Making a placement with a client is the lifeblood of a recruitment agency. However, until the client makes payment, the agency has not fully realised the profit generated by that placement.
In many start-up agencies, early placements are handled by the business owner, often using a borrowed invoicing template and without a clear understanding of the correct processes. In larger organisations, this would previously have been managed by an accounts department.
The alternative and likely best solution is to engage a back-office and accounts provider who can manage this process on the owner’s behalf, allowing them to focus on making more placements and growing the business.
Below are some practical tips for managing credit control, whether handled internally or by an outsourced team:
ENSURE YOU HAVE ALL THE CORRECT INVOICING INFORMATION
Not all clients follow the same invoicing procedures. Many have specific requirements outlined in their contracts that must be followed for an invoice to be accepted for payment. These may include the correct company name and address, a cost code or purchase order number, submission to a specific email address, and clear details of the placement.
Best practice is to gather this information at the contract stage, so your agency fully understands what is required to ensure invoices are valid and paid within agreed terms.
ONCE INVOICE HAS BEEN SENT, CONFIRM IT HAS BEEN RECIEVED
After sending an invoice, follow up within the first seven days to confirm that it has been received, that all details are correct, and that it will be paid within terms. If this confirmation can be obtained in writing, it may help protect the agency in the event of any future disputes. This is also an ideal opportunity to identify who within the client’s accounts team is responsible for processing payments and to confirm when their payment runs take place each month, ensuring your invoice is scheduled accordingly
FOLLOW UP TO ENSURE IT IS INCLUDED IN THE PAYMENT RUN
Once the accounts team confirms the invoice will be included in the payment run, it is advisable to follow up a few days beforehand to ensure there have been no changes. This extra step can prevent disappointment if payment is unexpectedly delayed.
For permanent placement invoices where a clause states that late payment invalidates any rebate period, this follow-up can also be used as a reminder to the client, helping to secure timely payment.
IF AN INVOICE BECOMES OVERDUE, DO NOT HESITATE TO CHASE OR ESCALATE
If an invoice becomes overdue, the first step is to contact the client to understand why payment has not been made, assuming all required processes were followed correctly. Clients will often try to manage their own cash flow by delaying payments, which can negatively impact your agency.
If payment is withheld without a valid reason and your agency has complied with the client’s invoicing requirements, issuing a formal seven-day warning letter is an appropriate next step. This should state that legal action will be taken if payment is not received.
If the deadline passes without payment, options include using the UK Government’s Money Claim Online service to pursue a County Court Judgment (for smaller debts) or engaging a specialist debt collection agency, many of which operate within the recruitment sector.
MAYACHI has many years of experience supporting recruitment businesses through outsourced back-office and accountancy solutions to ensure invoices are paid within agreed terms. We work closely with specialist providers and also educate internal teams on best practice for debt collection and legal escalation when necessary.
