Invoicing a retained search in stages
How an agency bills a retained search as engagement, shortlist and appointment instalments, words each invoice, and tracks what the client has paid.
By Achekam · · 5 min read · For Recruitment businesses in South Africa, Nigeria, Kenya
A retained search is a different animal from a contingency placement. The client commits to one agency for a senior or specialist role, and in return the agency commits time from the start: mapping the market, approaching people who are not looking, interviewing and assessing them. Because the work happens long before anyone is hired, the fee is paid in instalments along the way.
Those instalments are where billing goes wrong. An agency issues the first invoice on signature, then gets busy with the search itself. Months later nobody is sure whether the shortlist invoice went out, whether the client paid it, or what is still to come. This article sets out a simple way to bill each stage and keep a running record the client can follow too.
Typical stages: engagement, shortlist, appointment
Most retained assignments split the fee into three moments, though your terms may differ:
| Stage | What triggers it | What the client has received |
|---|---|---|
| Engagement | The client signs the search agreement | Your commitment and the start of the research |
| Shortlist | You present the agreed shortlist of candidates | Assessed candidates ready for interview |
| Appointment | The chosen candidate accepts the offer | The hire |
The first two instalments are usually earned whether or not the client eventually hires; the last depends on an appointment. Investopedia's guide to the retainer fee explains how retainers paid to advisers and consultants work, including the difference between earned and unearned retainer money, which is the distinction your terms need to make clear for each stage.
Write the trigger for each stage into the agreement in words that leave no room for argument. "On presentation of a shortlist" invites the question of what counts as a shortlist. "On presentation of a written shortlist of no fewer than the number of candidates agreed in the brief" does not.
One invoice per stage, numbered in sequence
Raise a separate invoice for each stage when its trigger is met. In Achekam, a customer invoice starts as a draft that can be changed or deleted. Issuing it gives it the next number in your sequence and posts it to the ledger as debtors, sales and output VAT. Default terms are 30 days, and the number format is set in Settings.
Two habits help with retained work:
- Prepare the drafts early, issue on the trigger. You can create all the stage invoices as drafts when the search is signed, then issue each one on the day its stage is reached. A draft has no number and posts nothing, so it costs nothing to keep it waiting, and the issue date is the date the stage was earned.
- Never issue a stage early to help cash flow. An invoice for a shortlist the client has not seen is an invoice the client will dispute, and it teaches them to question every later stage.
When an invoice is issued, download it as a PDF on your letterhead and e-mail it straight from the invoice, with or without a pay link. If a send fails, the screen reports it as not sent, so check before you assume the client has it.
Wording each line so the client sees which stage it is
A retained search can run for months, and the person who approves your invoices at the client may not be the person who signed the agreement. Each line should stand on its own:
Retained search: Head of Finance. Second instalment, due on presentation of the shortlist on the date stated. Fee basis as agreed in the search agreement.
Include the client's own order or reference number if they use one. Name the stage in words; "second instalment of three" tells the reader where they are in the assignment without a phone call. If your fee is a share of an estimated package, say whether the final instalment will be adjusted once the actual package is known. The way to state a fee basis on the invoice itself is covered in showing the fee basis on an invoice.
Payments against each stage invoice
Clients do not always pay one invoice at a time. Achekam records a customer payment against a single invoice or spreads it across several of the client's invoices. A part payment leaves the invoice part-paid, and anything paid over is held on the customer's account. A receipt can be re-allocated later if it was applied to the wrong stage.
That flexibility matters when a client pays the shortlist instalment short, perhaps because they think a candidate fell outside the brief. The invoice stays part-paid, visibly, rather than being closed off or written down by accident. Resolve the dispute, then either collect the balance or issue a credit note.
A credit note in Achekam is issued from the invoice it corrects, in full or for chosen lines, and posted to the ledger; any credit left over is held for the client. There is no credit note without an invoice, which keeps each reduction tied to the stage it belongs to. If a search is cancelled after the shortlist, the agreement decides what is still owed, and the credit note shows exactly what was given up.
The statement of account as the running record
The client's statement of account is the simplest record of the whole search. Achekam produces it as a PDF that can be e-mailed, and the screen shows whether it went out.
Send it with every stage invoice. The client's finance team then sees each instalment issued so far, what has been paid against each, and what is outstanding, in one document. Inside the agency, the statement answers the question that started this article: what has been billed on this search, and what has been paid.
Keep a short note on the search file as well, listing each stage, its trigger, the date it was reached and the invoice number. When the appointment invoice follows, the timing rules for a placement fee in when to issue the placement invoice apply to the final stage too.
Look at your open retained searches today and check that every stage already reached has an issued invoice, and every issued invoice appears on the client's latest statement.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
