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Doing this business is hard enough. Doing it for free is insanity. Our business is unique in that getting paid is actually a core competency. In most industries it’s assumed. But for us, you can do the work, think you are working with a good client who has agreed to the fee, and at the last minute get a shocking surprise that the client thinks he can hire someone from you and not have to pay for your service.
Here are five keys to keep in mind to help you understand when you might be dealing with a problem client.
- Make sure you are dealing with a client that has paid search firms before. If you take on one that has never paid big fees before, there is a risk. Make sure you have the agreement nailed down and complete client cooperation before going forward. Ask tie-down questions like, "Does everything make sense, Mike? I just want you to understand the value that you get from our service and that you have prepared for it in the budget."
- Make sure you are dealing with someone who has the authority to pay the fee. Ask this question: "From the time I email the agreement to you to the time you fax it back, who else will need to see it?"
- Make sure you have documentation that they agree to it. I’m not a lawyer but I do know that you need to make sure that your agreement is solid. In the legal game, it doesn’t matter what happened. What matters is what’s provable.
- Make sure they pay you when they are supposed to. "Oops. Forgot to send the check to you. I’ll get it to you within the next thirty days." What happened is that they knew it was on the schedule and they either got lazy and don’t respect you or choose not to send it out. This reminds me of the friend of mine who took ballroom dancing lessons. Once they finished the dancing lessons they still needed to pay the $700 for it and complained about it for months. Then they started talking about ways to get out of the agreement or to reduce the fee, even though they already agreed to it. (sound familiar, like with one of your clients?) Once the action or the service has been performed, the longer it takes for you to get paid then the higher the risk there is of not getting paid. This is why you can solve your slow-pay problems by reading this article:
Remember, if they don’t pay you quickly, they might not pay you at all or find ways to discount what they have already agreed to.
- Observe patterns of behavior with your client. Do they try to negotiate hard and then not follow through on what they negotiated? This means that you could be dealing with someone who doesn’t play fair. If they make a deal and the first instance you see them not complying with what they agreed, then you need to either get out of the relationship or make sure that you minimize your risk when going forward.
Here’s a final action step for you to increase the likelihood of you getting paid by all your clients: In a group at your next internal training meeting, discuss the five characteristics of those ‘good clients’ who always pay on time, and those ‘bad clients’ who slow pay or no pay. Then go through specific ‘warning signs’ of bad clients and train your staff on how to be cognizant of them. Then develop a countermeasure strategy based on proactive detail and integrate it into your policy and procedures manual. If it’s standardized, then it’s gospel and it reduces the risk of bad things happening to good recruiters.
The search business is all about managing risk. Make sure that you work with the right type of clients, the ones that have the authority to make the deals, and those who have the integrity and the likelihood to actually follow through (pay you) on what they agreed to. Doing this business is hard enough. Doing it for free is insanity. Learn how to minimize your risk so you can get paid every last penny of what you deserve.
Copyright © 2004 Scott Love
Scott Love increases the billings of recruiters and expands the margins of search firms through his coaching, consulting, in-house training, and keynote presentations. To have him help your recruiters bill more than they ever thought possible, call him at 828-225-7700. His website, www.recruitingmastery.com, has become one of the largest free training sites for the search industry with over 120 articles, tools, and downloads.