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The Allen Magic Collect-A-Fee System, Part 2

Oct 21, 2009

Editor’s note: Yesterday, in part 1 of this 2-part article, attorney Jeff Allen shared the first five tips for collecting more fees. The article concludes below.

6. Send your invoice the day employment commences.

Earlier is too aggressive, while later risks the employer questioning the hire or obtaining the candidate’s cooperation to avoid the fee.

7. Discount the fee for prompt payment.

It’s a well-established business practice, but don’t discount the fee for late payment! This must be strictly an inducement to accelerate the payment.

Whatever discount you want to use is legally acceptable. However, you must also indicate the full fee on your invoice and when it is due. Otherwise, it’s virtually impossible to obtain it later.

8. If the account becomes past due, pursue collection personally.

Why do you think this is recommended?

There are six reasons:

  • Preserving the rapport between your recruiter and the client is important in the future.
  • The further away from the dispute your recruiter is, the better a witness he will make.
  • The recruiter is personally involved, often hungry, and probably worked very hard to make the placement.
  • The recruiter is probably not qualified to collect the fee.
  • Sometimes a different personality can close the deal.
  • It’s your responsibility.

9. Don’t send your placement file to the employer.

More fees are lost by doing this than all of the other mistakes combined.

This is like playing poker with your cards backwards. The result is a complete defense to the employer. This includes a sanitized file and a turncoat candidate.

Whenever some human resourcer says, “Show me why we owe a fee and we’ll pay it,” understand the translation: “Show me why we owe a fee and we’ll show you we can avoid it.”

If you ever feel the compulsion to do this, just ask the employer for its file. That will make you a believer.

10. Refer the matter for collection when it is 30 days past due.

Almost any change in circumstances weakens your position. What can happen?

  • Termination of the employee.
  • Termination of the person responsible for the fee.
  • Promotion or transfer of the employee.
  • Termination of your recruiter (maybe over this issue).
  • Sale of assets of the employer.
  • Insolvency or bankruptcy of the employer.
  • Change in corporate structure of the employer (merger, acquisition, etc.)
  • Time is always on the employer’s side.

Here are the typical defenses to placement fees (in order of frequency):

  • The recruiter did not make the placement (this includes split-fee disputes with other recruiters)…………………………………….30%
  • The placement fee is “too high”……………………………….20%
  • A fee schedule was not received……………………………….20%
  • A trial period was promised (or is customary)…………………10%
  • The lower base starting salary does not include commissions, bonuses, or incentives (“salary” versus “compensation”)………….10%
  • An invoice was not received……………………………………..5%
  • The employer cannot afford to pay………………………………5%

With the exception of the defense that the employer cannot afford to pay (asserted only 5% of the time and often solved by a little patience), The Allen Magic Collect-A-Fee System will help you avoid all of these problems.

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