Year End Checklist: Preparing Your Staffing Agency for Success

By: Frances Velez, Payroll Services Manager

Fran ensures accurate payroll and invoicing, advises clients on staffing best practices, and builds strong, trusting relationships.

Gear Up for Next Year

As the year draws to a close, it’s the perfect time for a year end checklist. Staffing agency owners should reflect on accomplishments and plan for a successful year ahead. I’ve seen firsthand how beneficial a thorough year-end review is for staffing entrepreneurs. It allows you to optimize your operations, strengthen client and workforce relationships, and align your goals with next year’s opportunities!

To help you navigate this busy period, I’ve compiled a comprehensive checklist that ensures your staffing agency is primed for growth and ready to tackle the new year’s challenges.

1. Review Your Financial Year End Checklist and Plan for 2025

Start by diving into your agency’s financials. Did you meet your revenue goals this year? Where did you exceed expectations, and where did you fall short? A detailed review of your financial performance can uncover valuable insights to guide your budget planning for 2025.

Assess profitability: Calculate metrics like gross margin percentage and days sales outstanding (DSO). Are they aligned with industry standards?
Forecast growth: Adjust revenue and expense projections based on this year’s performance.
Identify cost-saving opportunities: Review expenses to pinpoint areas where you can trim costs or reinvest in high-impact areas like technology or marketing.

This is the financial metrics year end checklist I recommend that my clients track for accurate year-end reporting:

Gross Margin Percentage: Indicates profitability and pricing efficiency (Target: 20-30%)
Fill Rate: Measures ability to meet client demand (Target: >90%)
Days Sales Outstanding: Tracks how quickly payments are collected (Target: <45 days)
Candidate Turnover Rate: Reflects retention of temp workers (Target: 15-20% annually)
Client Concentration: Evaluates revenue dependence on key clients (Target: ≤20-30% per client)
Payroll-to-Revenue Ratio: Ensures payroll costs align with revenue (Target: 60-70%)
Recruiting Efficiency Metrics 
- Time-to-Fill: Speed of filling open positions
- Cost-per-Hire: Cost of recruiting and onboarding

2. Evaluate Client Relationships and Strengthen Partnerships

Because healthy relationships are the backbone of any successful staffing agency, take the time to assess current contracts, client satisfaction, and opportunities to grow your accounts. Consider activities like:

Conduct contract reviews: Look for opportunities to renegotiate terms, adjust billing rates, or refine your scope of services.
Gather feedback: Year-end surveys or informal meetings can uncover ways to improve your service offerings.
Reinforce client retention strategies: Address feedback, solidify partnerships, and identify opportunities to upsell value-added services.

These are the specific clauses or contract elements I recommend that staffing entrepreneurs prioritize when renegotiating contracts at year’s end:

Billing Rates and Markups: Ensure rates reflect current market conditions, including inflation, labor cost increases, and demand for specialized skills.  Specify overtime rates, holiday pay, and other premiums. 
Payment Terms: Negotiate shorter payment cycles (e.g., net 30 vs. net 60) to improve cash flow. Be sure to include penalties or interest for late payments. 
Conversion Fees: Update terms for clients hiring temp workers permanently, ensuring conversion fees align with the value of the placement. 
Scope of Services: Clarify services provided, including recruiting, background checks, onboarding, and any ancillary support.  Define client responsibilities, such as workplace training or equipment provision. 
Performance Metrics and SLAs: Establish measurable Service Level Agreements (SLAs) that set clear expectations for response times, fill rates, or worker quality.

3. Year End Checklist to Optimize Operations and Technology

You already know that upgrading your technology can save you time and resources, but it’s nice to have a refresher. Use this time to ensure your agency is running efficiently.

Audit your tools: Review your CRM, ATS, and payroll systems. Are they meeting your needs, or is it time for an upgrade?
Automate where possible: Identify repetitive tasks that could be automated to improve efficiency.
Strengthen cybersecurity: Protect sensitive client and candidate information by conducting a security audit.

