A new code for recruitment process outsourcing (RPO) firms and managed service providers (MSPs) launched earlier in the summer is already making a difference to recruiters.

So says Ann Swain, chief executive of APSCo (the Association of Professional Staffing Companies).

The APSCo code was launched in May to address long-standing problems with the recruitment supply chain. Chief among these were ‘pay when paid’ clauses inserted in contracts between MSPs/RPOs and the agency. These clauses allow the intermediaries to avoid paying the agency until they themselves have been paid by the end user. This in turn makes lenders more reluctant to lend to staffing companies.

Under the code, which is not legally binding but represents a statement of intent, contracts should include either a backstop date by which the agency must be paid, or allow the agency direct recourse to the end user for payment.

Swain tells Recruiter that feedback from APSCo members suggests that not only has the code opened this up as an area for discussion between agencies and others in the supply chain, but “in some instances has allowed agencies to renegotiate the terms on which they are dealing with RPOs”.

She adds: “Realistically this means removal of the ‘pay when paid’ clause or having a backstop position.”

Swain says there is anecdotal evidence that agencies are also finding it easier to obtain lending. She says a proper evaluation of the code will be carried out next summer after it has been operating for a year. 

Earlier this week, Carlisle Managed Solutions was the latest company to pledge its support for the code.  

Annelise Smith, head of implementations and supply chain management at Carlisle Managed Solutions, says: “As a business we don’t use ‘pay when paid’ clauses and so it is gratifying to see that the industry will now start to adopt this approach more widely."