Recruitment Agency Plan: Do Successful Placements Pay for All Searches?

A placement fee must cover the work on unsuccessful assignments as well as the successful search. Include replacement obligations and collection dates before deciding how many new mandates the agency can afford to accept.

Cost the complete delivery cohort

Original assumptions, $. Three contingent assignments each consume 40 recruiter-hours at $50 plus $500 sourcing. Other selected commitments are $2,000. The 120 available recruiter-hours are fully used. A successful placement earns $10,000 under an assumed candidate-start trigger on day 30 and is collected on day 60. All initial costs are paid during the delivery month.

No placement probability is claimed. Allocating all costs only to successful recruiter-hours would omit the failed searches and overstate the fee margin.

Replacement work changes both cost and next-month capacity

Assume one replacement requires twenty further hours at $50 and no extra fee. It costs $1,000, turning the one-placement result into negative $500. If performed next month within another 120-hour roster, 100 hours remain, fitting only two complete new 40-hour assignments. The spare twenty-hour fragment is not a third full assignment.

Follow the fee trigger through collection

$9,500 is spent before day 60 collection. In the one-placement case, receipt of $10,000 leaves $500; an assumed $1,000 replacement payment on day 75 then creates negative $500 cumulative movement. Initial funding and later guarantee exposure are different dates in the same case.

Separate mandate progress from fee entitlement

Maintain one mandate record with the contracted fee basis, work performed, candidate-start condition, invoice date, collection date and replacement period. A shortlist or an interview may consume recruiter hours without creating the fee assumed in the cash forecast. A retained-search milestone and a contingent start fee need their own schedules rather than one blended price per recruiter-hour.

Carry unsuccessful searches into cohort delivery cost and carry promised replacement work into the future capacity calendar. Link a replacement to the original mandate before treating its hours as a new paid sale. Record whether an event changes the collectible fee, creates further work or both, using the actual agreement and appropriate contractual review.

Review expected collected contribution per mandate cohort alongside the hours already committed to new searches and replacements. Separate signed mandates from a probability-weighted opportunity scenario; neither an exclusivity clause nor recruiter availability proves a placement.

Use actual fee entitlement, candidate-start, invoice, collection and replacement terms. Separate temporary staffing payroll from permanent search, and do not treat exclusivity as guaranteed success. The selected Recruitment Agency Financial Model is the seller's Recruiting Agency model; its advertised service-hour revenue basis needs to be compared with the agency's actual fee structure.