Every recruiter loves to celebrate when a deal is signed and a candidate is due to start on-site with a client. However, from a business owner’s perspective, the deal isn’t truly complete until the client has made payment.
Most clients an agency works with will pay within the agreed terms, or occasionally slightly later, to settle the balance owed. If a valid contract is in place and all clauses have been fulfilled, there should be no reason why payment is withheld.
That said, there are instances where a client may choose not to pay valid invoices. In such cases, they may either “go dark” and stop responding to communication from the agency, or they might dispute the invoice using weak or fabricated excuses, hoping the agency gives up chasing the debt.
Agencies should exhaust every reasonable method of contact, including phone calls, emails (with read receipts), recorded delivery letters, and, if necessary, site visits. If these efforts are unsuccessful, there are two main options available:
MONEY CLAIM ONLINE
If the amount owed is below £25,000, you can use the government’s Money Claim Online service to issue a County Court Judgment (CCJ) against the client. Once the online form is completed, supporting evidence of the debt is submitted, and the required fee is paid, a CCJ is typically issued within 24 hours. The CCJ will automatically appear on the client’s credit record, damaging their credit rating and potentially affecting their relationships with other clients and suppliers. To remove the CCJ, the client must pay the full amount owed, including the court fee, within 21 days or formally contest the claim. This method is often highly effective for recovering smaller debts.
COLLECTION AGENCY
If the amount owed exceeds £25,000 or involves complex debt or contractual issues, it’s advisable to engage a collection agency. These firms specialise in recovering outstanding debts on your behalf and usually charge a percentage of the recovered amount as their fee. Once the court rules in your favour, the collection agency can enforce the judgment. In many cases, the client will also be liable for the legal costs involved in contesting the claim.
In any case, the best way to avoid legal action is to establish a robust credit control process (also known as a Dunning Cycle). This should include conducting credit checks on clients before engaging with them, verifying that invoices have been received and are accurate, and confirming they will be paid on time. It’s also important that the agency follows through on any legal threats made to clients to maintain credibility.
MAYACHI provides guidance and support to recruitment agencies struggling to collect payments from clients. MAYACHI offers advice on setting up a strong Dunning Cycle and can help connect agencies with trusted outsourced providers to manage credit control processes on their behalf.
