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Accounting Temp Agencies: Are they expensive?

Posted on Jun 20, 2024

Why would a company or organization utilize an accounting temp agency? After all, an employment agency is not the same thing as a public accounting firm. Accounting Temp Agencies recruit, hire and employ accounting professionals as W-2 employees for a specific period of time. While there is a relative cost to engaging an employment agency or staffing firm, it does not nearly cost the same as hiring a public accounting firm, outside bookkeeper, or consulting firm. The costs are far less expensive. Temp agencies do not charge anywhere near the same hourly rate as an accountant, bookkeeper or partner at a public accounting firm.

When should a firm decide between using the above available options? The choice begins with the strategic need. If a company is seeking staff augmentation to replace an employee termination, an accounting temp agency would satisfy that need. If a company seeks an additional accounting professional with relevant industry experience (e.g. real estate or manufacturing) who can commit to a 3 month or longer specific assignment, the employment agency would also be the solution. After all, the accounting transactions keep piling up and coming. Sometimes in order to keep up with flow of business and monthly deadlines, a temporary/contract employee is the perfect fit.

Accounting temp agencies charge a flat hourly bill rate for every hour worked by the temporary employee. The client reviews and approves the employee’s submitted timecard prior to payroll and billing. Like any customer-focused service provider, a temp employment agency should craft an hourly rate range together with the client based on 2 factors.

1. The client’s budget. Clients may have a budget in mind or shopped around. Their past experience matters in the collaboration.

2. The current market pay rate range of the temporary employee. The accounting temp agency has to share its market intelligence on accurate employee pay rates in order to be able to acquire the right talent to do the job requested by the client.

Sometimes if the employment agency and client cannot agree on a price or bill rate range, maybe its best to redefine the employee job description. Scaling back the job requirements will scale back the employee hourly pay rate. At that point, a lower hourly bill rate can be offered for a slightly different category of temporary employee.

So how do these factors affect the price? Typically, an employment agency will quote an all-in hourly bill rate range based on the mutually agreed employee pay rate range between the 2 parties (the temp agency and client). The bill rate range is above the employee pay rate range because it includes all mandatory state/federal taxes, disability insurance, paid sick leave benefits, workers compensation insurance, and other payroll processing costs. Since the employment agency is officially the W-2 employer, the staffing firm pays all those payroll costs. If the client were to hire the same employee on its own, the client would be required to pay those same costs as well as any other mandatory health benefits, PTO, and 401(k) retirement costs. Additionally, the client would spend time and money on recruitment and loss of productivity due to the worker shortage or gaps in employment.

All of a sudden, the price of retaining an accounting temp agency may not be as expensive as what may appear. The temp agency handles all the following costs:

  1. Recruitment
  2. Job Board / Advertising Costs
  3. Referral bonuses
  4. Payroll Costs: State/Federal Taxes, SS/Medicare, Paid Sick Leave, Disability, Workers Comp & more.
  5. Unemployment Costs – unemployment benefits to the employee when the assignment ends

Additionally, since an accounting temp employment agency complies with FLSA employment laws, a staffing firm will classify its employees as non-exempt workers (hourly employees). This in turn, allows the temp agency to manually set the hours per work week (for example, 25 – 30 hours per week). Clients who utilize accounting temp agencies can ultimately can save money by retaining an outside temporary employee to work less scheduled hours than their own full time employees.

In summary, while it’s not uncommon for a temp agency to hear responses from clients about being pricey or expensive, there are several different circumstances where partnering with a temp agency provides the most flexibility. After all, the billing stops exactly when the client chooses for the assignment to end.