Staffing agency CFO services: margin per placement, payroll you can fund

Gross margin per placement, after every burden

The spread between bill rate and pay rate is not margin — it is the starting point burden gets subtracted from. As employer of record, the agency carries the employer share of CPP and EI, vacation pay at Ontario's 4 percent minimum, public-holiday pay, WSIB premiums that follow the kind of work the placement actually does, and Employer Health Tax once payroll clears the exemption. Ontario's licensing regime for temporary help agencies adds its own line: the licence, and the $25,000 letter of credit behind it, which quietly ties up borrowing capacity. Loaded honestly, a placement that looked like a comfortable spread can turn thin — which is why we build the burden calculator per client and per role, never as one blended percentage.

Permanent placements look cleaner — a fee on first-year salary and no ongoing payroll — but they carry their own accounting. Falloff guarantees mean a fee is not fully earned until the guarantee period runs, and a perm desk's margin has to absorb recruiter compensation, job-board spend, and the months a search ran before it closed. We report margin by desk and by recruiter, temp and perm separately, every month. The same calculator prices statutory changes before they land: when CPP ceilings or the minimum wage move, it says which placements need a rate call — rather than which ones quietly went underwater.

Funding the payroll gap: line of credit, payroll funding, or factoring

Temp staffing has a structural gap: your people are paid weekly or biweekly, your clients pay in 30 to 60 days, and every placement you add widens it. That is why fast-growing agencies run out of cash at precisely the moment sales are best. The funding structure has to match the model:

None of these is a distress signal; third-party funding is normal in staffing. The CFO job is matching the facility to the growth plan — and re-tendering it as your volume earns better pricing.

Client concentration is a covenant, not a talking point

Concentration bites a staffing agency twice. Commercially, a whale that leaves takes a desk's worth of revenue with it. Financially, the funding facility caps advances per debtor — so your biggest client's invoices may not even be fully fundable, and you end up carrying your largest payroll on your thinnest cushion. We track the top client's share and the top three's combined share monthly, run credit checks before terms are granted rather than after invoices age, and put concentration targets into the sales plan so diversification is somebody's number instead of everybody's hope. Terms get negotiated at the win, when leverage is best, not re-papered after the first late payment — and where a client is essential but slow, credit insurance on the receivable can cost less than the risk it removes.

Scaling: the mix, the verticals, and the cross-border desk

Temp revenue recurs but consumes working capital; perm is cash-light but lumpy. The right blend is a funding decision as much as a sales one, and margin by vertical shows which desks earn their keep once burden and recruiter cost land where they belong. Two operating ratios round out the monthly pack: redeployment — how many finishing temps move straight to the next assignment, because a redeployed worker costs nothing to recruit — and fill rate against orders received, which tells you whether the real constraint is sales or candidate supply. Cross-border placements — TN professionals into US clients, US billing, classification at scale — have their own tax layer, covered in our cross-border tax guide for staffing agencies. The payroll engine itself — weekly runs, ROEs at every assignment end, high T4 volume — is a separate discipline our payroll team runs daily. CFO engagements are fixed-fee and scoped after a discovery call; the shape of them is on our advisory and CFO services page.