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The Fordyce Letter

Straight Talk for the Recruiting Profession


The Business of Recruiting

A Practical Guide to Collections Invoicing


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money-handsYou’ve done all the work. Sent the invoice. Celebrated. Spent the money. And you run to the post office daily hoping you didn’t spend the money too soon. Sound familiar?

After collecting in excess of $8 million over the last six years, I’m happy to say I have only had to go to court once in a collection proceeding. We won with a jury trial that lasted over four days.

When I was a bank president I went through many collection activities. In fact, at one point I had to go through the collection of a $5 million indirect car loan portfolio. This was due to a rogue lender. It resulted in hundreds of repossessed vehicles.

Collections are a necessary evil in all industries. Here are some ideas that I have applied to the search business.

First, develop a system. Systems ensure you do things consistently and efficiently. Systems make sure things get done. Regarding accounts receivable, consider having a system for:

  • Sending invoices;
  • Tracking invoices;
  • Follow-up communication procedures with clients;
  • What to do when there is a problem.

When to Invoice

As for sending invoices, I like to send invoices at the point of acceptance and establishment of a start date. If there is a written offer letter, I will wait and send the invoice upon validation that the candidate signed and returned the letter. I believe, sending the invoice prior to start date re-enforces with my client that there is a fee and I give them plenty of time to call me before the start date if they have an issue with the fee or the amount. I would prefer to have those discussions prior to start date rather than after the candidate has started, just to give me the edge in negotiations.

Collections chartTracking invoices can easily be done by keeping a simple Excel spreadsheet. This schedule is known as the Accounts Receivable Aging. I suggest the schedule include the name of the search consultant responsible for the deal, client name, candidate name, date of invoice, invoice amount, start date and due date of invoice. Also, I have one more cell in which I keep a summary of all collection communication with the client. The chart is an example.

Collection Communications

In regard to collection communications, I have my office manager do all collection activities. As a banker, I learned never to let a loan officer collect their own deals; it just makes things messy at best. I meet with our office manager one day each week and go over the status of each receivable. If I see there is a problem, then I get more involved. I keep the search consultant aware of all collection activities so they see value from the office and won’t feel like they have to initiate any collection conversations. Sometimes this is difficult, since the search consultants don’t get paid their commissions until the collection. I train that it’s important to keep the search consultant relationship with the client focused on “customer service,” and that they could damage the relationship by doing collections.

I have it in my policy to not panic until the collection goes 30 days past due. And I really don’t go into panic mode until communication ceases. Even if I don’t get straight answers, as long as they are taking my calls, my experience tells me they intend to pay.

Some clients just pay slow and will always pay slow. Some like to “extend the guarantee period” by just stretching out payments. As an owner, you have to choose which clients you want to work with in the future. Obviously, payment history is an area to consider.

If communication ceases, I immediately get the assistance from an attorney to send a demand letter and contact a professional collection agency. Most collection issues will be taken care of at this point. Even if the collection results in a “negotiated” settlement, my belief is that you need to get it behind you as soon as possible so that you can focus on new billings rather than stewing over bad money. Naturally, I always get the buy-in of the search consultant involved with the deal and try to keep the emotions in check.

Bill Gibbens is managing partner and co-founder of Global Recruiters of Victoria, a contingency search firm headquartered in Victoria, Texas.The office achieved top honors in 2010 as the leading firm in revenue for GRN?s 180 office global network. The office has been home of four National Rookie Search Consultants of the Year and home of three National Search Consultant?s of the Year. Gibbens has twice earned the National Manager of the Year honors. A CPA with a background in banking and accounting with KPMG, Gibbens currently operates a desk and is growing his firm. He frequently shares his experience speaking at national recruiting engagements and training forums and may be reached at bgibbens@grnvictoria.com.