Billing temporary workers' hours to clients
How a staffing agency bills its temps' hours to clients as time while the workers themselves are paid through payroll, and how to match the two.
By Achekam · · 4 min read · For Recruitment businesses in South Africa, Nigeria, Kenya
Launching soon. The Industry CRM add-on described in this article is launching soon. This article describes it as it will work at launch.
Temporary staffing is a margin business. The agency pays each worker for the hours they worked and bills the client for the same hours at a higher rate. The difference pays for recruitment, administration, the risk of carrying the payroll and, in the end, the agency's profit. When the hours paid and the hours billed drift apart, that margin leaks away quietly, a few hours at a time.
The drift usually comes from having two separate processes. Payroll pays from one set of timesheets; billing invoices from another, or from a spreadsheet someone updates when they remember. A shift added late, an overtime hour approved by phone, or a public-holiday rate applied on one side and not the other, and the two no longer agree.
This article explains how Achekam keeps the two sides distinct but connected when an agency uses the Recruiting & staffing pack: workers paid through payroll, hours billed to the client as time.
The pack pays nobody: temps are paid through payroll
The Recruiting pack pays no temporary workers. It keeps Vacancies, Candidates with their interviews, and Placements, but the money that reaches a temp's bank account comes from Achekam payroll, not from the pack.
That separation is sensible. Paying people involves tax tables, statutory deductions, payslips, bank verification and approval rules that belong in payroll. Pay runs can be monthly, fortnightly or weekly, with each period's overtime, commission, allowances, reimbursements and unpaid leave entered as variable inputs. An approved run is posted to the business's own ledger as a wages journal, with amounts owed to the tax authority and funds recorded as liabilities.
Hours billed to the client as time
On the client side, temporary workers' hours are billed as time. Time recorded against Industry CRM work can be billed, which means the hours a temp works on a client's assignment become billable time for that client.
The pack's starter catalogue includes an item for temporary staff per hour, alongside contractors per day, permanent placement fees, retained search and assessments. Every item comes without a price, so the hourly charge-out rate is yours to set, per client if your agreements differ. Temporary staffing posts to its own revenue account, Temporary staffing revenue (4570), separate from Placement fees (4560).
When the time is invoiced, each invoice line names the revenue account and the product it sells, so revenue from temps lands on the temporary staffing account rather than being mixed with placement fees.
Variable inputs on the pay run
On the payroll side, overtime, allowances and other items that change from period to period are entered as variable inputs on each run. For temps, those inputs are where differences between billed and paid hours most often creep in: overtime billed to the client but not paid to the worker, or a shift allowance paid but never billed.
Make the same approved timesheet the source for both. Whoever enters the payroll inputs and whoever records the billable time should be working from the identical, client-approved document, not from separate copies.
Matching billed hours with paid hours
Because the cost and the revenue both reach the same ledger, an agency can compare them. The wages journal carries the cost of temp pay; the temporary staffing revenue account carries what was billed. A monthly check, per client, catches drift before it becomes a habit:
- Total the hours billed to each client for the period.
- Total the hours paid to the temps on that client's assignment for the same period.
- Explain every difference. Some are legitimate, such as a paid training shift the client agreed not to be billed for. Others are mistakes to correct on the next invoice or run.
- Compare revenue with cost per client to see the real margin, after overtime and allowances.
A client whose margin is consistently thinner than its agreed rates suggest is a client whose timesheets deserve a closer look. Investopedia's explanation of gross margin shows how to calculate the share of revenue a business keeps after its direct costs. Keep the working for each month's match, too. When a client queries an invoice months later, a record of how billed and paid hours were reconciled at the time settles the question quickly.
What to agree with clients
Many billing disputes over temp hours trace back to an unclear agreement. Before a temp starts, agree in writing:
- Who approves timesheets at the client, and by when each week or period.
- The charge-out rates, including overtime, Sundays and public holidays.
- Minimum shift lengths, if any, and what happens when a shift is cut short.
- How disputes are raised, and the deadline for raising them after an invoice.
- What happens if the client hires the temp permanently, and any fee that applies.
Record these on the client's placement and keep the signed agreement with it.
A weekly rhythm for temp billing
- Collect client-approved timesheets.
- Enter payroll variable inputs from those timesheets.
- Record the same hours as billable time against the client's work.
- Run payroll; a second person approves.
- Invoice the client's time.
- Once a month, match billed and paid hours per client.
What happens after a permanent candidate starts is covered in following a placement after the start date. How candidates and clients are kept apart is explained in why each candidate is a customer of their own, and the intake for each new client role in taking a vacancy brief and signed terms of business.
Take last month's figures for your largest temp client and compare the hours billed with the hours paid. The gap, if there is one, is your first piece of work.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
