how billing works in the staffing world.

how billing works in the staffing world.

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The payment arrangement between employer and employee is clear: the former pays the latter for services rendered or time on the clock. But when a staffing firm enters the ring, payment can get a little more complicated. In this article, we'll outline the billing process to help you know what to expect.

But if you're expecting to see an exact figure in this article, stop right now, because billing depends on a lot of variables — specifically, you and your needs. Here's how it works.

bill rates, pay rates and markups

The staffing-firm billing model is made of three main components: pay rates, bill rates and markups. Let’s look at pay rate first since it's fairly straightforward.

Pay rate is compensation owed to a temporary employee for hours worked. Once the pay rate is established, staffing firms add a markup to cover their own costs. This additional charge generally includes compensation for all candidate sourcing, interviewing and vetting done by a staffing specialist on behalf of an employer.

The pay rate and markup are then combined and sent to an employer as the final bill rate. This sum represents the total cost to the employer for both the employee's time and the staffing firm's efforts.

bill rate

factors contributing to markup

No two candidates are alike, and the same is true for the hiring processes used to find them. Since each hiring case will require a different set of resources, the final markup ultimately seen by employers varies.

For example, if you're staffing for a short-term project, the bill rate could be higher since staffing rates typically decrease when clients commit to longer-term engagements. This same model applies to the size and scale of each assignment: the more personnel a company needs, the greater the value the company will receive from their engagement with a staffing company. 

Not surprisingly, time is also a major factor when determining final markup. Sourcing talent for highly specialized skill sets is more time-consuming and resource intensive than it is for more readily available positions, so niche roles typically mean higher markups.

There are important insurance- and benefits-related concerns to consider as well when determining a final charge. For instance, insurance costs vary depending on the type of work, and benefits like healthcare become more costly the longer an engagement lasts.

 

blue vector mountain
Project scale, time spent sourcing talent, and insurance- and benefits-related concerns contribute to final markup charges.project-scalemountain-textfacts-about-manufacturing

why the markup is worth it

While costs can add up quickly, it's important to keep in mind the value a staffing partner brings.

First, they save you time. Staffing firms are able to hire faster by dipping into their talent networks to bring you the best candidates available. Considering that top talent is only on the market for as little as 10 days, that's a big advantage.

right arrowStaffing partners save you time and money.

Second, staffing partners can help you save money in the long run. Recruiters from staffing firms are experts at what they do because finding qualified candidates is their full-time job. They take the time to truly understand their customers' needs and company culture to make best-fit hires that last, in turn saving you additional costs by helping you avoid having to find a replacement. american-progress-linkThe cost of turnover can be as much as 21 percent of an exiting employee's salary. So despite a little upfront investment, staffing firms can ultimately save you money.

 

graph 21 percent
Turnover costs companies as much as 21% of the exiting employee's salary — so despite the markup, staffing companies can save you money.21-percent-graph21-percent-text-2

the bottom line

Understanding cost is the first step to assessing whether or not working with a staffing partner is right for your company. To know what to expect, take an employee's pay rate for hours worked and add a markup estimate to get the final bill rate. Despite these initial costs, working with a staffing firm can save you time and money and get you stronger candidates in the end — and that'll lead to a significant boost to your bottom line.

 

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how billing works in the staffing world.

Posted by Amy Tarkington on Feb 11, 2019 2:36:24 PM

The payment arrangement between employer and employee is clear: the former pays the latter for services rendered or time on the clock. But when a staffing firm enters the ring, payment can get a little more complicated. In this article, we'll outline the billing process to help you know what to expect.

But if you're expecting to see an exact figure in this article, stop right now, because billing depends on a lot of variables — specifically, you and your needs. Here's how it works.

bill rates, pay rates and markups

The staffing-firm billing model is made of three main components: pay rates, bill rates and markups. Let’s look at pay rate first since it's fairly straightforward.

Pay rate is compensation owed to a temporary employee for hours worked. Once the pay rate is established, staffing firms add a markup to cover their own costs. This additional charge generally includes compensation for all candidate sourcing, interviewing and vetting done by a staffing specialist on behalf of an employer.

The pay rate and markup are then combined and sent to an employer as the final bill rate. This sum represents the total cost to the employer for both the employee's time and the staffing firm's efforts.

bill rate

factors contributing to markup

No two candidates are alike, and the same is true for the hiring processes used to find them. Since each hiring case will require a different set of resources, the final markup ultimately seen by employers varies.

For example, if you're staffing for a short-term project, the bill rate could be higher since staffing rates typically decrease when clients commit to longer-term engagements. This same model applies to the size and scale of each assignment: the more personnel a company needs, the greater the value the company will receive from their engagement with a staffing company. 

Not surprisingly, time is also a major factor when determining final markup. Sourcing talent for highly specialized skill sets is more time-consuming and resource intensive than it is for more readily available positions, so niche roles typically mean higher markups.

There are important insurance- and benefits-related concerns to consider as well when determining a final charge. For instance, insurance costs vary depending on the type of work, and benefits like healthcare become more costly the longer an engagement lasts.

 

blue vector mountain
Project scale, time spent sourcing talent, and insurance- and benefits-related concerns contribute to final markup charges.project-scalemountain-textfacts-about-manufacturing

why the markup is worth it

While costs can add up quickly, it's important to keep in mind the value a staffing partner brings.

First, they save you time. Staffing firms are able to hire faster by dipping into their talent networks to bring you the best candidates available. Considering that top talent is only on the market for as little as 10 days, that's a big advantage.

right arrowStaffing partners save you time and money.

Second, staffing partners can help you save money in the long run. Recruiters from staffing firms are experts at what they do because finding qualified candidates is their full-time job. They take the time to truly understand their customers' needs and company culture to make best-fit hires that last, in turn saving you additional costs by helping you avoid having to find a replacement. american-progress-linkThe cost of turnover can be as much as 21 percent of an exiting employee's salary. So despite a little upfront investment, staffing firms can ultimately save you money.

 

graph 21 percent
Turnover costs companies as much as 21% of the exiting employee's salary — so despite the markup, staffing companies can save you money.21-percent-graph21-percent-text-2

the bottom line

Understanding cost is the first step to assessing whether or not working with a staffing partner is right for your company. To know what to expect, take an employee's pay rate for hours worked and add a markup estimate to get the final bill rate. Despite these initial costs, working with a staffing firm can save you time and money and get you stronger candidates in the end — and that'll lead to a significant boost to your bottom line.

 

Topics: topic:what is it, phase:awareness, industry:all, topic:faqs