Hidden Agency Fees

The topic of hidden agency fees is a hot one for both job seekers and companies alike. When I first entered the job market, I was afraid of approaching a recruitment company because I was worried I would have to pay a fee as a job seeker. What I didn’t understand is that job seekers should never have to pay a fee! 

On the flip side, while companies do expect to pay recruitment fees, many companies are not clear on what types of charges are standard. Let’s talk a little about what you should expect as well as the pitfalls and sneaky billing practices that can put your company (and your budget) in jeopardy.   

Sneaky Billing

Imagine receiving a credit card bill that only listed a total amount due. Would you pay the bill without asking for transaction details?

Call me old fashioned, but I wouldn’t. And I wouldn’t expect my clients to either.

Several years ago, the Accounts Payable representative of one of our Sponsors sent an email to me asking about the Project Management fees on the last three invoices received. The email startled me because we don’t provide project managers to this Sponsor – only CRAs.

When I opened the invoices in question, I sighed a little bit of relief when I realized they were actually from another recruitment agency. It was interesting though, because as I viewed these invoices, what I found to be most interesting was that this “other” agency doesn’t provide PMs to this Sponsor either. 

They also don’t provide operational oversight to the CRAs, so in my mind, I just couldn’t understand what the ‘Project Management Fee’ was for.  I was curious about these fees so called my client to discuss. She told me this was the cost of the agency’s Account Manager to handle escalations when the CRA wasn’t meeting expectations! 

Wow! She then told me that these surprise and hidden recruitment fees were the reason why they were in the process of ditching that agency.

What Should Account Management Cost?

There should be no costs associated with an agency handling escalations. Here is why: When one of my clients calls me to complain about a CRA, I do four things:

  1. Apologize profusely that there is an issue, while ensuring I gain full understanding as to the details of that issue from the client’s perspective. 
  2. Immediately contact the CRA to discuss the root cause of what is going on.
  3. Work with the CRA and Client to put an action plan in place to resolve.
  4. Track that action plan to closure, ensuring every item is resolved to the Client’s satisfaction.

I never charge for my time when it comes to handling escalations. If a CRA that we have vetted and placed isn’t meeting expectations, it therefore becomes my responsibility to resolve the issue. 

An Acceptable Invoice

There was an additional (and significant) issue with these invoices outside of the surprise recruitment fees: there was no documentation to support any of the charges. 

We live in an industry that has to be audit-ready at any given time. Along those lines, I feel that invoices for time and expenses should be just as audit-ready as the data gathered from clinical trials. With that being said, invoices that simply provide the total costs shouldn’t be accepted.

  • For hours, there should always be a client approved timesheet included in the invoice. How else will the Client be able to confirm the hours are accurate?
  • Additionally, from a competency standpoint, all time should be broken down into meaningful categories. For example, clients may want their spend tracked to different project codes or different charge categories such as site management, training, monitoring, report writing and travel time.
  • And for Pass-through expenses, there should always be an itemized listing of what the expenses are for, and receipts should always be included. Providing this detail not only ensures there are no mistakes, but also enables the client to confirm the charges adhere to their travel guidelines.

Shame on any agency that a) isn’t transparent in their billing, fully disclosing the associated timesheets and expenses or b) charges recruitment fees for handling complaints and escalations.

Avoid Surprises by Automating Time and Expense Tracking

There are a lot of benefits to having an automated time and expense tracking system in place. If your company doesn’t already have one (and there isn’t the budget to establish one), consider leveraging a recruitment agency that uses an automated system.  


Improves Accuracy and Efficiency

Several years ago Ungerboeck produced the results from a controlled study where 215 students were given 30 data sheets that contained six types of data to process. The studies made an average of 10.23 errors when manually analyzing the data sheets. However, when using an automated system, the error average dropped to 0.38 mistakes.  

Why does this matter? A recent survey from the Workforce Institute shows that 49% of US based workers will leave a company after two paycheck errors. And what a silly reason for attrition! 

Additionally, when the administration team doesn’t have to spend time manually calculating timesheets, they will be able to spend more time on higher priority tasks. Better accuracy and increased productivity? Seems like a win/win. 

Provides the Ability to Analyze Spend

A robust time and expense tracking system will provide the ability to monitor and control costs associated with every project. Additionally, outside of tracking the time and expenses per project, you can also break down the labor into specific charge categories which will enable your leadership to quickly identify billing outliers. 

For example, perhaps 9 out of 10 CRAs only bill between 3-5 hours to write a report while 1 charges 10 hours. As an operations manager, wouldn’t you want to be able to see this type of outlier so you can dig into the root cause? This type of data will certainly enable a proactive management approach for your projects. 

Tracks Tangible Data for Future Project Estimates

And for those of you with future projects in queue, knowing the actual spend of previous similar projects will give you the data needed to more accurately estimate these upcoming project budgets. 

Not Sure What Normal Is? 

Call us for a safe discussion. We are happy to answer your questions without strings (and no stalking afterwards). We look forward to hearing from you!