Summary

  • Invoices are often paid once the work is done which makes customers slower to pay.
  • In recruitment, the director or senior team member is usually involved in the chasing - often to clients they’re also selling to.
  • Many credit control tools have revenue-based pricing which means automation can be expensive. (We cover the ones that don’t.)
  • A good process: chase before the due date, send from a person, assign each client to the consultant who owns them, and check the aged debtor report weekly.

Why late payment is common in recruitment

Invoices are often only paid once the work is finished

Recruiters are commonly paid as a percentage of the placed candidate’s first year salary. That means they can only invoice once the work is complete. This creates the first issue: there’s much less urgency for customers to pay once the work has already been done.

This is a structural issue that means late payment in recruitment is much more common than in other industries.

The person chasing is often the person selling

In a standard recruitment firm, the consultant who placed the candidate is frequently the one also chasing the fee. When the same person is responsible for both selling the next work and chasing up payment for completed work, things can start to slip through the cracks.

High turnover, thin margins

Recruitment turnover is typically high but often margins are much more modest, particularly in temp recruitment where most revenue goes straight back out to contractors. The margin you actually keep is thin.

That matters when you’re choosing credit control tools, because a lot of credit control software charges based on the revenue or invoice value it processes. On a high-turnover, thin-margin agency, that pricing model gets expensive quickly for a job - chasing emails - that doesn’t cost more to do just because the numbers are bigger. A flat monthly fee almost always works out better. We compare the options in the best credit control software for recruitment agencies.

Perm fees can be clawed back

On the permanent side of recruitment, most placements come with a rebate or guarantee period. If the candidate leaves within a set window, the client can reclaim some or all of the fee. That turns what looked like a paid invoice into a disputed one, sometimes weeks later. It needs handling differently to a straightforward late payment - we’ve covered that in handling disputed perm fees and rebate clauses.

Credit insurance comes with a reporting obligation

Many agencies carry credit insurance to protect against a client going under. Most policies require you to report slow payers within a defined window, often 60 to 90 days. Miss that window and a claim can be rejected on the grounds that you didn’t notify in time. So a documented, on-time collections process isn’t just good practice for insured agencies - it’s a condition of the policy.

What good credit control looks like in a recruitment firm

You don’t need a finance team to do this well. You need a consistent process that can support a busy team member.

Start before the invoice is overdue. Send a short reminder a few days before the due date confirming the amount, the payment details, and checking there are no queries. For temp desks, this is also the moment to confirm the timesheet is approved. It removes the “we never received it” excuse and surfaces disputes while there’s still time.

Send it from a person, not a system. Emails from your own inbox get opened and answered. Emails from an accounts platform’s address get spam-filtered or ignored. This matters more in recruitment than almost anywhere, because the recipient is a client you want to keep.

Assign each client to the consultant who owns them. The person with the relationship should be visibly attached to the chase, even if the reminders are automated. It keeps the tone right and means nothing falls between desks.

Map an escalation path in advance. Decide now what happens after two reminders get no reply: who escalates, when, and in what tone. Two reminders recover about 80% of overdue invoices, so escalating after two will start tackling the long tail of reasons customers don’t pay.

Watch the aged debtor report weekly - and report to your insurer on time. A weekly look at your Xero aged receivables report tells you what’s tipping into 60 and 90 days. If you’re insured, that’s also your prompt to notify the insurer before the policy window closes.

When it’s time for a recruitment firm to implement credit control software

Firms usually look to automate their credit control process when they are experiencing the following:

  • There is a lack of consistency in when and how debtors are chased
  • It’s becoming difficult to keep data in sync with Xero and other systems.
  • If someone goes on holiday, the system slows right down.
  • And most importantly: Your volume of unpaid invoices is increasing, despite hard work.

If this sounds familiar, it’s worth looking at credit control options. We’ve written a 2026 guide for recruitment firms here.

Frequently asked questions

What are standard payment terms for recruitment agencies?

Temp and contract placements are often invoiced on 7 to 30-day terms, since the contractor has usually already been paid. Permanent placement fees are commonly 14 to 30 days from the candidate’s start date. Terms are worth negotiating when you sign the client agreement rather than accepting whatever the client proposes.

Should the director really be the one chasing invoices?

In the early days, yes - it keeps the relationship personal and the founder close to cash flow. But once chasing is eating hours a week or the overdue book is growing month on month, it’s a sign to formalise the process with a tool rather than hire a credit controller. Our software comparison covers the options for small teams.

Is the cause of unpaid invoices different for temp versus perm?

Yes. Temp is a cash-flow-timing problem - you’ve paid the contractor and need the client to pay you. Perm is more of a dispute problem, centred on rebate clauses if a candidate leaves early. The two need slightly different handling which we have covered later in this guide.

Do we need credit insurance and does it change how we chase?

It’s not a legal requirement but many agencies carry it, particularly where a single client failure would be serious. If you do, check the reporting window in your policy - most require you to notify slow payers within 60 to 90 days and a documented collections process is part of keeping your cover valid.