Why Permanent Recruitment Agencies Should Consider Placing Contractors

19 Aug

In today's competitive recruitment landscape, agencies that focus solely on permanent placements may be missing out on a game-changing opportunity. We understand that moving into contract recruitment can feel daunting, but the benefits are too significant to ignore: consistent revenue streams, enhanced business valuations, and deeper client partnerships.

At AGPayroll, we work with hundreds of agencies who've made this transition successfully. Here's why contract recruitment could transform your business—and how we make it simple.

Generate Revenue Every Day Contractors Work

One of the biggest challenges with permanent placements is the unpredictable revenue cycle. You might close a deal, but payment depends on start dates, notice periods, and client schedules. This creates the classic "feast or famine" cash flow that keeps agency owners awake at night.

Contract placements change this entirely. With contractors generating income every day they're on-site, you'll build a predictable revenue stream that smooths out cash flow fluctuations. Imagine having multiple contractors working daily—that's consistent income flowing into your business whilst you focus on growing both your permanent and contract books.

Significantly Increase Your Agency's Valuation

Here's a statistic that might surprise you: agencies offering both permanent and contract services can attract valuations of 3-6x revenue, compared to just 1-2x for permanent-only businesses.

Why? Because contract revenue demonstrates recurring income streams, diverse service offerings, and deeper market penetration. When it comes time to sell your business, that contract division becomes a significant value multiplier. You're not just selling relationships and pipeline potential—you're selling proven, ongoing revenue.

We Handle the Complexity So You Don't Have To

The biggest concern we hear from permanent-focused agencies is: "Contract recruitment sounds complicated." We get it. Managing payroll compliance, funding contractors, and handling administration can seem overwhelming.

That's exactly why AGPayroll exists. Our fully outsourced payroll solutions remove every administrative and financial burden:

Complete payroll management: We handle umbrella, CIS, and limited company payroll
Funding solutions: Your contractors get paid on time, every time
Compliance confidence: SafeRec certified processes ensure you're protected
Technology that works: Our Nxsys platform integrates seamlessly with your existing systems

You focus on what you do best—finding great candidates and building client relationships. We handle everything else.

Strengthen Client Relationships and Uncover New Opportunities

With permanent placements, your relationship often goes quiet once the candidate starts. But contractors create ongoing touchpoints that permanent recruitment simply can't match.

Contractors on-site become your eyes and ears, providing valuable intelligence about:

Upcoming projects and additional resource needs
Organisational changes and new hiring managers
Market insights from inside your client's business
Opportunities for both contract and permanent placements

By offering both services, you become a strategic partner rather than just a supplier. Clients see you as their go-to recruitment solution, whatever their needs.

Build a More Attractive Business for Future Exit

Contract revenue doesn't just boost your current profitability—it makes your business significantly more attractive to potential buyers.

Acquirers love businesses with predictable, ongoing revenue streams. When you have contractors working at the point of sale, the buyer inherits immediate cash flow. Compare this to a permanent-only agency, where value is largely based on client relationships and future pipeline potential—much harder to quantify and guarantee.

Your Next Step Into Contract Recruitment

Any recruitment agency focused solely on permanent placements should seriously consider diversifying into the contract market. The benefits are clear: improved cash flow, increased business valuation, stronger client relationships, and a more comprehensive service offering.

At AGPayroll, we've helped hundreds of agencies make this transition successfully. Our fully outsourced solutions mean you can start placing contractors immediately without overhauling your internal processes or taking on compliance risks.

Ready to explore how contract recruitment could transform your business?

Let's talk about your specific situation and show you exactly how we can support your move into contracting. With our SafeRec-certified processes and proven track record, you'll have everything you need to succeed.

Contact our team today: