How Recruitment Agencies Can Effectively Get Paid from Non-Payers: A Step-by-Step Guide
In the competitive world of recruitment, getting paid on time is crucial to maintaining your agency’s financial health. However, dealing with non-payers can be challenging. Here’s a structured approach to ensure you get what you’re owed, starting with proactive reminders and escalating to formal legal actions if necessary. Follow these steps to maximise your chances of securing payment:
1. Send a Reminder One Week Before the Invoice Is Due
Proactive communication is key to avoiding late payments. A week before the invoice due date, send a courteous reminder to your client. This serves as a gentle nudge and gives them ample time to prepare for the payment.
Example Reminder Email:
Subject: Upcoming Invoice Due Date Reminder
Hi [Client's Name],
I hope this message finds you well.
This is a friendly reminder that the invoice [Invoice Number] for [Amount] will be due on [Due Date]. Please let us know if you need any additional details or have any questions.
Thank you for your attention to this matter.
Best regards,
[Your Name]
[Your Recruitment Agency]
2. Send a Reminder 3 Days After the Invoice Was Due
If the invoice hasn’t been settled by the due date, follow up with a reminder three days after. This email should be slightly more urgent, requesting confirmation of the payment date.
Example Reminder Email:
Subject: Reminder: Invoice [Invoice Number] Overdue
Hi [Client's Name],
I wanted to follow up regarding invoice [Invoice Number], which was due on [Due Date]. As of today, we have not received payment.
Please confirm when we can expect the payment. If there are any issues or further information needed, let us know.
Thank you for your prompt attention.
Best regards,
[Your Name]
[Your Recruitment Agency]
3. Send Another Reminder After 7 Days, Then Issue a Letter Before Action (LBA)
If payment is still not received seven days after your second reminder, it’s time to send another follow-up. If there’s still no payment, issue a Letter Before Action (LBA). The LBA is a formal document indicating that legal action will be taken if the debt is not paid within a specified period. This letter can be drafted by you or a solicitor specialising in debt collection and should include late payment fees.
Example LBA Email:
Subject: Final Notice: Immediate Payment Required for Invoice [Invoice Number]
Hi [Client's Name],
This is our final notice regarding invoice [Invoice Number], which remains unpaid despite previous reminders.
Please find attached the Letter Before Action. We request that the full amount of [Amount], including any late payment fees, be settled within the next 14 days. If payment is not received by [Deadline Date], we will proceed with further legal actions.
We hope to resolve this matter amicably. Please contact us immediately to arrange payment.
Best regards,
[Your Name]
[Your Recruitment Agency]
4. Send a Statutory Demand
If the debt remains unpaid after the LBA deadline, the next step is to send a Statutory Demand. This formal request for payment is a serious legal document that, if ignored, can lead to bankruptcy or winding-up proceedings against the client.
Example Statutory Demand Email:
Subject: Statutory Demand for Payment
Hi [Client's Name],
As the invoice [Invoice Number] remains unpaid, we are now issuing a Statutory Demand for payment.
Attached is the Statutory Demand document outlining the amount due and the consequences of non-compliance. Immediate payment is required to avoid further legal actions.
Thank you for your prompt attention.
Best regards,
[Your Name]
[Your Recruitment Agency]
5. Proceed with a Winding-Up Order
If no payment is received following the Statutory Demand, you may consider applying for a winding-up order. This is a legal process that can force the client into liquidation, allowing you to recover the debt through the liquidation process.
Final Steps:
- Consult a Solicitor: Seek legal advice to initiate the winding-up process.
- Prepare Documentation: Gather all necessary documents and evidence related to the debt.
- File with Court: Your solicitor will file the necessary paperwork with the court to start the winding-up proceedings.
Conclusion
By following this structured debt collection process, you’ll demonstrate seriousness and professionalism, increasing the likelihood that non-payers will settle their debts promptly. Remember, the LBA stage is crucial—around 90% of clients will respond once they realise you’re prepared to take formal action. Protect your agency’s finances and reputation by implementing these steps effectively.
For personalised advice or assistance, follow our page useful links that we feel will be useful for collection professionals specialising in recruitment agency debts. These experts can provide tailored solutions and ensure you navigate the debt collection process efficiently.