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The Fordyce Letter

Straight Talk for the Recruiting Profession


Articles tagged 'collections'

Jeff's On Call!

Jeff’s On Call!: Fee Collection and Client Bankruptcy



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This week’s inquiry comes from Joseph H. Davidson:

Jeff:

I am a big fan of Jeff’s On Call! and also an owner of your Fee Collection Guide. I work at a boutique size firm, primarily with hospitals, and place senior and executive leadership at those facilities. Last year, I was retained to find a CFO for a new client. Here is the series of events, timetable, and my question(s):

  • Client signs contract and pays 20K retainer, with remaining 2/3′s  to be paid upon completion of search.
  • 45 days later, CFO successfully placed.
  • We invoice our fee, 25% of 250K = $62,500 – 20K retainer = balance of $42,500.
  • Client doesn’t pay and makes me chase them for months.
  • Client, after substantial delay, asks that balance be paid in two installments and cuts check for $21,250.
  • Within 90 days of writing check, client declares Chapter 7 bankruptcy. The last third of the fee is not paid to my firm.
  • Meanwhile, the CFO collects 24 Million in active accounts receivable management over the 4 months he is employed. What a success!
  • Six months later, a bankruptcy trustee writes to us and demands the 2nd third of our fee back because it was a “preferential” payment.
  • We negotiate the trustee from $21,500. down to $7500. and “settle.”

Since the candidate was successfully placed, stayed well through the guarantee period, and made our client a lot of money, how do you explain how a $62,500 fee turns into a $34,000 fee? I’m told that this is a typical issue of “preference,” and that the “ordinary course of business” argument is not applicable here. What steps could we have taken to ensure payment of our entire fee?

Thanks for your reply.

Signed,

Joseph H. Davidson

Uncategorized

Choosing, Using, and Enthusing a Collection Agency, Part 2



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In yesterday’s Part 1, we discussed the first two steps involved in collecting fees. Today we continue with the remaining four steps:

3. USING A COLLECTION AGENCY

Most collection agencies view commercial (business) debts as difficult to collect. Unlike consumer (personal) ones, they lose the effectiveness of their major weapon — fear. Businesses who don’t pay their bills promptly are used to receiving demand letters for payment. Some are shrewd, some are sloppy, but more are sophisticated.

It doesn’t take long to get a lot of practice when you stop paying your way.

Uncategorized

Choosing, Using, and Enthusing a Collection Agency, Part 1



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If you’ve ever tried to use a collection agency to collect a five-figure placement fee, don’t blame the agency for not collecting. It’s not their bag. It’s like asking a podiatrist to perform brain surgery.

But if your fee — temp or perm — is less than $7,500, you should know how to choose, use, and enthuse a collection agency.

In many cases, you’ll have no choice.

Chances are you won’t be able to find a competent lawyer who’ll collect your fee on a contingency (percentage) basis. That doesn’t mean the lawyer won’t accept it on a contingency basis.