Payback Agreements are a useful tool for encouraging a reasonable, minimum employment term for an employee who is relocating. As a legally binding contract, the agreement serves as a tool to help with a company’s retention efforts when significant employee investments have been made. However, should an employee leave prior to the agreed upon term, recovering a company’s financial investment can be challenging.
Some relocating employees who have signed such documents see them as non-enforceable, a company bluff or “too much hassle for the company to try and collect from me.” In fact, they may be on to something. Some companies have decided that the time and/or resources necessary to locate the former employee and enforce the agreement are not worth the investment.
Many companies make serious efforts to consistently reclaim owed funds, but limited time, resources and priorities make success difficult. What can companies effectively do to recoup owed funds and not over-tax internal resources in the process?
A Collections Partner Who Appreciates Relocation Dynamics
NEI’s experienced partner, Commercial Services Group (CSG) of Louisville, KY, is a nationally licensed collection agency and a member of Worldwide ERC that has helped corporate clients recover outstanding relocation industry accounts receivables since 1983
While having excellent success with owed Payback Agreement funds, they also help companies with Tax Equalization, Employee Loans, Salary Overpayments, Sign-On Bonuses and Tuition Assistance funds that also may be legally owed by former employees. Due to legal requirements related to collections of debt, fees charged and the arrangements for this would be handled directly between our clients and CSG with NEI assisting to implement the process.
CSG stands out from others in their industry for a number of reasons including their consistently professional approach in discussions with customers regarding outstanding balances. CSG is also unique in that they work within the unique culture of each client company to resolve issues of broken employee contracts and that they never forget debtors are also former employees.
In fact, CSG Account Representatives are scored monthly by their Audit Team to ensure compliance with applicable laws and their internal scorecard based on professional collection techniques.
Other differentiators include
- No upfront costs – CSG is paid a fee solely on recovered dollars and has the ability to litigate the contract through their legal collection network that specializes specifically in debt collections through the legal process.
- All CSG phone-calls are recorded and letters/encrypted emails are used to communicate with employees.
- Accounts are diligently worked for 90 to 120 days by professional representatives to solidify amicable payment plans or resolve the balance in full.
- CSG does not believe in “throwing good money at bad”. If a payment plan is not solidified or is ignored, CSG will make client recommendations, such as closing the account or requesting permission from the client to use the services of an attorney in the employee’s state or country of residence.
- If the employee’s location cannot be verified, CSG monitors the account on a regular basis. The balance owed will remain “open status” until efforts are exhausted at client preference.
- CSG consults with clients regarding legal collection process best practices if the collections need is deemed warranted or inevitable.
“We act as a liaison in many situations to answer questions from the terminated employee and our clients in an effort to resolve the obligation owed,” says Becky Baumann, Business Development Manager at CSG. “While we always attempt to collect the full balance quickly, we are able to set up payment terms and, more importantly, follow up on those terms. Our software automation, coupled with our experienced account representatives, ensures a prompt and quick resolve.”
Proven Payback Performance
CSG has a track record of success and has recovered millions of dollars for businesses of all sizes and in various industries.
“In the first year of implementing our process and CSG’s collection services, we were able to recover $431,000 in repayment agreements.” - Corporate Global Mobility Professional
In fact, sometimes just mentioning to some employees that CSG has been retained by the company to collect owed funds carried enough weight that a number soon mailed the total funds owed without ever requiring CSG’s expertise.
CSG’s collections have increased dramatically as the relocation industry continues to embrace its services. The graph shows the increase of collections year after year since 2011.
Retention and ROI Goals
Payback Agreements can be both an effective motivational “carrot” for employees to remain in their jobs after accepting a company-sponsored relocation – and an effective option for companies to help recover funds owed.
Yet, if the necessary time, resources and expertise to enforce these signed agreements are in short supply, taking advantage of a professional and tactful service partner can increase company productivity and impact relocation ROI.