I find that streamlining these operational inefficiencies can help staffing entrepreneurs operate with less headaches:  

Recruiting and Onboarding Delays: Extended time-to-fill metrics or frequent missed client deadlines
- Streamline candidate sourcing and screening processes. 
- Invest in applicant tracking systems (ATS) or automation tools. 
High Candidate Turnover: Frequent redeployment needs and increased recruiting costs
- Improve communication about job expectations. 
- Enhance worker engagement through incentives, feedback, or training programs. 
Inefficient Timesheet and Payroll Processing: Errors or delays in payroll affecting worker satisfaction
- Transition to digital timesheet management systems. 
- Reassess payroll cycles for better alignment with cash flow. 
Client and Job Order Mismatches: High rejection rates or dissatisfaction with worker placements
- Develop clearer job requirement intake processes. 
Poor Communication and Follow-Up: Client or worker complaints about responsiveness
- Set up standardized communication protocols and follow-up schedules. 
Unbalanced Client Portfolios: Over-reliance on a few major clients or underperforming accounts
- Review client profitability and renegotiate or discontinue low-margin accounts. Diversify the client base to mitigate risk.

4. Refine Your Marketing Strategy for Growth

Marketing is key to attracting clients and expanding your candidate pool, especially if you’ve entered a new market or geographical area. Reflect on this year’s efforts and fine-tune your approach for the year ahead. Here’s what I recommend to clients:

Evaluate past marketing campaigns: Which strategies delivered the best ROI? Lean into those next year.
Plan future outreach: Leverage data to craft campaigns that showcase your agency’s unique value proposition.
Build trust: Develop case studies and client testimonials that highlight your success stories. Use for sales materials, on your website or on your Google business profile.

The most important aspect to consider for staffing agency marketing is authenticity. If you can authentically articulate what makes you different, that will go a long way. 

Take some time to develop a strong value proposition. What makes your services unique? This may include experience, expertise, specialized focus, personal touch, and proven results. 
Train your team to deliver this value proposition to prospects through sales & marketing channels (calls, emails, marketing materials, social media, etc.).
Cultivate client testimonials, case studies, and success stories that support your value proposition and how it impacts clients.

Learn about marketing for staffing agencies in more detail here!

5. Prepare for Payroll and Compliance Updates

Payroll and compliance updates are non-negotiables for any staffing agency. Ensure you’re fully prepared to meet new regulations and tax requirements. I direct my clients to this year end checklist:

Review payroll processes: Verify that your systems are accurate, compliant, and ready for next year.
Complete tax preparations: Finalize year-end tax filings and review changes to federal, state, and local regulations.
Stay ahead of labor laws: Confirm compliance with evolving laws, including minimum wage increases and classification rules.

Clients often ask where to find local, state, and federal payroll or tax regulations. Here’s where I usually direct them:

IRS
US Department of Labor
Bloomberg Tax (if you’re searching for a new tax software)
Your state’s Department of Labor or Workforce website
Your city or county’s tax websites
Resources published by your payroll software

6. Explore Payroll Funding as a Growth Strategy

As your staffing agency grows, maintaining cash flow is crucial. Payroll funding can help bridge the gap between paying employees and receiving payments from clients, especially when billing cycles are long. There’s a common misconception that payroll funding is only useful when you’re in a pinch: false! It isn’t just for emergencies; it’s a strategic tool for long-term growth.

At Encore Funding, we provide customized funding solutions to help staffing agencies like yours thrive. Whether scaling operations, onboarding a high volume of candidates, or tackling a slow payment cycle, payroll funding offers financial flexibility to achieve your goals.

How do you know if payroll funding is right for you? Evaluate your cash flow needs, growth plans, and operational challenges. Additionally, consider extra services you might benefit from, like credit checks and back-office support (both of which are part of Encore services, which my clients find to be a huge plus!).

Start the New Year Strong with a Strategic Plan

A thoughtful year-end review sets the stage for a successful and profitable year ahead. By evaluating your financials, client relationships, workforce, and operations, you’ll be well-positioned to capitalize on new opportunities in 2025. I hope you found this year end checklist helpful!

If you’re ready to take your staffing agency to the next level, apply for funding. Let’s make next year your best yet!