Staffing Company Owner? Here’s 10 Things You Need to Know About Getting Paid

Adams Evens & Ross handles collections for the Staffing & Recruiting industry. I am well acquainted with AER because as a past owner of a staffing firm, we used them more than once. We didn’t have a huge amount of past due debt, but if we ran into a client who wasn’t paying their invoices – they piled up quick and the total due did too.

AER was so successful when I did need to turn an account over to them, that I learned if for some reason they couldn’t collect money due to us, we would never be paid. This company knows everything there is to know about credit, collections and equally important – how the staffing industry works.

If you handle A/R for your staffing company, it pays to know a few things:

1. If a company files for bankruptcy and this firm paid you within the last 90 days, the bankruptcy trustee can make you return those funds. It is called a preferential payment and AER has at least six clients a year that have faced this issue.

This happened to us when we owned Reliance Staffing & Recruiting and I was flabbergasted. So if you suspect a client of yours is in trouble, don’t wait to pursue getting paid as time is not on your side.

2. Most companies that go out of business never file for bankruptcy. The fact is there is no reason; they simply walk away from the corporation.
Yes, you can sue the company and you will get a judgment, but if there are no assets you will never be able to collect.

3. If you have a debtor sign a personal guarantee and then puts a title, for example “President,” next to his/her name, this more than likely voids the personal guarantee.

4. If you do not have a signed contract in the state of Massachusetts, you will lose the case if the debtor’s attorney is aware that the Massachusetts Supreme Court has ruled that there is no agreement without a signed contract.

5. You must register in the state of New Jersey as a licensed recruiter or temporary staffing firm. Failure to do so means that you cannot use the New Jersey court system if you have a dispute or if the debtor fails to pay you.

6. If you do not have a signed contract, you cannot recover interest or legal fees.

7. If you accept a credit card payment, the debtor could try to reverse the credit card charges for up to 12 months after the charge. If you do not have the proper paperwork, the charges could be reversed and the funds pulled out of your merchant account.

This just happened to me from a building contractor who did not perform services. I was able to receive all my credit card charges back from January 2022. As a staffing firm ensure you know your client/debtor and that they won’t dispute charges already paid by them. If a client is unhappy, you typically know that the same day and they will refuse to pay their invoice before they receive it. If our client called our staffing agency with a legitimate complaint, we didn’t invoice them.

8. To be a secured creditor, you only have to have the debtor sign a contract that gives you permission to file a simple form called a UCC1 with the courts.

9. If a company does not pay you and you share this information that this company does not pay any of its vendors, that firm could sue you and win. It happened to one of our clients last year.

10. A company can try to reverse a check that might have cleared months earlier. Also, you can demand that your bank refund you the money.

COATS Staffing Services is integrated with Adams, Evans and Ross. If you have an account you need to send to collections, you can do so at a click of a button. If you have a question on any of these issues, email Wilson Cole at where he will share quick videos on each topic compiled to give you more information. If you need help on any client invoices immediately, call 800-452-5287 Ext 6578.