Have you ever had a slow paying client? How about several? I did at one time, too. I hated it. I would never know how to plan for my spending because I never knew when I would finally get paid by my clients. They saw me as a low level vendor and treated me like that. They never made paying me a priority and usually put me at the bottom of the list. The service has already been done, they probably thought, so letís put him on the bottom of the list and finally pay him when he starts becoming a squeaky wheel and calling in to our office.
The only thing I could do was call into accounts payable and talk with some part time clerk who had no authority to make decisions on when to pay people. I was humiliated by the fact that I had already provided my service and was struggling to pry a check out of their hands.
Trying to get paid does not have to be a core competency of our business. Why should it? Instead be proactive. Develop a system that guarantees that you get paid within ten days of the candidateís start date. This is how you do it. You start by figuring out a way that gives people an incentive to pay you quickly. People only do those things that are in their own best interests, so letís leverage that concept to our advantage.
What could possibly motivate someone to pay us quickly? First look at the fear of loss. The fear of loss is one of the greatest motivators. Find a way to tie a fear of loss to you not getting paid on time. Put yourself in the clientís shoes. He or she has paid a recruiter a whopping fee and doesnít want to loose out on getting the return on that investment. The only way they could lose that cash and not get any benefit from it is if the candidate didnít work out. So tie your payment to your guarantee period.
This is what I did, and it worked for me and I hope it could work for you. I had my guarantee, which was 90 days replacement only, tied to me getting cash in to the office. I would tell my clients this if they ever asked about guarantees: "Bob, my guarantee is optional. You get a ninety day guarantee period if I get payment in to my office within ten days of the candidateís start date." I only had two or three clients ever complain about that. I put the ball in their court. It was their choice whether or not they got a guarantee. How many slow payers do you think I ever had after that? Only one, and they were a loser company anyway. And if a client had a problem with it, then they were probably going to be the type of client I didnít want anyway. Respect yourself when you bring on a client and the client will follow your lead.
This is how you set up this system on your desk (but get manager approval first, of course.):
Make the policy change. Presto chango. Abracadabra. Ninety days dependent upon cash in to the office within ten days of the candidateís start date. Change your fee schedules to reflect this.
Tell it to your clients when they ask. Theyíre only going to remember so many things that you tell them, and theyíll remember this. Just like I said above, make it no big deal. Now, you might get a client that says they are a big company and thereís no way they can pay in ten days. This then becomes a point of negotiation. You could respond like this: "Bob, Iíll see if my manager can accept extending the ten day time frame to thirty days, but Iíll need to take something back to him that would give us the incentive to do so. Maybe we could get first right of refusal on the next search." You can use this negotiation gambit to your advantage to get more business, when all what you are really doing is extending the period of time by twenty days that you are getting paid by them.
Put it on your signed agreements. Yes, get a signature. What a concept. Would a car dealership sell a car to your client without the client not signing the agreement? Why do you fear getting a signature from him for promising him to give you the same amount of money for your service? Start respecting yourself and insist on it. Donít take the risk of not getting paid. You service is too valuable to deal with unprofessional people and if they refuse to sign an agreement, then that means theyíre either not the real decision-maker or there is some sort of reason why they are reluctant to sign it, and that reason might be an indicator of future problems with this client.
Put the policy on all of your invoices, every one. "Please process immediately. Guarantees are dependent upon payment into our office by May 30, 2004." Put the specific date on the invoice.
Remind the client right before the invoice is sent. Some recruiters wait until the candidate starts before they email the invoice. Why not send it before? Once the candidate has accepted the position, your service is almost complete, so email it to your client so he can start his internal payment process. Email it to your client earlier as a favor to him to start his internal payment processes.
Minor changes in major areas are the essence of major achievement. I hope this little change gives you positive cash flow for the rest of your life.
Copyright © 2004 Scott Love