Choose your model · Lesson 3 of 18 · 7 min
Recurring revenue, an accumulating book, and a business that pays people every week whether or not it has been paid. Here is the operating rhythm, and the activity that produces more margin than anything else you can do.
A contract desk is closer to a subscription business than to recruitment. You place someone, and they generate margin every hour they work — this week, next week, next quarter, without you doing anything further. Ten people on long assignments is a revenue base that arrives whether or not you fill anything new.
The price of that is a weekly operating cycle that never stops, and a permanent claim on your cash. Both are manageable. Neither is optional.
This runs every week for every contractor you have out. Most of what goes wrong on a contract desk goes wrong in step two.
Hours are worked
Your contractor is on a client site doing the work. You are not there, which means your only visibility into whether it is going well comes from asking. A short check-in call in week one and week two catches most problems while they are still fixable.
Timesheets are submitted and approved
The contractor records hours; the client manager approves them. This is the step that jams, every week, in every agency — an approver on holiday, a disputed half hour, a timesheet nobody submitted. Chase it as a routine, not as an exception.
Payroll runs
You pay the contractor, with employer taxes and insurance on top. This happens whether or not the client has approved the timesheet, and whether or not you have been paid. It is the immovable part of the week.
The invoice goes out
Same day as approval, ideally. Every day between an approved timesheet and a sent invoice is a day added to the money you are financing, and it is the cheapest improvement available to a contract desk.
Collections
Terms are what the contract says; days sales outstanding is what actually happens. Contact on the first day an invoice is late, politely and as a matter of routine. Agencies that wait a fortnight teach clients that they will wait a fortnight.
Check yourself
Your contractor’s assignment ends in three weeks. When is the right time to talk to the client about extending?
You approve timesheets on Monday but invoice at the end of the month. What is that costing you?
The thing you are building on a contract desk is not a client list, it is a book of live assignments. That book generates the revenue, and it leaks continuously — assignments end, contractors resign, projects finish, budgets close.
What makes this manageable, and what makes contract staffing genuinely different from most subscription businesses, is that the churn is visible in advance. Every assignment has an end date, and it is written in your own records. A desk that runs on that information behaves completely differently from one that does not.
When an assignment ends, you have a proven worker becoming available whose skills, reliability and rate you already know. Placing them again requires no new client win, no new search and no new negotiation about who they are.
Almost every guide to growing a staffing agency is about acquiring clients. Redeployment is cheaper than all of it, and it is mostly a matter of paying attention to dates you already hold.
Know the end date from day one
Every assignment has one, and it is in your own records. A contract desk that is surprised by an assignment ending is a desk that will have a gap in revenue it could have seen coming weeks earlier.
Ask about extension early
Well before the end, not in the final week. Managers often have not thought about it, and asking is frequently what causes the extension to happen. Late asking means the contractor has already started looking.
Line up the redeployment
If it is not extending, the contractor is about to become available — and you know their skills, their reliability and their rate. Placing them again is far cheaper than winning a new client, and far faster than a fresh search.
Keep the relationship after the assignment
A contractor who finished well is both a future placement and a source of referrals into the site they just left. Most agencies stop contacting them the day the assignment ends, which is the moment they are most useful.
Debrief the client
A short conversation about how the assignment went does two things: it surfaces problems you did not know about, and it is the most natural possible opening to ask what else is coming up.
Sooner or later a client will want to take one of your contractors onto their own payroll. This is a good problem — it means the placement worked — and it is a bad conversation to have without a clause.
The usual approaches are a flat conversion fee, a percentage of the salary, or a sliding scale that decreases with the contractor’s tenure and reaches zero after a period. Any of them is defensible. What is not defensible is discovering you never wrote one down, at the moment a client is asking and your contractor wants the job.
On a perm desk, your obligations to a candidate largely end when they start. On a contract desk they run for the length of the assignment: you are the employer, so payroll accuracy, worker classification, sick leave and paid time off rules, safety, and any sector-specific credentials are yours for the duration.
That is the real reason contract staffing has a higher operating cost than its margin structure suggests — and why the setup lesson puts payroll and insurance first.
Key takeaways
You employ the worker — you are their employer of record — and hire them out to a client for an hourly or daily rate. The client pays you for hours worked, you pay the worker a lower rate, and you keep the difference after employer taxes and insurance. The revenue recurs for as long as the assignment runs, which is the attraction, and you pay the worker long before the client pays you, which is the constraint.
Placing a contractor into a new assignment when their current one ends. It matters because it is the cheapest revenue a contract desk can generate: you already know the person, their reliability and their rate, and you do not have to win a new client to bill them. Agencies that treat every assignment end as a loss rather than an event to plan for are re-running expensive searches they did not need.
Weekly is the most common expectation in contract and temporary staffing, and in some markets and sectors daily or biweekly pay is normal. What matters commercially is that the pay cycle is much shorter than the client payment cycle, so you are always financing the difference. That gap, multiplied by the size of your book, is the working capital your agency needs to hold.
What a client pays if they want to take your contractor onto their own payroll permanently. It is normally either a flat fee, a percentage of the salary, or a sliding scale that reduces the longer the contractor has been on assignment and eventually reaches nothing. The important part is that it is agreed in the client contract at the start — a conversion request without a pre-agreed clause is a negotiation you will lose.
Because growth consumes cash in this model. Every contractor you add is more payroll paid out before the matching invoice comes in, so a desk that is winning work needs more capital, not less. Profit on paper and cash in the bank move in opposite directions during a growth phase, which is why the calculator lesson comes early in this course and why factoring exists as an industry.
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