When to issue the placement fee invoice
When a recruitment agency should issue its placement-fee invoice, why a draft is safer until the start date is firm, and what to do if the date moves.
By Achekam · · 4 min read · For Recruitment businesses in South Africa, Nigeria, Kenya
The candidate has accepted the offer, the client is delighted, and the consultant wants the fee on the books before month end. It is tempting to raise the placement invoice at once. Then the start date moves back a month because the candidate's notice period was longer than anyone checked, and the agency has an issued invoice for a placement that has not started.
For a recruitment agency, the placement fee is the moment the work turns into money, and the timing of the invoice matters. Issue too early and you may have to reverse it. Issue too late and you wait longer to be paid, and the client's accounts team asks why the invoice arrived after the person did.
This article explains how to time the invoice, how Achekam treats drafts and issued invoices, and what to do when the start date moves.
Your terms of business set the moment
The right moment to invoice is the one your terms of business say. Agencies commonly tie the fee to one of two events: the candidate accepting the offer, or the candidate starting work. Some split it between them, particularly for senior or retained searches.
Whatever your standard terms say, check the client's own procurement terms too. A client that signed your terms may also have a purchase-order process, and an invoice without the client's order number may sit unpaid. Agree before the placement which event triggers the invoice and what reference it must carry.
A draft can change; an issued invoice cannot
In Achekam, a customer invoice starts as a draft. A draft can be changed or deleted freely, so it is the right place for a placement fee while the start date is still settling.
Issuing is the commitment. When you issue an invoice, it takes the next number in your sequence and is posted to the ledger as debtors, sales and output VAT. Default payment terms are 30 days, and the number format is set in Settings.
That gives a practical rule for placements: prepare the invoice as a draft as soon as the offer is accepted, with the fee, the candidate's role and the client's references, and issue it when your terms say the fee is earned.
If the start date moves before you issue
When the start date moves while the invoice is still a draft, there is nothing to undo. Change the dates, check the details and leave it as a draft until the new start date is confirmed.
Keep a short list of draft placement invoices and review it weekly. A draft that sits for weeks usually means a placement in trouble, and that is worth a call to the client and the candidate before it becomes a failed placement.
If it moves after you issue
When an issued invoice turns out to be premature, the fix depends on whether anything has happened to it since.
- No payments or credits yet: an administrator can void the issued invoice, which reverses its journal. You then raise a fresh draft for the new date. Voiding is the cleanest route when the invoice went out too early and nothing has been paid.
- The client has paid, or a credit has been applied: voiding is no longer possible. Instead, a credit note is issued from the invoice it corrects, in full or for chosen lines, and posted to the ledger. A credit note always belongs to an invoice; there is no credit note without one.
If the placement fails altogether after the candidate starts, your terms of business usually decide what the client gets back. That is a different situation, covered in rebates when a placed candidate leaves early.
The VAT rate is taken on the invoice date
When an invoice line states no rate, VAT is taken at the rate in force on the invoice date, and a credit note uses its original invoice's date and tax codes. For placement fees, that means the date you issue determines the rate, which matters on the rare occasions a rate changes. In South Africa, SARS sets out the obligations of a VAT vendor, including charging VAT on taxable supplies, issuing tax invoices and keeping records.
Nigerian and Kenyan agencies pick a tax code on each invoice line: standard, zero-rated, exempt, out of scope or reverse charge, and only standard lines carry VAT, at the approved rate for the country. At the time of writing, while the Nigerian or Kenyan standard-rate rule awaits approval on the platform, Achekam refuses to charge standard-rate VAT on that country's invoices and tells the user to choose a tax code without VAT or wait. Check with your accountant which code your placement fees need before the first one is issued.
Sending the invoice
An issued invoice can be downloaded as a PDF on your letterhead and e-mailed from the invoice, with or without a pay link. If the e-mail fails, the screen reports it as not sent, so check before assuming the client has it.
A placement invoicing checklist
- Confirm which event in your terms of business triggers the fee.
- Create the invoice as a draft when the offer is accepted.
- Collect the client's order number or reference before issuing.
- Issue on the trigger date, and check the VAT code.
- If an issued invoice proves premature and nothing is paid, ask an administrator to void it.
- If it was paid, correct it with a credit note instead.
Temporary placements follow a different route, through payroll; see loading a batch of new temps into payroll and payslips and pay schedules for temporary workers.
Look at your current open offers today and create a draft invoice for each, so nothing is issued early and nothing is forgotten.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
