This is an interesting scenario which we don’t come across often, but it’s a good example of cases where the debtor genuinely believes they are not liable for payment of the invoice. If handled in the right way these debts can be collected whilst retaining the customer relationship.
Our client is a recruiter specialising in placing permanent healthcare staff, primarily in care homes. The recruiter introduced two care home workers to the hiring manager of a care home. The care home was then sold to a competitor, along with all staff, including the hiring manager. Shortly after the business was sold the hiring manager engaged both candidates at the care home. The hiring manager didn’t inform the recruiter, who found out later after contacting one of the candidates.
This left the recruiter a little confused. Ordinarily he would invoice the business that had engaged the candidates, but he did not have terms in place with that business, his terms were in place with the company that previously owned the care home. The previous owner, still a client of the recruiter for other care homes they owned, told him it was no longer their problem.
The recruiter came to Sterling for advice, and having already spent considerable time on the matter, and worried about damaging his relationship with his client, he passed the invoice over to Sterling for recovery.
Most recruitment terms of business contain a clause relating to disclosing the candidate’s details to a 3rd party. In this case the clause stated:
‘Where the Client discloses to an End User any details regarding a Candidate Introduced to the Client by the Employment Agency and that End User subsequently Engages the Candidate within 12 months of the date of the Introduction, the Client shall pay the Fee as set out….’
So, the company that originally owned the care home was liable for the engagement fee after effectively passing on the candidate details to the acquiring company that engaged them.
Sterling made contact with the debtor who initially dismissed the matter, insisting that the new owner was liable. Our tenacious collector continued to make contact in a professional manner and was finally able to explain the legal standpoint so that the debtor understood their liability. The debtor agreed to make full payment. The recruiter was entitled to add late fees, interest and charges to the debt, but in the interests of their ongoing relations with the debtor they agreed to forego them.
The result of Sterling’s collection process was full payment of the invoices, and the recruiter managed to maintain the debtor as a client.