Business, Client Development & Marketing

Good Cop – Bad Cop Method of Fee Collecting

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frankrisalvatoBefore I even start this brief article I should mention that my client relationships are generally rock solid. They realize the vast amount of effort and work that goes into each search and more than 95% of the time so appreciative that they gladly pay as soon as the invoice is received.

 

Those that know me from when I worked in Englewood Cliffs, New Jersey in my pre-IRES days know that collecting fees was usually my last concern. My clients were large, well established companies and delays with cutting checks were something I experienced once every 3 years at most.

 

Nevertheless, when you do experience what seems to be a client stalling with a fee payment, it’s never a fun experience --- particularly in our industry where the services were performed months prior and cannot be “repossessed” as is the case with tangible goods or products.

Over the years, through trial and error, my office assistant and I developed a method that can be best described as the “Good Cop – Bad Cop” method of collecting overdue fees.

This is something you hopefully won’t need often. But when you do – it’s a nice “tool” to have in your toolbox. Add this approach with the other two approaches I shared in my previous two articles, and you will have a nice set of fee collection tools.

Here’s how this goes:

1.Client is overdue on fee due date (which in our case is 15 days but we generally don’t get loud or vocal until 25 days out just in case hiring management is beholden to HR and AP)

2.Around 20-25 days out (or if you are on a 30 payment cycle, 40 days out) we start a sequence of incrementally “cage rattling” and “feather ruffling” communications beginning from benign and friendly, to not-so-friendly.

3.You have to be cautious as each time you “raise the heat level” you risk never hearing from the company again even if you do get paid – something you need to consider

The Sequence of communication

1.First I pace a friendly call to the hiring manager. I will leave a message similar to:

  1. “I’m sure you’re busy getting your news sales director started and are tied up in meetings/conferences. Just wanted to provide a friendly reminder that as of last Friday, according to our recruiting terms (I never use the word ‘fee’ ever), the XYZ Company employment guarantee was waived since our payment was never received in time to activate the guarantee. I’m sure this was an oversight”. Let me know as soon as you find out where the check is at. Thanks!”
  2. If that doesn’t generate a response. And repeat calls seem to be getting ignored, then we “raise the heat” and turn it over to the Bad Cop, my office manager.
  3. Office Manager/assistant sends an email no later than 1 week after my message that reads as follows:

Dear Joe,

I’m sure you are very busy getting your new national sales manager up to speed. We are grateful for the opportunity to have been part of your company’s progress.

Attached is a copy of our original invoice No. 2375 which sent via priority mail on January 3rd. As per our recruiting agreement a copy which is attached [we attached a pdf that has key sentences highlighted in yellow just as you see here] payment was to be received in 15 days in order for the negotiated pro-rated 90 day guarantee to become valid and effective.

As of today, no payment has been received. Payment would have had to be received on January 18th for the guarantee to be enforceable. The guarantee has now been waived.

Frank Risalvato our search consultant whom you worked with made multiple efforts to help XYZ company avoid losing its guarantee by calling the week of the 18th, and immediately afterwards. He also left a voice message last week.

Kindly advise as to when payment can be expected.

Thank you so much,

Stacy Adams, Office Manager”

As you can see Stacy Adams your assistant or office manager now takes the heat. However if written professionally and accurately there should be no reason for anyone’s ire at this point. Also the search consultant is out of this dialogue. He is now the “good cop” for trying to call the company and warn them they were about to lose their employment guarantee, and Stacy is now the “Bad cop” for having to collect it anyway.

I find most problems vanish at this point. If it was a good client relationship they usually reply back with an apologetic email saying something along the lines of “I’m so sorry. I had sent that to HR the same day and had no idea AP was sitting on it. I forwarded your highlighted agreement to AP so they remove it from the normal 30 day cycle and asked them to cut your check tomorrow”.

If this doesn’t work, it’s time for “plan b” which is the scorched earth approach. You may lose the client’s future business – but you’ll stir enough trouble that you will get paid:

The next email isn’t a friendly reminder sent only to the hiring manager, but is copied, to the HR manager that was involved with writing the offer, the hiring manager’s manager, and anyone else involved in the interviewing and decision making process.

It’s essentially the same email as above, slightly re-written to remind there was no reply to the previous email, and copied to everyone that is involved in the process. The mutually assured embarrassment is likely to trigger a prompt reply.

I also reserve the option, as the search consultant (Good Cop) to re-instate the extended guarantee post-facto provided the check actually comes in. This way I rebuild my friendliness with the client.

A call will be along the lines of:

“Hi Bob. I was unaware of the communication between our office manager and yourself last week. I was so busy I thought your payment had come in after my initial call to you. I’ll need to speak to Betty and keep her in line!!

By the way – No worries on your 90 day guarantee. Consider it valid even though it did arrive 10 days after the deadline. I made sure Betty marks the account as having the guarantee in place.

I don’t expect you will need it – but it’s there if you do. Thanks again!

Now I’m a hero. I reinstated the extended, pro-rated guarantee even though the company would have sat on the check for 30 days or longer if I let them. And I’m not to blame. Since I never sent that nasty email and someone else did without my knowing about it!

Having to send “dunning” emails or calls is beneath an executive search consultant’s realm of responsibility. It ruins the relationship and creates tension and strain that is unnecessary. I always leave the stronger wording, combined with the visual impact of being forced to see their original fee agreement highlighted and marked up … to someone else … The Bad cop.

Hopefully you will only need this technique once every two or three years, as is the case with my company. An ounce of prevention is always worth a pound of cure and well established terms and guidelines that are clearly laid out in a signed agreement is your best prevention.

Don’t do what Steve Martin did in the Pink Panther movie – don’t try being the good cop and bad cop yourself! It takes two people.

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BIOGRAPHY

Within two years after leaving the corporate world for the search industry Frank Risalvato was earning $21,000 single fees – rivaling his previous annual salary on a semi-monthly basis. He founded www.iresinc.com, the search firm he continues to operate today. Today his fees average $37,500 and he works on multiple positions in the $150k range monthly. His recruiter training site now features his newest book “A Manager’s Guide To Maximizing Search Firm Success”. Click the preceding link or the book cover below for the amazon.com order page and buy a handful to share with your clients. 704-243-2110.

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