Written by Trevor Foster

As the temporary staffing market continues to grow rapidly, many independent recruiters have been considering adding contract placements to their list of services in addition to permanent placements. In doing so recruiters can leverage their existing contacts and clients to add significant revenue that can be very profitable. Of course, with any change, there are some important items to consider before adding this service – many of which are straightforward and some that are not.

This series of articles will not address all of the individual components of adding contract placements (like providing employer of record and payrolling services for the contractors placed at client sites). Instead, the focus will be on the top 3 cash flow problems that recruiters face when getting into temporary staffing – a vital part of providing complete contract placement services for your clients.

As with any small business, cash flow is one of the most important things to manage. It is, similarly, one of the most frequent concerns keeping owners up at night. With the nature of temporary staffing (where the majority of billing is for paying wages, taxes, and benefits for employees) cash flow becomes an even larger issue to manage. When considering adding contract placements to your business, cash flow problems generally come from three areas; invoicing, collections, and contract management.

This article is part 1 of a 3 part series designed to highlight those three problems with cash flow as well as some tips to manage them.


Generating invoices for contract placements is something that appears to be much simpler than it is. This is not only the mechanism used to request payment but also an opportunity to establish a professional brand experience with your clients. Focusing on getting accurate, timely invoices to the correct person at your clients can save hours of frustration and avoid significant cash flow issues.


Many complicated terms can find their way into billing arrangements for a contract placement. Methods ranging from modified overtime rates to bill rates that automatically reduce at agreed upon thresholds, making invoicing more complicated than it may seem at first. However, this may be the most important thing to get right in order to improve cash flow for any business – get invoices right the first time! Ensuring accuracy in billing begins with solid systems in place and proactive attention from you or your staff.

Tip: Set up a solid foundation for invoicing, including thinking through how you would handle disputed amounts on invoices. Leverage technology where possible.


While accurate invoicing is a vital outcome, it’s only the result of good procedures. You must focus on the entire time card approval process for the contract placements you‘re payrolling. This is something that needs to be managed up front in order to stay on schedule with paychecks and, just as importantly, invoicing. Obviously, inaccuracy in invoicing often comes from breakdowns in this process that require you to investigate and correct time worked, further delaying invoicing from being completed. This is where solid systems for collecting and approving time that simultaneously provides adequate supporting documentation for invoicing will greatly improve your ability to not only invoice accurately, but timely as well.

Tip: there are many online timekeeping options available and many integrate with billing software especially designed for contract placements.

Correct contacts

Having solid systems for gathering time worked for your contract placements is a great first step, but the system is only as good as the information in it. One of the most common delays in accurate invoicing is having the right contacts at your client to approve time cards. This creates extra issues in as you are generally required to pay an employee you’re payrolling even if no one from the client has approved their time.

In addition, once time is approved by someone at the client site, you need to make sure you know who should receive the invoice to begin their internal approval process – something that may seem simple, but can sometimes follow a strict internal workflow touching many layers of approvals before invoices are approved to be paid. This is often due to the actual dollar amount of temporary invoices being quite large, again, because the majority of what is invoiced is for wages, benefits and taxes paid for the employees you’re payrolling. Knowing who to contact and what the invoice approval process is should be a priority before you set out to work with a client.

Tip: Have these conversations early – who should approve the time card and who is that person’s backup; who is the accounts payable contact and how does the process work? Then, request confirmation of receipt on the first invoice sent to a client to ensure you are in the queue to be paid.

Don’t let invoicing delays and errors get in the way of a successful contract placement business. With the proper foresight you can anticipate and correct invoicing issues before they get out of proportion. With accurate and timely invoices sent to the correct billing contacts, you’re one step closer to keeping cash flow in check – now you can move on to managing collections of invoices, another of the top 3 problems contract placement recruiters face.

Cash flow is one of the most important concerns for running a successful contract placement business that handles the employer of record and payrolling services for temporary employees. With careful management and proactive procedures, you can set yourself up for success with accurate and timely invoicing, structured and consistent collections procedures, and careful contract management practices. It’s important to not let cash flow management become an afterthought – stay on top of problems so you don’t find yourself with a wildly profitable contract placement business that’s running out of cash!

Tip: Like many parts of running your business, enlisting help with the things you aren’t naturally good at can provide dividends in the long run. Explore hiring administrative help or using a Back Office HR Outsourcing Services like Innovative Employee Solutions who can help manage these cash flow, employer of record, and payrolling activities so you can spend your time growing revenue for your contract placement business!

Article part two

Article part three

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