Placement and temporary staffing revenue in the ledger
How the Recruiting pack posts placement fees, retained search and temporary staffing to their own revenue accounts, from accepted quotation to invoice.
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.
Inside many recruitment agencies there are really two or three businesses sharing an office. One fills permanent roles on contingency and earns a fee when a candidate starts. Another runs retained searches for senior roles, with fees agreed up front. A third supplies temporary workers and contractors week after week, carrying the payroll and earning a margin on every hour.
Those businesses behave very differently. Permanent fees are lumpy and depend on a few big months. Temporary staffing is steadier but thinner, and it ties up cash in wages before the client pays. An owner deciding where to invest needs to see each one clearly, and that starts with where the revenue is recorded.
The Recruiting & staffing pack in Achekam's Industry CRM keeps placement work and temporary staffing on separate revenue accounts from the first invoice. This article explains how.
The starter catalogue
When the pack is switched on, it brings a starter catalogue of what agencies typically sell:
- permanent placement fees;
- retained search;
- assessments;
- temporary staff, charged per hour;
- contractors, charged per day.
None of these items carries a price. Fee percentages, retainer stages, hourly charge-out rates and daily contractor rates vary between agencies, sectors and clients, so the pack leaves every price to you. For background on how recruiters charge, Investopedia's guide to headhunters explains what executive recruiters do and how they are paid, including contingency fees.
Decide early how you will treat work that does not fit neatly, such as an assessment sold on its own or a fee for converting a temp to a permanent employee, and write the rule down so that every consultant invoices it the same way. Consistency is what makes the revenue lines comparable from one year to the next.
Two revenue accounts
The catalogue posts to two revenue accounts: Placement fees (4560) and Temporary staffing revenue (4570).
The split mirrors the real division in the business. Permanent and retained work, where the agency earns a fee for finding someone, sits on one account. Temporary staff and contractors, where the agency supplies people over time and pays them, sits on the other. On the income statement, an owner can see at a glance whether this quarter's growth came from placements or from a temp contract that expanded.
What activation adds to your chart
Switching the pack on puts its revenue accounts into your chart of accounts and its unpriced starter items into your catalogue. Your existing accounts are left where they are.
The one thing that can stop it is a code clash. If your chart already uses one of the pack's account codes for a different type of account, activation is refused, and you are told which account is in the way. Your accountant can renumber the existing account, and activation can then proceed without touching the history in it.
From an accepted quotation to a draft invoice
For retained searches and other fee-based work, the Industry CRM lets a client accept a quotation on a link by typing their name and ticking a box. The acceptance drafts the invoice in receivables, so the fee the client agreed to is the fee that reaches the books, without anyone retyping it.
The client's IP address and browser are kept with the acceptance. A quotation that has been sent is frozen, and any change goes out as a revision rather than an edit, so it is clear which version was accepted. The invoice stays a draft unless an administrator has given recorded authority for it to be issued at once.
Invoice lines that name the account
On every invoice, each line names the revenue account and the product it sells. A permanent placement fee posts to Placement fees; a week of temporary staff posts to Temporary staffing revenue. An invoice to a client that carries both, such as a placement fee and the same month's temps, is split correctly line by line in one journal, with cost of sales for any product posted in the same journal.
That matters most at month end. Nobody has to reclassify revenue from a single sales account into the right lines before the management accounts make sense.
Reading revenue by line of business
Achekam's management accounts show an income statement for a chosen period beside the period before, and a balance sheet at period end, all added up from your own journals and exportable as PDF or CSV. With placement and temp revenue on their own accounts, those statements answer the owner's question directly: which part of the business grew, and which shrank, compared with last period.
Combine that with the wages journal from payroll, which carries the cost of paying temps, and the temp business's gross margin can be read from the books rather than estimated.
A set-up checklist
- Ask your accountant to check your chart for codes that could clash with the pack's accounts.
- Switch the pack on and confirm Placement fees and Temporary staffing revenue appear.
- Price the starter items you use, with client-specific rates where your agreements differ.
- Decide who, if anyone, holds the authority to issue an invoice at the moment a quotation is accepted.
- After the first month, check that placement and temp revenue sit on their own lines.
For the cost side of temporary staffing, see loading a batch of new temps into payroll and payslips and pay schedules for temporary workers. When a placement fee has to be partly given back, rebates when a placed candidate leaves early explains the credit note.
Look at last year's revenue and try to split it between placements and temps. If that takes more than a few minutes, the separate accounts will earn their keep.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
