The economy’s hit a rough patch. Job losses are outpacing hiring in the news. If you’re in the search business, you might be worried about future business prospects. However, a more immediate threat could come in the form of canceled searches. As budgets get tighter, the probability that a requisition will be canceled mid-search grows. In the recruiting business, canceled reqs are inevitable, even in the best of times. However in a slowing economy, recruiters have less leverage to recoup fees and costs — even costs stipulated by contract. Moreover, a slowdown in hiring might also favor taking a short-term hit in order to ensure that relationships stay intact.

Good economy or bad, a canceled search is never welcome news. It can be a true test of a recruiter’s professionalism — especially if the cancellation occurs in the early part of the search. It is in the first third of the search that recruiters commonly invest in candidate identification and research -- creating liabilities far in excess of the initial retainer. Most contracts cover these costs and most clients will work to pay them, as stipulated. When the client refuses to pay, however, or simply can’t, you’ve got a choice to make. Should you go to a collections agency? Hire a lawyer? Eat the cost? There’s no right call or good way out of this situation. You’ve either burnt a bridge or are out cash.

The situation is similarly challenging when a client cancels in the middle of a search. However, the bright side here is that if the second payment has been received, you can usually cover your costs. Even if the final payment does not come through, most recruiters will be able to cover research expenditures. In this situation, your alternatives are to press for full payment, walk away, or negotiate an alternative arrangement. Few recruiters will burn a bridge by suing or pressing for collections if a client reneges at this point. Instead of walking away, practice forgiveness. Offer a discount on a future search if the company honors their current obligations. Creative negotiating could not only get you your money, but also earn you a privileged line on future business.

Another topic recruiters frequently get bent out of shape about is bonus compensation. Recruiters often earn a percentage fee on the candidates first year bonus. Ask any recruiter how much they’ve lost in candidate bonuses -- due to canceled searches or unsuccessful payments -- and they’ll have a round number ready, summing into the tens of thousands -- at the tip of their tongue. Many recruiters feel they are entitled to a share of earned compensation whether a search is completed or not. However, companies rarely like to pay the percentage fee on the bonus if a search is not completed. Before you bust your calculator out, bemoaning lost revenue, take a moment to see things from the company’s perspective. A bonus is a reward paid to the employee for top performance and to the recruiter for finding the right performer. You can press for your cut of the bonus, but if the deal doesn't go through, doing so can make you look like a whiner. Sometimes you just need to walk away.

Clients don’t necessarily want to renege on their contractual obligations. However, in tough economic times, people’s logic can get fuzzy. If a company is delinquent on payment, it is usually not a reflection of their dissatisfaction with your services. Chances are management is applying pressure on its employees to save money. This puts people in “cash conservation” mode. Though a company might technically be able to pay, they have their eye on reducing costs. They’ve cut the requisition and are probably questioning the value of paying in full for a search that isn’t going to yield a head. In these situations, don’t let yourself get bullied. Take a moment to analyze the under-girding dynamics, behave professionally, and negotiate to win.