We’re not paying your invoice as you’re not on our PSL

Sterling Debt Recovery - case study series

Recruitment debts owed by large corporations can often be caused by poor communication or weak process in the debtor’s business. They can often be difficult to collect, with managers within the corporation being bound by internal rules, which for them overrule contract law.

Our client, a recruiter specialising in the water services sector, had approached a sales manager in a global utility company regarding a new role. The sales manager was not interested in the role, but the discussion quickly turned into a new opportunity as the sales manager himself was recruiting for an account manager in his team. There was a discussion about the vacancy and our client sent through TOB’s* and CV’s for two candidates the same day. The sales manager said he was interested and would forward the CV’s to HR and request that our client be added to the PSL.

And then all went quiet.

Despite repeated attempts to contact HR and the sales manager, our client could not get a response. Later that year they learned the candidate had been employed by the debtor 4 months after the introduction.

Our client raised an invoice and sent it to the corporation. The HR department responded, saying that no fee was due. They explained that there was no contract as they were not on the PSL, that they had not registered any vacancy with them, and that the candidate had approached them directly for the vacancy via Indeed.

Our client engaged a debt collection agency (not Sterling) who wrote to the debtor. The debtor replied with the same dispute. The collection agency emailed the dispute back to our client and suggested they refer the case on to their solicitor (working on hourly rate) to submit a claim.****

Our client was nervous about taking legal action against a big corporate with deep pockets, and did not want to throw good money after bad. They searched for a debt collection agency specialising in the recruitment sector and found Sterling.

Sterling wrote to the debtor’s HR department, outlining the case. We provided evidence and explained clearly how our client’s terms of business had been incorporated (despite them not being signed, and despite our client not being on the all-important PSL), we explained the importance of the clause in our client’s TOB’s stating that they need not be the effective cause of the engagement**, we explained the fees involved, and our next steps should they refuse to acknowledge the debt.

We received a response from the debtor’s legal department within days and a call was arranged to discuss the matter. Following the discussion, and further emails back and forth with some weak bluff and attempts of intimidation from the debtor’s legal team, they acknowledged the debt and agreed to make payment in full.

The client has used Sterling again to collect other debts since this matter, and we’ve learned they are now on the debtor’s PSL and filling vacancies for them on a regular basis!***

Important lessons:

This case is a particularly interesting one as there are a few points in the scenario where the agency could have lost their fee.

* Terms of business need to be put in place correctly. Often recruiters send them at the same time as the full CV, and sometimes they even send them afterwards. For more information see here: https://sterlingdebtrecovery.com/tips-and-templates-for-debt-disputes/

** The majority of recruiters would not have been able to collect if they were in the same position as our client. The most commonly used terms of business contain a weakness around effective cause which means they must prove their actions resulted in the engagement. Luckily our client’s terms were stronger than the market standards. See more information about effective cause here: https://sterlingdebtrecovery.com/recruitment-agency-terms-of-business/

*** Small and medium sized businesses are often put off from pursuing invoices owed by big business. Of course sometimes taking action can sour personal relationships, but in our experience pursuing the debt in the correct manner only shows that you have good, professional procedures, something that big business usually values.

**** Recruitment debts are often disputed, so it’s important to engage a debt collection agency that understands your market, your terms of business, and how to resolve disputes. The majority of debt collection agencies do not specialise, and whilst they may be able to collect simple ‘can’t pay or won’t pay’s’ they usually follow a simple process of red letters and refer to a solicitor (from whom they get a referral fee) at the first sign of a dispute.

A note on our case studies:

You’ll notice that we do not publish the name of our clients on most of our case studies testimonials. Sterling’s debt recovery service is provided in a confidential manner, in most cases our client prefers that we do not use their name due to the customer relationship sensitivities involved.

Sterling are happy to arrange reference site calls on request, usually with a client working in the same or similar sector. If you would like to speak to one of our clients please contact us to discuss your requirements.

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