77% of end users, RPOs and recruiters would like APSCo and ABFA to work on a code of conduct

77% of end users, RPOs and recruiters would like APSCo and ABFA to work on a code of conduct for recruitment sector supply chains

99% of end users, RPOs and recruiters think APSCo and ABFA should continue working together

80% think current supply chains are unsustainable

77% of end users, recruitment process outsourcers (RPOs) and recruiters voted that the Association of Professional Staffing Companies (APSCo) and the Asset Based Finance Association (ABFA) should consider drawing up a code of conduct governing recruitment sector supply chains at a half-day debate organised by APSCo and ABFA at the headquarters of the CBI in London on Friday (11/03/11).

The resolution followed a panel discussion which debated the problems being caused by contractual terms in the recruitment supply chain. These terms – ‘pay when paid’ and ‘non-assignment of debt’ clauses – are making it extremely difficult for invoice finance companies to fund recruiters.

APSCo has already scheduled a meeting with some of the largest RPO companies for June 14th 2011 following the event.

Delegates at the half-day debate, which included end user decision-makers, RPOs and recruiters, were given the opportunity to vote on key questions. 68% of delegates at the event believe that the current supply chain model does not create a level playing field for recruitment suppliers. 80% of delegates answered ‘yes’ to the question: Do the restrictions on the ability of suppliers to raise finance make the current supply chain unsustainable?

99% of delegates think APSCo and ABFA should continue working to resolve these issues. The majority of delegates (57%) think that regulation would potentially be a good solution to the problem, while 77% also think that a code of conduct adhered to by all parties could help resolve the funding issues.

Ann Swain, Chief Executive of APSCo, comments: “We have an emphatic mandate to continue working with ABFA to resolve this issue. The vast majority of delegates think that the current supply chain model is unfair to recruiters and is simply unsustainable. The consensus is that we need an industry-wide response.”

“Interestingly, 57% of recruitment sector stakeholders would consider a legislative solution. The Government has a track record in this area, having previously legislated to ban ‘pay when paid’ clauses in the construction sector, so it’s certainly not beyond the realm of possibility.”

Ann Swain adds: “While end users get immense value from RPOs, it’s not in their interest if the supply chain collapses because of how RPOs engage recruiters. The consensus among end user clients was that getting rid of ‘pay when paid’ clauses would not increase their costs, and to the extent that it would actually incentivise more SME recruiters to tender for business, would actually be beneficial.”

Kate Sharp, Chief Executive of ABFA, says: “Working with APSCo on this issue has been hugely valuable. ABFA members want to finance the recruitment sector, and ‘pay when paid’ clauses have become a major concern for funders, so the sooner we can resolve this issue, the better for everyone.”

“Ann Swain has been enormously impressive in driving this initiative from the beginning. The event successfully raised awareness, helped educate end users who were not fully aware of this problem and moved us a step closer towards a permanent solution.”

The highlight of the day was a panel discussion chaired by Ann Swain and featuring Kate Sharp (CEO of ABFA), Matthew Rodger (Director of Alexander Mann Solutions), Julian Bond (Commercial Specialist from National Air Traffic Services), Stephen Grant (MD of Cititec Associates), Les Duncan (MD of Hays Corporate Accounts), Andrew Richardson (Lloyds Banking Group) and Kieran Rossiter (CFO of Morgan McKinley).

End users increasingly engage recruiters through intermediaries (RPOs). ‘Pay when paid’ clauses mean that recruiters in the supply chain do not get paid until the RPO itself is paid. This creates cashflow problems for recruiters because they have to pay workers, regardless of whether they have been paid themselves. Recruiters supply through an ever-decreasing number of intermediaries, which increases the cashflow risk.