In any case, it is advisable to find out the contact details of the accounts payable division so that the credit control team can speak directly to them to chase for payment.
CONFIRM THE INVOICE WITH THE CLIENT WITHIN 7 DAYS
Within 7 days of sending an invoice, it is good practice to confirm with the client that the invoice sent has been received, is correct and will be on the payment run. This can be done via email when sending the invoice and chased with a phone call if no response is received. This ensures that any mistakes made in the invoicing process are sorted out immediately instead of waiting until the invoice is due for payment.
CONFIRM INVOICE IS ON PAYMENT RUN
Once you have the confirmation that the invoice is correct and received, there should be no reason for the invoice to not be paid within terms. However, it doesn’t hurt the week before the invoice will be paid to get confirmation that the invoice is on the payment run. If the invoice is not on the payment run then the agency can reiterate any penalties that may follow should they not pay the invoice on time (interest due, loss of rebate period, loss of discount, etc.)
SEND REGULAR STATEMENTS
When placing temps or contractors then there may be many invoices sent each week so it is advisable to send regular statements of account to the accounts payable team so they can check if they are missing any invoices due for payment. This should be backed up with communication verifying that all invoices have been received and are correct, but a statement can help as a double check.
PROCEED WITH LEGAL ACTION IF THREATENED
If a client decides that they are not going to pay within terms despite there being communication to the contrary, then an agency may wish to send a 7-day letter threatening legal action if payment is not made. However, should you decide to send this letter, then this
must be followed through or the threat made to the client is empty and the client is likely to continue to not make payment for any future demands.
MAYACHI Ltd has worked with many agencies regarding their credit control processes to ensure that clients make payments within terms. MAYACHI has done this by training and educating the credit control team, reviewing the way that placements are made and putting controls in place regarding pursuing overdue debtors.
