Recruitment agencies get paid in two ways. For a permanent placement, the client pays a one-off fee, usually a percentage of the candidate's first-year salary, invoiced when the candidate starts. For temps and contractors, the agency pays the worker and invoices the client for the hours worked plus its margin, often every week.
In this article
The short version
- Perm placements earn a one-off fee, usually 15% to 30% of the candidate's first-year salary, invoiced on the start date.
- Temp and contract work is invoiced from timesheets, often weekly, at a charge rate covering the worker's pay, costs and the agency's margin.
- Agencies must pay temps for work done even if the client hasn't paid, so they fund the gap between payroll and client payment.
- Most clients pay by bank transfer, which someone then matches to invoices by hand and chases if it's late.
- Unique bank details per client, payment links and direct debit for repeat temp clients can take much of that admin out.
How a permanent placement fee is charged
A perm fee is a percentage of the salary you've placed someone on. Published agency terms range from about 15% to 30% of first-year salary, and some agencies use a sliding scale where the percentage goes up with the salary. Place a candidate on £34,500 at 20% and the fee is £6,900.
You'd normally raise the invoice on the candidate's start date, not when the offer is accepted. Published agency terms set payment at 7, 14 or 30 days from the invoice.
Perm terms commonly carry a rebate or guarantee too. If the candidate leaves in the first few weeks, the client gets part of the fee back, on a scale that commonly runs over 8 to 12 weeks (sometimes longer). Published terms often make that rebate conditional on the client having paid on time, which gives a slow payer a reason to settle.
Perm income tends to be lumpy. You might send three invoices of several thousand pounds in one month and none the next, so a single late payment can leave a noticeable hole in the month's cash.
How temp and contract billing works
Temp billing works the other way round. The worker fills in a timesheet, you pay them for the hours, and you invoice the client at a charge rate that covers the worker's pay, holiday pay, employer costs and your margin.
A typical weekly invoice might be one worker for 37.5 hours at a £23.20 charge rate, which comes to £870. Across a dozen workers and several clients, that's a lot of small invoices every week, each with its own timesheet behind it.
The awkward part is timing. You have to pay temps for work they've done whether or not the client has paid you, so payroll goes out weekly while the client's money may not arrive for 30 days or more. If a client pays on 30-day terms, you could raise four or five more weekly invoices before the client pays the first. Some agencies cover that gap with an overdraft or invoice finance, where a funder advances most of each invoice's value for a fee.
Plenty of agencies do both perm and temp, so the same finance person can be chasing a £6,900 fee and a stack of £870 invoices in the same week.
How the money usually arrives
For many small agencies, it looks like this:
- The invoice is raised in Xero or QuickBooks and emailed to the client.
- The client pays by bank transfer, on their own payment run, often with a reference that doesn't quite match.
- Someone at the agency checks the bank feed and matches each payment to an invoice by hand.
- Anything overdue gets chased by email, phone or a WhatsApp to the hiring manager.
Bank transfer is cheap and familiar, but it leaves the matching and the chasing to you. Hiring managers who'd happily pay often aren't the person who releases the money, and a large client can push its own longer payment terms onto suppliers.
Many agencies are wary of card payments for perm fees because of the cost. On a £6,900 fee, a 2% business card rate is £138 before any fixed fee, which many agencies don't want to absorb. Direct debit is rare for perm because each fee is a one-off, but it suits temp clients you invoice every week.
If a business client pays late, you're entitled to statutory interest at 8% above the Bank of England base rate, which is 11.75% a year at today's 3.75% base rate.
Ways to get paid with less admin
Three changes can take a lot of the manual work out without changing how you bill.
Give each client their own bank details. If every client pays into an account number only they use, a payment is identified by where it lands, so a wrong reference doesn't matter. With Adfin, each client sees unique bank details, the account appears in your business's name, and payments are matched to the invoice and marked paid in Xero or QuickBooks automatically.
Send a payment link with the invoice. The client can pay by bank from their own banking app, or by card, Apple Pay or Google Pay if you choose to offer it. Adfin charges 1% + 20p per successful payment, with the percentage capped at £4 on bank payments, so a £6,900 perm fee paid by bank transfer or pay by bank costs £4.20.
Put repeat temp clients on direct debit. One mandate covers every weekly invoice, and each collection uses that invoice's amount and due date, so changing hours aren't a problem.
Chasing tends to be the job that gets put off, especially with clients who are slow but good repeat business. Adfin's AI Customer Agents can send those reminders by email, SMS or WhatsApp, following rules you approve, and chasing can be paused for any one client.
Common questions
What percentage do recruitment agencies charge for a permanent placement? Published agency terms range from about 15% to 30% of the candidate's first-year salary. Some use a flat rate and others a sliding scale by salary.
When do recruitment agencies invoice for a perm placement? Usually on the candidate's start date. Payment terms in published agency terms are commonly 7, 14 or 30 days from the invoice.
How do temp agencies make money? They charge the client an hourly rate that covers the worker's pay, employer costs and the agency's margin, and invoice for the hours on each timesheet.
Do agencies have to pay temps if the client hasn't paid? Yes. An employment business can't withhold a temp's pay for work done because the client hasn't paid it.
Can a recruitment agency charge interest on a late fee? Yes, if the client is a business. Statutory interest is 8% above the Bank of England base rate, currently 11.75% a year, plus a fixed sum of £40 to £100 depending on the invoice size.
Is direct debit used for recruitment fees? Rarely for perm fees, which are one-off. It's more useful for temp and contract clients you invoice every week or month.
Sources
- Reed - Employment Agency Terms of Business (accurate as of October 2026) https://resources.reed.com/hubfs/Website/Documents/Terms%20of%20Business/Employment%20Agency%20Terms%20of%20Business%20-%20REED.pdf
- legislation.gov.uk - The Conduct of Employment Agencies and Employment Businesses Regulations 2003, regulation 12 (accurate as of October 2026) https://www.legislation.gov.uk/uksi/2003/3319/regulation/12
- GOV.UK - Late commercial payments: charging interest on commercial debt (accurate as of October 2026) https://www.gov.uk/late-commercial-payments-interest-debt-recovery/charging-interest-commercial-debt
- Adfin - Pricing (accurate as of October 2026) https://www.adfin.com/pricing
