What Can I Do If A Client Refuses To Pay My Invoice?
There is always a sense of celebration within a recruitment agency when they place a candidate within a permanent or contract position. However, even though the placement has been made the client still needs to pay the invoice before the agency will realise the profit.
In 9 out of 10 times, the client will make payment with no issues based on the agreed terms with the recruitment agency. However, there is always that one client who may decide to delay the payment of invoices causing undue pressure on the credit control team and the agency directors.
In most cases, the consultant who made the placement can sometimes help with the liaisons with the client to get the payment made but if this fails then more extreme measures may need to be taken.
The first port of call would be to send the client a 7-day letter (by recorded email and/or recorded post). This letter demonstrates that the agency has tried on numerous occasions to chase for the unpaid invoices and that the money is still outstanding. The client then has 7 days to make the payment to the bank details provided or legal action would then be taken. It is advisable to enclosed a copy of the invoice and the signed terms with the client to back up the claim.
Should the client not make the payment within the 7 days then you have two options: -
- For UK debtors, you can use the Money Claim Online service (MCOL - Money Claim Online - Welcome) to lodge a claim against the client. This is a service provided by HM Courts & Tribunal Service and allows you to lodge a CCJ against a company which they normally receive within 24-48 hours. There are costs involved in lodging this claim but the client will have to pay these fees alongside the overdue amounts. This service can be very effective as the client will not want a CCJ registered against them as it will affect their credit rating.
- As an alternative for UK debtors or for overseas debtors, you can use a debt recovery service to collect the funds on your behalf. This type of companies are experts in their field and will often work on a no-win/no-fee basis (fees are normally between 20-25% of the collected amount).
If you have a Credit Insurance policy or if the debt is funded and insured by an invoice finance provider then you will have to check with them before taking any actions to ensure that this does not jeopardise your agreements and mean you lose out on making a claim on the insurance policy.
As part of the services provided by TBOS, we have many years’ experience of collecting debts from various clients and are well versed on actions needed to collect debts from clients. On our TBOS Freedom solution, we also fully credit insure the debts to ensure that should a client go bust or can’t/won’t pay their invoices then the agency still receives funds from the insurance policy.
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