Recruiters should perform credit checks before providing credit to clients, according to credit management and debt collection specialist Daniels Silverman.

The firm’s warning comes it reports a 313% increase in enquiries from the recruitment sector in the last year.

Other recommendations include:

• Check out directors personally and ask for personal guarantees if credit checks show irregularities
• Invoice on time and ensure statements are accurate
• Promptly chase late payment in writing and by telephone
• Review credit limits regularly
• Watch out for signs of fraud
• Don’t give up on money owed – there are a range of debt recovery techniques available from flexible payment plans to issuing insolvency notices
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Managing director Carole Hughes says: “An increase in enquiries for debt recovery services on this scale shows the recruitment industry is struggling to keep a rein on late and non-payment from its clients.

“We have seen cases where businesses have used recruitment agency staff and settled low value invoices then, when a relationship has been established, built up a large debt and refused to pay for the recruitment services provided. This problem is exasperated if the business than becomes insolvent or undergoes a pre-pack administration. Daniels Silverman is petitioning the government for tougher legislation to give creditors greater protection in these instances.”