New Recruitment Firm Dilemma: How to Handle a Client Dispute Over Payment Terms?

We are a newly opened recruitment consultancy in Mumbai. It's a partnership firm.

Today, I faced a situation with clients.

This is a reputed company in India. We posted an ad on Quikr for clients for consultancy, so in response, they approached us. After taking this further, we sent them our terms and conditions. However, they didn't agree to our standard charges as per the market. Then they asked us to work on 6% of CTC, and payment will be on the 90th day. Considering them as our first and valuable client, we managed to work on their terms and conditions. We sent them an agreement with revised terms and conditions to sign. Meanwhile, they sent us their requirements, and we started working instantly after receiving the requirement. Within one and a half days, we sent six relevant CVs and scheduled interviews. Three candidates are very well-suited for that position. Now, after getting contact details for all six candidates, they informed us that they will pay only 5k for the candidate, whereas according to the 6%, it is worth 25-30K. The agreement is still to be signed as they mentioned it will take a week to sign.

Questions and Concerns

So now, my questions are:

How should I handle this?

We have approval for this via email.

We worked honestly, dedicatedly, and gave high priority to their requirements, managing to close the urgent position in two days. In fact, we are new to this process.

I am really confused about how to handle this. I neither want to lose my client nor lose my payment.

Please suggest on this. I hope I have conveyed my situation clearly enough to give you an idea!

Awaiting your response.

Thanks

You are a vendor to your client. No vendor should start providing materials or services unless you receive a PO from them. You have rendered your services without a PO. Furthermore, the agreement is also not signed. Now, you have two options. One is to forgo the amount, and the second is to send a lawyer's notice. However, check with a lawyer whether this case fits within the purview of the Indian Contracts Act, 1872.

Secondly, how have they communicated their decision to change the remuneration from 6% to Rs 5,000 per candidate? Was it verbal or through email? That also matters.

Thanks,

Dinesh Divekar

Handling Client Discrepancies in Recruitment Consultancy

1) If you have a "go-ahead" email from your client after you sent the revised terms, you are entitled to the charges accordingly.

2) What to do is entirely up to you. If you feel the company is strong and ethical enough to give you good business in the years to come, accept their revised terms. If not, insist on payment for services already provided per the terms initially agreed and move on.

Regards

I echo our experts. Please stand strong on the amount discussed initially. I had shared it with my mentor, Sudipto Mukherjee, and he suggests you play hardball. You are new to the business; hence, it's an especially sensitive period for you. Trying to get clients, even after being underpaid, will burn your resources. Cut the losses and stand firm.

Here's his words if you may want to read it: [Sudipto Mukherjee, Business Coach to CEO suggests](https://www.facebook.com/.mazumdar/posts/10152473840233370?comment_id=10152473879648370&off set=0&total_comments=2&notif_t=feed_comment)

First of all, thanks for your valuable suggestions.

From Client

Thanks for your response. As per our company’s policy, we pay all our vendors 6% of the annual CTC, and the payout period is after 90 days. Also, the replacement period is 90 days. I hope you agree on these conditions.

Our Response

As discussed, we agree on the below-mentioned conditions. Please let me know the process for signing the contract. Also, kindly send the requirements for your company so that we can start working on the same. We started on their requirements, which we achieved in one and a half days. We learned about the 5k amount through a telephonic conversation. We proceed based on trust, honesty, and clean business.

To Hardeep

As I have mentioned the decisive statements above, we agreed on their T&C, wherein our standard is 8.33%. Now, there is no way to accept their revised terms because I am very confident in my services and responsiveness. Even HR appreciated our services, so I think I deserve my pay. Even if they provide good business in terms of requirement on 1%, no firm or organization will continue on their revised terms. Right?

To (Cite Contribution)

I appreciate your response. Similar to our strategy, I was seeking support on this strategy. We already expected a loss initially, but not like this. So there is no effect on our firmness. We believe and are confident in providing excellent service up to the client's satisfaction and are ready to go the extra mile with them. We value relationships, except for the finance which we deserve in exchange for our efforts.

Queries

- Can I meet their VP/GM or head to sort this out?
- Is it right to go legally if nothing conclusive comes up? Request you to suggest in YES/NO.
- It's okay we didn't get many clients. Lesser clients and excellent service. I firmly believe in this. What are your opinions?

Thanks again for giving your valuable time to provide your suggestions.

Thanks and Regards,
Sidhaarth

I share your anguish. At this very early stage of your business, such hiccups can be discouraging. However, it's your choice whether to proceed legally or otherwise. You have not mentioned why you have not opened a dialogue or some form of negotiation with this client so far. A legal course will surely take many years and cost money, which could be much more than what you stand to gain from them, not to mention the uncertainty of the outcome.

If I were in your place, my first choice would be to build goodwill among clients, earn a standing in the market as a start-up firm, and understand that a few losses here and there are part of the game. Think it over regarding what you want to achieve as a first choice.

Kind regards

I believe the legal option is costly to pursue, especially because you do not have a strong case in terms of a document where the client has agreed to certain terms. What you need to do in such circumstances is to first let them pay Rs. 5K, which you should then accept under protest with a nicely drafted email followed by sending it by Registered A.D.

As I see it, the client sent terms via email which you have accepted and then proceeded further. If the email came from a person authorized from his official email, it is admissible evidence, AFAIK.

As already stated by me, as well as others, the choice is yours. It has happened to every recruiter - and will continue to. An association works only with clear support, which the recruiter fraternity lacks presently.

If the company has no stance to begin with, it may not come to a legal standoff. You can escalate the matter to the MD/legal department, and if they are sensible, recovery should happen. However, you can forget future business then - whether you want the same per their revised - verbal - terms is the call you really have to take.

Reputed companies honor their agreements. They value the efforts a recruiter makes and do not deviate from agreed terms. They also know how difficult it will be for them to get talent if the word spreads - no recruiter would touch them and instead at every opportunity would advise candidates not to join them. Not even a small company would like that to happen, and generally, its owner/MD would see this view.

Just my opinion.

I would suggest you go ahead with this placement for the time being since it is your first breakthrough with the client. Make sure to get confirmation from the client to adhere to the agreed rate in the agreement for the next billings.

As you will definitely add more clients in the future, validate the clients according to the requirements and billings. If this client seems prospective or not at that time, you can make a decision.

Regards,
Saravana Kumar

When the clients agreed to pay 6% of CTC per candidate, they are ready to pay Rs. 5,000/- per candidate. Thus, for 6 candidates, the total comes to Rs. 30,000/-. So, where is the dispute? Please recheck your posting to confirm whether they are ready to pay 6% CTC per candidate. However, haste and overdoing things always put everyone in trouble. It's better to get the documents signed and further your clients according to their needs. Never trust even your left hand.

Best regards.

Building a business is all about learning. Take this as a learning experience and move ahead. I am sure you will be smarter than any client the next time you do business with them. Look at this as an opportunity to understand the world of business.

Importance of Having an Agreement

Having an agreement in place is the first and foremost principle of a transaction.

Wishing you success.

Regards,
Raghavendra Marimuthu

In business, such things are likely to happen. Remember, all your clients are valuable. Treat this client positively. I am sure that at some point they will appreciate your effort. In the long run, you will get your desired share of profit. Take this as a lesson to be learned in business. Use all your time and energy in constructive business approaches and formulate strong business policies with a robust recovery policy.

Wishing you all the very best.

Regards,
Bijay