Why Margin-Only Deals Could Be Undermining Your Recruitment Agency’s Growth

At first glance, margin-only recruitment deals may seem like a simple, low-effort solution, especially for new or growing agencies. The end-client handles payroll, the contractor gets paid, and you receive your margin. But dig a little deeper, and it becomes clear these arrangements come with significant hidden downsides, many of which can limit your long-term success.

At QUBA Solutions, we work closely with agencies at every stage of their growth. We’ve seen how margin-only deals can quietly undermine profitability, professionalism, and future opportunities. Here’s what you need to know before agreeing to one.

1. You Lose Operational Control

With a margin-only deal, your agency typically retains responsibility for invoicing, but loses control once the client takes over payroll. That raises key questions:

• Has the contractor’s rate changed?
• Has the assignment been extended?
• Are new terms being discussed, without your input?

Without oversight, you’re no longer fully managing the contractor relationship, and key business decisions can happen without your knowledge.

2. You Risk Losing Contact with the Contractor

When the client is handling payroll, your regular contact with the contractor often disappears. This is more than a missed check-in, it’s a lost relationship. And in recruitment, relationships are everything.

That contractor could be a future client, refer others to your agency, or be open to new assignments. Without regular communication, you’re missing valuable long-term opportunities.

3. It Can Damage Your Financial Position

Contractor turnover forms part of your business’s overall financial profile. If you’re not processing payroll, you’re not showing that contractor spend in your turnover figures, which can matter hugely during:

• Financial reporting
• Investment rounds
• Future business valuations or acquisition talks

Put simply: margin-only deals shrink your apparent business footprint, even when you’re delivering real value.

4. It Can Undermine Professional Credibility

If your agency doesn’t offer payroll services, it can appear less established or capable to both contractors and clients. Having a robust back-office and payroll setup (like the one QUBA provides) shows you’re serious, compliant, and fully equipped to support both sides of the hiring equation.

5. Admin and VAT Complexity Increases

You’re still responsible for invoicing and reporting, including VAT, without the benefit of end-to-end visibility. This fragmented process not only creates more admin but increases the chance of error or oversight, especially when assignment details change mid-contract.

With no integrated view of payroll and margin, financial reporting becomes messier and less reliable.

6. There’s Less Security for You and Your Contractor

When the client is payrolling the contractor, you no longer benefit from the credit checks or financial risk assessments that come with working through a factoring partner like QUBA. If the client is experiencing financial difficulty, you may not know until it’s too late, putting your reputation and the contractor’s income at risk.

At QUBA, our finance partners conduct real-time credit assessments, protecting both agency and contractor from working with high-risk clients.

QUBA Solutions: Helping You Stay in Control and Scale with Confidence

At QUBA Solutions, we believe recruitment agencies deserve better than margin-only compromises. That’s why we offer a full suite of funding and back-office services, built specifically for recruiters, so you can:

• Retain control over your contractors and client relationships
• Show the full value of your turnover
• Reduce admin and risk
• Look professional and capable to all stakeholders
• Scale confidently with real-time financial insight

Our exceptional customer service means we’re not just a provider, we’re your partner. From your first placement to multi-million-pound turnover, we’re by your side, ensuring your agency runs smoothly, looks professional, and maximises every opportunity.

Thinking of reviewing your approach to contractor payroll and margin-only deals?
Let’s talk. Contact the QUBA Solutions team today and discover how we can support your agency with smarter funding, better control, and genuine long-term growth.