Recruiting Agency Invoicing: Fees, Terms, Rebates

Recruiting agency invoicing works differently from service invoicing: the fee is usually a percentage of the placed candidate's salary, the invoice is triggered by the candidate's start date, and a rebate clause may claw back part of the fee if the hire leaves early. Getting these three mechanics right protects your cash flow.

This guide covers the fee models, the invoice triggers, and the rebate terms specific to placement work.

Quick summary

• Placement fees are typically a percentage of the candidate's first-year salary.
• Contingency invoices on start date; retained invoices in stages.
• A rebate clause refunds part of the fee if the placement leaves within a set window.
• Invoice immediately on the agreed trigger; placement fees are large and worth chasing.
• The fee basis and rebate terms belong in the client agreement, not just the invoice.

How recruitment fees are structured

A recruiting fee is almost always a percentage of the placed candidate's compensation, not a flat service rate. That percentage and what it applies to must be agreed before the search.

Model	When you invoice	Fee basis
Contingency	On candidate start date	% of first-year salary
Retained	Staged (engage / shortlist / placement)	% of salary, split across stages
Container	Partial upfront + balance on placement	Hybrid of the two

On a contingency basis, fees commonly run 15 to 25 percent of the candidate's first-year salary, with 20 percent the most common benchmark; retained and executive search typically run higher.

Contingency is paid only on a successful hire; retained spreads risk by billing across the search. State which model applies and the exact salary basis (base only, or base plus bonus) in the agreement so the invoice is not disputed later.

The start-date trigger

The detail that separates placement invoicing from service invoicing is the trigger. A contingency fee is earned when the candidate starts, not when the offer is signed.

Invoice on the confirmed start date. Build the trigger into your client agreement so there is no debate about when the fee becomes due, the same clarity a service consultant gets from an engagement letter. Send the invoice the same day the candidate starts; these are large amounts and delay is expensive.

What the placement invoice must include

Beyond the standard invoice fields, a placement invoice needs specifics that justify a large fee.

• The placed candidate's name and role.
• The agreed salary the fee is calculated on.
• The fee percentage and the resulting amount.
• The confirmed start date (the trigger).
• The rebate terms by reference.

Include the standard details too: invoice number, dates, payment terms, and methods. Track and send these through invoicing and payments so a high-value invoice is not sitting in a draft folder.

The rebate clause

Recruiting carries a risk service work does not: the placement can quit or be let go shortly after starting. The rebate clause handles this.

A typical rebate refunds a sliding portion of the fee if the candidate leaves within a guarantee period, for example a full refund inside 30 days, scaling down over a 90-day guarantee period. Spell out whether it is a cash refund or a free replacement search. This clause is a frequent dispute source, so the exact wording matters.

The data experiment: trigger clarity and disputed fees

We compared placement engagements where the invoice trigger was written into the agreement versus those relying on an informal understanding.

The written-trigger engagements collected on time with few disputes, because "fee due on confirmed start date" left nothing to argue. The informal ones generated arguments over whether the fee was earned at offer, acceptance, or start, delaying large invoices by weeks. For high-value placement fees, a single defined trigger line is worth more than any collection effort after the fact.

Not for you: when this model does not apply

This invoicing approach assumes placement-based recruiting. It does not fit when:

• You run staffing on an ongoing hourly markup (temp/contract). Then you invoice recurring hours, closer to standard service invoicing for consultants.
• You charge a flat retainer for advisory talent work with no placement component. Use a service invoice and skip the percentage and rebate.
• Your client mandates a vendor management system with its own billing rules. Follow their process.

Percentage fees, start-date triggers, and rebates fit permanent placement. For other recruiting models, invoice the way the work is actually structured.

Frequently asked questions

How do recruitment agencies invoice clients?

Recruitment agencies typically invoice a percentage of the placed candidate's first-year salary, triggered by the candidate's confirmed start date for contingency work, or in stages for retained searches. The invoice should name the candidate, role, salary basis, fee percentage, start date, and rebate terms.

What is a rebate clause in recruitment?

A rebate clause refunds part of the placement fee if the candidate leaves within a guarantee period, often on a sliding scale such as a full refund inside 30 days reducing toward 90 days. Some agreements offer a free replacement search instead of a cash refund.

When does a recruitment agency get paid?

For contingency placements, the fee is earned and invoiced when the candidate starts, not when the offer is accepted. Retained searches are billed in stages across the search. Defining the trigger in the client agreement prevents disputes over when the fee is due.

What is the difference between contingency and retained recruiting?

Contingency recruiting is paid only on a successful placement, invoiced at the candidate's start date. Retained recruiting charges a fee split across stages of the search regardless of outcome, which spreads the agency's risk and is common for senior or specialized roles.

Related guides:

• How to invoice as a consultant
• Engagement letter: template, samples, and clauses
• Net 30 vs net 15: which payment terms to use