Effective Ways to Minimize the Impact of Back Door Hires on Your Business
Have you ever had a client that refused to pay their fees at the appointed time? If you’re a service oriented business, it can often mean that you have to deal with this issue quite often. This is the case for businesses within the staffing and recruiting industry. This problem even has a specific name in the industry; Back door hires.
What Exactly Are Back Door Hires?
Back door hires are a term that many staffing and recruiting industry veterans have heard about. It’s one of the worst things that can happen, because of how much effort it takes to correct it. Simply put, back door hires are when a client actively tries to avoid paying the recruiting fees that you’re rightfully owed.
Most of these debtors will have a number of elaborate excuses to get out of paying your fees. Some of these border on the ridiculous. An example of this is a case where the debtor’s excuse was that the hired individual is technically not the same person. Needless to say that excuse held no water in court. However, there are some excuses that can be more impactful and can easily turn the tide of a case in your debtor’s favor. This is why you need to know how to minimize the impact of back door hires on your business
How Can You Minimize the Impact of Back Door Hires on Your Business?
There are certainly a number of ways you can minimize the impact of back door hires on your business. However, not all of them will be time efficient or effective at keeping back door hires away from your business. Luckily, there are a few very simple, and effective methods that you can easily apply right now to keep back door hires at bay.
Always Have a Signed Contract Before Providing a Service
All too often we’ve seen staffing companies eager to start working with a potential client that they forget to immediately get a signed contract. This is a terrible mistake that can easily come haunt you down the line.
Contracts are your business’ way to ensure that you can hold another business or client accountable. A signed contract easily sways a case in your favor in case a client fails to uphold their side of the deal, in this case, it’s your owed placement fees. A client that refuses to sign a contract from the onset is a huge red flag for you. So you need to make sure that you get a signed contract as soon as possible, and be very careful of clients that refuse to sign one.
Push for A Personal Guarantee
If contracts are a way for your business to hold another business or client accountable, then personal guarantees are a way to hold an individual accountable. You might have encountered situations where a client went bankrupt before they could pay you. This situation can be a problem because bankruptcy means that the business or client can no longer pay you. You often have to wait in line to be able to get your fee, and sometimes you might not even be able to get it due to a number of circumstances.
However, having a personal guarantee means that the person behind the business is obligated to see the payment through. Think of a personal guarantee as a contract between you and the individual, rather than the company as a whole.
Always Have a Paper trail to Follow In Case a Back Door Hire Does Happen
A common issue that many businesses in the staffing industry is that they don’t always have a paper trail they can follow. Paper trails are invaluable when it comes to collecting the fees that you’re owed. This applies to every business, and not just the staffing and recruiting industry.
Having a paper trail means that you can trace any correspondence that you’ve had with your debtor. This includes any promises that they have made, and any changes to the contract that have been done. In addition to tracking your prior correspondence, a paper trail also gives you the edge in the off chance the case does go to court.
Do note that your paper trail doesn’t have to be literal paper. Emails and calls also count as part of your paper trail, and can be used in place of documents.
Have A Lawyer Be the Mediator Between You and Your Debtor
There have been so many times where a creditor threw away their right to collect a fee just because of a few words. We’ve seen it happen time and time again. This usually happens if the creditor is directly interacting with the debtor. A single word can ruin your case. This is why it is so important to have someone act as a bridge between you and your debtor.
In most situations it’s going to be a lawyer. Lawyers are professionals that will ensure that everything you say cannot be twisted by the debtor to their advantage.
Utilize the Right Debt Collection Companies When Dealing With a Problematic Back Door Hire
There will always be times when your business won’t be able to handle a back door hire on your own. These debtors will often cause you to lose more money chasing after them than to just let them have the fee. However, that sets a dangerous precedent that can heavily affect your business in the long run. In these situations, it is often best to call a professional debt collection company to assist.
Debt collection companies are often specialized for a specific industry. So you need to make sure that you look for a collection company that specializes in back door hires to get the most out of them.
Final Thoughts
Back door hires are a problem that doesn’t have to be a major headache for your staffing or recruiting business. As long as you know how to effectively minimize their impact, then you should have no issues collecting the fees that you’re owed.
