Recruitment fees due

According to Companies House almost 1,800 new recruitment agencies were registered in the first two months of 2018, bringing the total number of agencies in the UK to its highest number ever at 37, 052. Recruitment is a sector that continues to defy all growth expectations and the expected downturn in hiring that was expected due to the UK’s withdrawal from the European Union hasn’t happened. The sector remains strong and is estimated to be worth over £35 billion, this combined with increased confidence in the economic forecast despite Brexit, means that this could be a record year for recruitment.

Although the sector is buoyant, receiving payment for their services appears to be an ongoing problem in the industry. Many of the smaller recruiting companies may feel they are caught in a ‘Catch 22’ situation if they don’t get paid as they do not want to sour a relationship with a company that has the capacity to be a fruitful source of work moving forward. However, for any business and especially SMEs, cash flow is vital for the long-term viability of the company, and not being paid may risk the security of that business.

Some of our clients at Daniels Silverman have been reticent in the past about using a third-party agency to recover these debts because of the risk to the future relationship. However, working with a reputable and established agency with proven success in both recovering money and maintaining relationships has proven very beneficial to them.

Recruitment agencies are used by companies to find employees to fill positions that they have vacant. Finding the right staff, with the right skills set, who will be a good culture fit and share your company’s values can be an incredibly time-consuming process, which is where recruitment agencies play their part. They will source candidates, pre-interview and assess their suitability for the role on offer before sending you a short-list for interview. They advertise the position and undertake the search on your behalf. There is no cost to the prospective employee and all fees are recovered directly from the employer.

There are different ways that this can work. If an employee is recruited on a temporary basis then the agency will pay the staff and recover the money, with a small profit margin for processing, from the employer. If the employee is then employed by the company on a permanent basis the company will be charged a transfer fee. Some employers do not foresee this charge and may not have read the terms and conditions in depth. The employer may also employ the candidate in a position that differs from the original intended role, however, the agency has still done the work recruiting that member of staff and a fee is still incurred.

For recruitment into a permanent role, the agency should be paid upon the acceptance of the position, standard recruitment fees are between 15-20% of the candidate’s first annual salary, this can rise to 30% for positions that are particularly difficult to fill. This method can often result in the position being filled quickly as agencies will work fast to find the best applicant and earn the fee.
Agencies can also work on a retained basis where the fee is staggered. An upfront payment guarantees exclusivity, a payment is then made on the shortlist delivery and a final payment made when an applicant is hired to the role. This method allows the agency to take more time in finding the ideal fit for the company.

Knock on effect of late/non payment

Being routinely paid late by large clients for temporary contract workers can have a huge knock-on effect if you are an agency who has multiple clients doing just this. It means that the agency is forced to bridge the gap and pay the contractors before they are paid.

Not being paid at all because a client has mis-understood or not read the terms and conditions can leave the agency vulnerable.

In both of these cases Daniels Silverman can help to improve your cash flow as well as maintain a good relationship between you and your clients. We ensure that this relationship is at the heart of everything we do, and we work tireless to ensure that your reputation and relationships are preserved.

Are you struggling to recover your fees?

We offer both credit control and debt recovery services that will help to keep your company liquid. If you are struggling to recover money that you are owed please contact us today for a free no-obligation consultation. Our clients rage from large blue-chip companies to smaller independent companies and sole traders, whatever the size of your business, we’re here to help.

For a helping hand reconnecting with your customers and getting back on track, get in touch with us today on 0800 953 3631 or visit our website and start a chat session with one of our Business Development team.

https://www.danielssilverman.co.uk/contact

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