Recruitment Process Outsource Companies (RPO’s) are now a staple in the recruitment industry. Effective RPO solutions operate in two way: firstly they manage the recruitment process for the clients, providing any staff they require and second tier any placements they cannot fill to selected agencies; secondly, they manage the invoicing and payment processes for the client on behalf of all the agencies that have contractors on site.
The client (who may be a government agency i.e. an NHS trust, major banks, telecom companies, etc..) will enjoy getting their staffing needs filled whilst greatly reducing their accounts department procedures, manpower and costs – the RPO will manage the whole process and take a cut from each contract and permanent placement made by external agencies.
Whilst most RPO’s make the processes as simple as possible for the agency by having online portals, self-bill invoicing and prompt payment terms, there are a number of providers that overcomplicate the process and often delay payments – even though correct procedures are followed.
TBOS has dealt with a number of different RPO’s on behalf of our agencies and here are some tips on how we would recommend dealing with them on your contract placements:-
- Read the RPO Contract Thoroughly
The contracts that RPO’s provide agencies with are often very comprehensive and cover a range of clients on the same template. It is advisable to fully read all clauses to ensure you can comply with their requirements and that you are not in breach of contract. It is especially important to look at insurances required by the agency, the compliance documents required by the candidates and the processes for timesheets and invoicing. It is also really important to review the fee section as some RPO’s reduce the agency profit margins on anniversaries of the contract and can impose discounts that are controlled by the RPO.
- Watch Out for Pay-When-Paid Clauses
Most RPO’s work on a premise that they will pay the agency if they follow their strict procedures for getting timesheets authorised and uploading/sending invoices. However, some RPO’s impose a Pay-When-Paid Clause within their agreement which suggests that they will only pay the agency if/ when they receive payment from the end client. As the agency has no access to the RPO’s bank account or cannot ask the client if they have made payment to the RPO, there is no way of knowing when an invoice will be paid. This also makes it very hard to chase the RPO for payment as they can simply say “we haven’t been paid by the client yet”. This can also have a detrimental effect on your funding arrangement as most invoice finance companies will not provide funding on pay-when-paid contracts.
- Make sure that your funding provider can provide finance
As per the previous point, pay-when-paid contracts are often not funded by invoice finance companies so before you start making placements, it is important to check with your provider that they are happy to fund placements involving an RPO. Also some RPO’s have a “ban on assignment” which stops the debt from being assigned to an invoice finance provider, which again could mean the invoice finance company may not be able to fund the invoices. Lastly, most invoice finance companies base their funding on the credit rating of the client; whereas your client may have a fantastic credit rating, the RPO may not which could reduce the funding provided.
- Ensure you fully understand all aspects of their online portal
Most RPO’s work using an online portal which may include functionality for online timesheets, creating/uploading invoices, producing self-bill invoices and monitoring remittances/ payments. All of these systems have been created specifically for that RPO and will all have their own quirks which your accounts department need to fully understand. If a procedure is not followed correctly, this can delay the payment for the time worked as the invoice will remain invalid until all invoicing processes have been followed properly.
TBOS has many years’ experience of working with many RPO’s on behalf of our clients, meaning that we understand how the systems work and the issues that agencies can have. TBOS studies each of the RPO’s systems to ensure we become experts to reduce delays on payments and that the agency’s cash flow does not suffer. TBOS also has relationships with a range of invoice finance companies (plus the TBOS Freedom model) who can provide finance on RPO’s and pay-when-paid contracts.
If you would like more information on how TBOS can help elevate your RPO headaches or provide finance on these kind of deals, please contact our office