Recruitment finance contracts form the cornerstone of every successful deal you will make. Carefully vetting the contract before signing is commonplace, however when the contract is thousands of words long it can be easy to miss a crucial part or be confused by clauses. Don’t worry, you’re not alone, 73% do not read all of the terms. And owing the length of contracts it’s easy to see why..
A study into terms and condition by Which? discovered that Apple’s iTunes page is longer than Macbeth, which comes in at 30,066 words. Topping the list of longest t&cs is PayPal, which stretched to 36,275 words – more than Shakespeare’s classic Hamlet.
With 764 million users between them at last count, both Paypal and Apple’s B2C model is pay-as-you-go, which makes signing a set of t&cs of this length an easier proposition.
However, what if you’re signing a recruitment finance business contract?
According to a Fairer Finance survey, 73% of people admit to not reading all the fine print and of those who do, only 17% say they understand it. In this case, nearly three-quarters of contracts are being signed blindly.
The majority of clauses within a recruitment finance contract between your business and the provider are standard and inflexible. They primarily set out the who, what, where’s and how’s, and exist to protect the providers IP and you as a user of their service. Clauses that are negotiated, including price and length of service, will need to be cross-referenced against the terms with which they are set.
To protect your business, make sure you ask key questions to uncover the most stringent and restrictive clauses, long before the final phase of contract proceedings. As a specialist provider of finance to recruitment agencies, our examples below relate directly to our business practice. If you’re reading this article and are not seeking recruitment finance, some of the below will still be applicable, but it’s advisable to come up with a series of questions relating to your industry that you want detailed answers for.
1: Fees & Charges
- Make sure to ask for every fee you will be charged and under what circumstances
- Typical fees include set-up, service, late-payment, exit and auditing fees.
2: Cancelling and Switching Providers
- What are you exit terms?
- Am I charged and at what point?
- Do I forfeit any profit?
- If I transfer to another provider, how does the process work?
- Is any margin withheld at any point?
3: Candidate Payments
- What circumstances will lead to the candidate not being paid?
- How much notice is given to all parties in the event of non-payment?
4: Credit Control
- How does your credit control function operate? Ask for an example of an end-to-end process.
- How do they handle late payments?
- What credit limits do you set?
- Ask to credit check a sample of your clients across a range of turnover bands.
- How frequent is the communication between parties?
5: Payment of Margin
- In what circumstances will margin be withheld?
6: Spread of Business
- Does our business have to put all of our placements through your business? (In effect, is an all-turnover agreement enforced?)
7: Technology (if provided)
- What functionality does the technology provide? (ask for a list of functions and details of tasks performs by each party.)
- Is the technology cloud-based?
- Are the timesheets paper-based or online?
Image: Sebastien Wiertz