Rebates when a placed candidate leaves early
How an agency gives a client a rebate on a placement fee when the candidate leaves within the guarantee period: credit notes, refunds and the statement.
By Achekam · · 4 min read · For Recruitment businesses in South Africa, Nigeria, Kenya
The call comes in the second month. The candidate you placed as a finance manager has resigned, or the client has let them go, and the client's HR manager reminds you, politely, that your terms of business promise a rebate if a placement does not last through the guarantee period.
Nobody enjoys this call, but how the agency handles the money afterwards matters for the relationship. A rebate that is calculated correctly, credited promptly and shown clearly on the client's statement keeps a client who might otherwise go elsewhere. A rebate that takes weeks of chasing to appear does the opposite.
This article covers the money side: what your terms should say, how to credit the fee in Achekam, what to do if the client has already paid, and how to keep the record straight.
Start with your terms of business
Rebate arrangements vary between agencies, and the terms of business the client signed are what count. Before working out any figure, reread them and check:
- The guarantee period: how long after the start date a rebate applies.
- The rebate scale: many agencies reduce the rebate the longer the candidate stayed, so a departure late in the guarantee period earns a smaller rebate than one in the first weeks.
- Replacement or rebate: whether you offer a replacement candidate first, a rebate, or the client's choice.
- Conditions: commonly that the fee was paid on time, that the client tells you promptly, and that the departure was not caused by the client changing the role.
If the conditions are not met, say so clearly and early. If they are, move quickly. In South Africa, the codes of professional practice that bind APSO member agencies leave fees and guarantee periods to the agreement between the agency and its client.
Crediting the placement fee
In Achekam, a credit note is issued from the invoice it corrects, either in full or for the lines you choose. It is posted to the ledger, and it can be downloaded as a PDF or e-mailed to the client. There is no credit note without an invoice, which keeps every rebate tied to the placement it relates to.
The credit note uses its original invoice's date and tax codes, so the VAT on the rebate follows the VAT on the original fee. That avoids a mismatch if a rate changed between the invoice and the credit.
Rebates are often part of a single fee. Agree with your accountant how a partial rebate should appear in your books: for example, as a credit for the whole fee with a fresh invoice for the part the client keeps, or in whatever form your accountant prefers. Decide once and apply it the same way to every rebate, so your reports stay comparable.
If the client has already paid
Often the rebate request arrives after the fee was paid. The credit note then leaves credit sitting with the client rather than reducing an unpaid balance. Achekam holds leftover credit for the customer, the same way an overpayment is held on the customer's account.
You then have two choices, and the terms of business usually say which applies:
- Credit on account. The credit stays with the client and is used against the fee for the replacement placement or the next role you fill for them. Customer receipts can be re-allocated, so the credit can be matched to the next invoice when it is issued.
- Refund. The client wants the money back. Administrators can refund a receipt. If the client originally paid through an online pay link, the refund itself is made in the payment gateway's own dashboard and then recorded by a person, because Achekam does not send invoice refunds through the gateway.
Whichever you choose, put it in writing to the client so both sides record the rebate the same way.
The statement after the rebate
Once the credit is in place, send the client a statement. Achekam's server produces a customer statement of account as a PDF that can be e-mailed, and the screen says whether it was sent. The statement shows the original fee, the credit and what, if anything, remains, which closes the matter more clearly than any explanatory e-mail.
Keep an eye on ageing, too. Receivables are aged into 0-30, 31-60, 61-90, 91-120 and over 120 days, with overdue totals. An unpaid fee that is disputed because of an early departure will otherwise drift into the older columns and look like a bad debt when it is really an unfinished rebate. Settling the rebate quickly keeps the ageing honest.
Record why the rebate was given
Rebates are useful information, not just a cost. For each one, keep a short note in the placement file:
- the candidate's start and leaving dates;
- the reason for leaving, as far as you know it;
- the rebate band applied under your terms;
- whether a replacement was offered and accepted;
- the credit note and any refund.
Read those notes every quarter. A pattern of early departures from one client, one consultant or one kind of role tells you something about how those placements are being made.
A short rebate checklist
- Reread the terms of business and confirm the rebate applies.
- Agree with the client whether it is a replacement, a credit or a refund.
- Issue the credit note from the original placement invoice.
- If paid, leave the credit on account or have an administrator record the refund.
- Send a statement and keep the reason on file.
Timing the original invoice well reduces how often this happens; see when to issue the placement fee invoice. Fees that cannot be recovered at all are a different matter, discussed in writing off irrecoverable fees.
The next time a placement fails, aim to have the credit note and statement with the client within the same week as the call.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
