As a recruiter, the last thing you want to think about, on top of securing roles and candidates, and keeping clients happy, Is having to consider the stability of your clients, or deal with a bad debt. Losing money is never ideal, and for the majority of businesses, client insolvency will have an immediate impact. Managing this risk should be part of your daily routine, but inevitably, it can be difficult to find the time to apply systems consistently. There’s not just ‘one way’ to manage risk either, and strategies run from pro-forma invoices (not best suited to recruitment), through to outsourcing credit control to dedicated experts. As an alternative, there is of course credit insurance, which provides a framework to improve credit risk management, and provides a safety net, paying out in the event of client insolvency and arising bad debt.
At The Channel Partnership, as specialist risk management and credit insurance advisors to recruitment businesses, we support you to manage risk and secure your future by maintaining stability. For some, this will mean reviewing and updating the credit management practices to maximise income and minimise risk, and for others the right approach will include securing a credit insurance policy to offset the risk of bad debt and support stable cash flow. There is no right or wrong, and each approach is personal to your business, so we get to know each individual business before presenting all the options.
In recent months, we have spent extensive hours assessing commonalities and differences between recruiters, to understand where greatest business risks come from and what the biggest challenges are. What has become immediately obvious is that there is often little consistency between a recruiter’s clients, with some paying on invoice and others secured against timesheet. This inconsistency makes it very difficult to risk manage effectively, leaving recruiters especially vulnerable.
In response to these findings, in August we will be making available a recruiter specific credit insurance policy suite, available to RGN members, which adapts credit insurance more specifically to the industry. It will include cover for contract staff, with the option to add or exclude perm fees, and the breadth of invoice types will be increasing too. Options will include cover for invoices raised, for timesheets signed and not yet invoiced, and for unsigned timesheets where you have had to pay your contractor. There may also be a notice period for credit limit changes giving you security of cover for a limited period to allow you time to react or to make alternative arrangements.
More to be revealed soon, with RGN members getting a sneak peak of our video, white paper, FAQ’s – all released in August.