Credit checking clients is an important step for an agency to take to help equip themselves with information on their clients on the chance that a client may go bust or refuse to pay. However, this step is not a necessity when making a placement (as the agency can take a risk on a non-credit worthy client) but is advisable to at least give as much information as possible.

Most recruitment agencies who are making temporary or contract placements will often be using an invoice finance facility which has a bad debt/credit protection policy associated with it. This policy will provide insurance should a client go bust as long as the client has passed a credit check and has the appropriate credit limit to protect the outstanding debt. Therefore as part of the requirements to receive the funding it will be expected that the agency applies for a credit limit on their client (preferably before they make the placement) to ensure that not only is the limit approved but also that the invoice finance company can provide the funding required to pay the candidate.

For agencies making permanent placements (which often does not require an invoice finance facility), there is no requirement to credit check the client as no insurance is provided but knowing whether a client has poor credit can ensure that the agency will be paid for the placement made.

TBOS has the ability to apply for credit checks for free which will give a TBOS client an indication whether the client is credit worthy for them to pursue the placement they are hoping to make. If the client does fail a credit check then the information provided will allow the agency to decide whether to still work with the client as it may be something that can be remedied by renegotiating the payment terms.

Recruitment Finance Guide

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