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Recruiting & Candidate Development

HOW TO SPEED UP GETTING PAID DURING YEAR-END - or any other time!

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frankrisalvatoThis time of year resignation periods can take two or even three weeks or more as placed candidates push forward start dates to fall behind holidays or even after year-end bonuses are paid.

Whether your start date delay is caused to the November Thanksgiving-through-Christmas holiday period, or delayed by bonus distribution mandating someone is on the job the 1st of the next calendar year … delays in resignation periods usually lead to delays in getting paid your fee.

But it doesn’t have to be that way.

I’ve always had a knack for calling clients and getting them to pay in advance of start dates (that is, paying any balance owed to close out the project assuming they paid an engagement fee on the front end). But my process was always ad-hoc and handled on a case-by-case basis.

Not too long ago I noticed language in our “standardized contingency recruiting agreements” that stood in the way of getting paid more promptly. Chances are, if you are using any template contingency recruiting agreement (not to mention names but such as those promoted by trade association legal experts as “suggested language”); you have room for substantial improvement to get paid sooner.

For many years, one phrase in my contingency recruiting agreement read as follows:

“Implementation of the guarantee is contingent upon our invoice being fully remitted within 15 days after candidate’s first day of employment…”

This language goes back to the Anthony Byrne school of thought that “if you don’t pay us as agreed upon, the guarantee is void”. But it also overlooks the payment date itself while focusing on the guarantee validity issue.

If your candidates are taking three week resignations, or taking two week resignations but adding a one week vacation prior to starting, your “start date of employment” can easily be 3 weeks to an entire month out. Especially so for higher wage positions in the $100k to $200k range where candidates feel obligated to close out projects for their current employer. Other stalling factors that can substantially delay your “start date” are:

  • Year-end bonuses (may not pay out until Jan/Feb of following year)
  • Time needed to plan for relocation and find a rental home at the new destination
  • Executive level nature of the job requires 3 weeks as opposed to the standard 2
  • Integrating vacation which may have never been taken in many years into the resignation period … To name a few examples.

Consider changing the wording on your recruiting agreement to something like this:

“Implementation of the guarantee is contingent upon our invoice being fully remitted within 15 days after receipt by client. Invoices are generated and considered payable upon confirmation of candidate’s acceptance of client’s offer either verbally or via signing client’s employment letter.”

I see no reason why we must wait until the “start date” when the “start date” for most executive level hires is simply a footnote in a process that is often considered “wrapped up” for the purpose of press releases many weeks prior.

I had a client issue a PR Newswire “press release” about the impending start of a newly appointed executive that was not to start until November 21st. Even though the press release was distributed November 7th, just after the employment letter was signed/dated and electronically scanned and emailed back to the client the week of October 31st.

If the client is considering things a “done deal” sufficient for mass emailing their employees nationally, and sending out press releases of the “new appointment”, then why should we not bill the client at the same time it was mutually agreed the placement is a done deal.

The candidate had resigned the week of October 31st once the press release was issued it was no secret where this individual would be working next.

If you feel the acceptance date is premature, then you can word your payment due clause to center around the resignation date as follows:

“... Implementation of the guarantee is contingent upon our invoice being fully remitted within 15 days after candidate’s confirmed resignation from current position. If hired candidate is not currently employed the date of acceptance of client’s offer shall be used to generate final invoice.”

I’m not an attorney and I suggest you seek out legal counsel as each state may have preceding case law that prevails.

I see no reason why as an industry we are fixated on “start date” where many of my clients are happy and willing to consider our services rendered and earned many weeks sooner. Why not tie our “payment due” date to the same date the client feels it’s okay to publicize the hire? Or tie the fee owed date to the same day the client starts to prepare the office space or relocation program, which could be many weeks before actually “reporting to work”.

I have even had lower level “sales reps” in the $50k salary ($100k including commissions) create “gray areas” when it came to start dates. What do you consider a “start date” if someone is showing up at the new employer’s place of business for training once a week, while not yet officially starting for yet another month?

I had a case in Long Island where an independent sales rep could not officially “resign” for another month as his largest account owed him a $30,000 commission. Being independent, and in charge of his own weekly schedule, he was able to “report for training” one day each week for 4 weeks prior to the official start date which was lengthened so he could first receive and cash his commissions owed.

For the client, the hire was considered done and official as of the first day of training which was 1 month prior to his starting full time. In such “gray areas” of transitioning, using the mutually agreed date of official “date of employment” can postpone your fee one month unnecessarily. Especially when in the client’s viewpoint, the “start date” in of itself is secondary in importance to the actual demonstrated commitment and acceptance.

If you work with larger companies that conduct background or criminal/financial investigations then why not use wording modified to incorporate the background check process such as:

“... Invoices are generated and payable no later than fifteen days after a candidate’s verbal or written offer acceptance and the satisfactory completion of any background subsequent background check. Failure to receive full payment within fifteen days of receipt voids guarantee.”

Of course you can change this portion of the agreement to narrow the payment period down to 7 days since the object of your wording modification is to get paid quicker. Making the payment permissible within 15 days could lead to your getting paid on or within days of the first date of employment but that’s still more desirable and an improvement over “date of employment” language used by most recruiting firms.

Look at your “Payment Terms” section of your agreement (of course everyone uses signed contracts these days right?) and see if you have room to advance and improve on your payment terms clause.

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BIOGRAPHY

Within two years after leaving the corporate world Frank Risalvato was earning $21,000 average single fees with one to three placements monthly. In 1991 he founded www.iresinc.com, the search firm he continues to operate today.

Today his fees are about double that of his earlier years while working no more than thirty hours weekly.  He often generates six figures of gross recruiting fees in one single month.

Frank’s FREE “Audio Download” page provides an opportunity to “be a fly on the wall” and listen in to live calls, messages, conversations with clients and candidates – look for it on www.searchwizardry.com .   There are also seminar and webinar excerpts located there.

His “Maximizing Search Firm Success” book has helped recruiters lock up partial and full retainers between $5,000 to $40,000 by helping drive home the concept of partial retained over contingency while separating yourself from the crowd. He is at 704 243-2110 and fris@iresinc.com

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