Staffing Agency Bill Rate: What is it?

"You pay your employees $20/hr and bill us $34… are you serious?" What exactly is the staffing agency bill rate, and what does it encompass?

Many organizations find that partnering with staffing agencies to source non-employee workers temporarily provides numerous advantages, including improved access to in-demand skills, lower workforce expenses, and increased flexibility. However, they are puzzled by the staffing agency bill rate and its implications.

In this article, we will explore what the staffing agency bill rate entails and what it generally covers. 

Understanding the exact amount you are paying your staffing agencies will provide insight into your non-employee workforce program, enabling you to make more informed staffing decisions in the future.

What is staffing agency bill rate? 

A staffing agency bill rate is the addition of the pay rate and markup. The pay rate is the amount of money that the staffing agency is paying the temporary workers (temp) that they are placing within your organization, while the markup is the additional cost they are adding for their services. 

In essence, the bill rate is the complete cost that you are paying for the temps works, government taxes and benefits as well as the efforts of the staffing agency to place the worker within your company. 

These elements are all added together to create the staffing agency bill rate. 

What costs are included in the bill rate?

What can be included in the bill rate can differ substantially between staffing agencies. We recommend that before working with any staffing vendor it’s crucial that your business find out exactly what costs are included in the bill rate. 

A staffing agency should be able to tell you exactly what percentage of the bill rate is going to the temp, how much is going to the government and what cut the agency is taking.

There are a few different aspects that make up the bill rate for a staffing agency, these include:

Benefits - Since a temporary worker falls under the employee category for the staffing agency placing them, they are entitled to benefits such as insurance, disability, vacation and sick pay. Since the responsibility of this payment is transferred from the organization to the staffing agency, there will be an added cost to the bill rate.

Recruiting and operational costs - This covers all of the staffing agency’s operational costs of running their businesses, such as management, worker training, administration, compliance and recruiting costs. Therefore additional costs will be added to the bill rate.

Payroll burden - When sourcing temps through a staffing agency, these workers will still be on the payroll of that vendor. That means your organization will have absolutely no responsibility when it comes to payroll of temp workers. 

Profit-  Staffing agencies are profitable businesses too. That means they ultimately need to make a profit. Once all the costs are clearly identified,  the remainder is the staffing agency's gross profit on the resource(s) they have placed at your organization.  

Remember, when analyzing your staffing vendors and their bill rates you need to find a middle ground. 

Any staffing agency that is willing to go into lengthy negotiations and significantly reduce their markup is likely to place poor temps into your organization, and reduce your overall workforce quality. 

But at the same time - paying a markup that’s significantly over the industry standard will only end in your business paying too much money, and that’s going to have a negative impact on how profitable your company is. 

You’re going to have to find the balancing act between saving money, but also improving workforce quality. We will give you one tip to help, the use of a vendor management system (VMS) that consolidates your vendors and gives your clear visibility into staffing agency performance and spend will ensure you are able to continually improve your non-employee workforce program. 

Do you have any  questions about staffing agency bill rate?  And implementing smarter ways to manage your vendors? Contact us today - we would love to talk!

Read More about Managing Staffing Agencies with a VMS: 

➡️ How to Manage Staffing Agencies: Your Complete Guide➡️ 5 Reasons to Use Staffing Agencies: & How to Manage Them Effectively with a VMS➡️ VMS: The Simplest Way to Manage Your Staffing Agencies➡️ Managing Staffing Agencies: To Tender or Not to Tender➡️ Managing Staffing Agencies: Your Guide to Performance Management & KPIs➡️ Best Practices: Managing Staffing Agencies for your Contingent Workforce➡️ Managing Staffing Agencies: What Bells & Whistles do you Really Need?➡️ Using VMS Software to Track Staffing Agency Performance➡️ 5 Dangers of using Manual Spreadsheets to Manage Staffing Vendors➡️ How to Choose a Staffing Agency for You Company's Contingent Workforce Needs➡️ VMS Technology: Why Manual Spreadsheets are Not Effective

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