Staffing Agency Timesheet Approval: How Many Approved Hours Reach an Invoice?

Three records, one assignment at a time

The count needs no new software. It needs three exports that a staffing firm already produces, matched on the assignment, the worker and the week.

• The payroll register: hours paid per worker per week, split into straight time and overtime, with the pay rate. Federal recordkeeping rules already require this detail. Under 29 CFR 516.2, employers keep hours worked each workday and total hours worked each workweek, total straight-time earnings, total overtime premium pay, total wages paid each pay period, and the date of payment and the pay period it covers.
• The timesheet or approval record: hours submitted, the date and time each timesheet was approved, and the name of the client approver. Where the client approves inside its own vendor management system, this is the VMS export, not the firm’s ATS.
• The client invoices: hours billed per worker per week, the bill rate, any overtime and expense lines, the invoice number and the date the invoice was sent.

Illinois puts two of these records side by side in its statute. The Day and Temporary Labor Services Act (820 ILCS 175/12) requires an agency to keep, for each day or temporary laborer, the number of hours worked and the hourly rate of pay, along with copies of all invoices for the third party client. It also requires the third party client to send the agency the hours information no later than 7 days after the last day of the work week, and it says the client’s failure to do so is not a defense to the agency’s recordkeeping duty. Hours paid and hours billed are both on the record there. Comparing them is the whole method.

Sort every gap into three piles

For each assignment and week, subtract hours invoiced from hours paid. In a clean week every line matches. Every line that does not belongs in one of three piles, and each pile has a different owner and a different fix.

• Approved, not yet invoiced. The client approved the hours and the invoice has not gone out. Causes: invoices batched on a fixed day, an invoice held for one missing line, a billing person out, a client that wants one invoice per cost center when the system produces one per worker.
• Not approved, waiting on the client. The worker submitted and the supervisor has not approved. Causes: a supervisor on leave, approvals routed to someone who left, a dispute about a missed punch, hours entered against the wrong week or the wrong PO.
• Paid and never billed. The firm paid the hours and no invoice will ever carry them unless someone looks. Places to check: a pay-rate raise entered on the pay side without a matching bill-rate decision; overtime paid at the premium and billed at straight time, or not billed; a week worked after the assignment end date in the system; a holiday or shift differential the agreement allows the firm to bill; a timesheet correction made in payroll and never pushed to billing; reimbursed expenses never rebilled.

The third pile is a hypothesis to test, not a finding. A firm may run the count and find nothing in it, which is a good result worth knowing. Where expenses do turn up there, note what Kforce’s 10-K says about billable expenses: they are recorded in revenue and in direct costs and “provide no profit margin.” An expense paid to a contractor and never rebilled is therefore not a thinner margin; it is the whole amount out of pocket.

Run the four-week count

Pick the last four complete work weeks. Export the three records for every active and recently ended assignment. Then build one table with a row per assignment per week and these columns: hours paid, hours approved, approval date, hours invoiced, invoice date, and the pile each difference belongs to. Two more columns finish it: the days from the end of the work week to the invoice date, and the dollar value of each gap at the bill rate.

Illustrative example: a firm has about 50 contractors on assignment, paying roughly 2,000 hours a week at an average bill rate of $40 an hour, or $80,000 a week of billable time. Over four weeks it pays 8,000 hours and finds 7,700 on client invoices. The 300-hour gap sorts like this: 180 hours approved but waiting for the next invoice batch, 90 hours still unapproved at two clients, and 30 hours paid and never billed (one week of overtime billed at straight time and one raise not carried to the bill rate). At $40 an hour that is $7,200 waiting on the firm, $3,600 waiting on the client, and $1,200 that would never have been billed. The numbers are hypothetical; the shape is the point. Each pile now has a size, and the size says which fix comes first.

Read the days column next to the dollars. If invoices for a week usually leave the following Tuesday but one client’s leave the following Friday, that client’s terms start three days later than everyone else’s, every week, on every hour.

One owner for approved to invoiced

The fix is ownership first and software second. One person, by name, owns the step from approved hours to a sent invoice, and the step has a time on the calendar. A workable rule: invoices for the prior work week leave on the same day payroll for that week is processed, and anything that cannot leave that day goes on a list with a reason and a next action.

A short set of standing rules keeps the three piles small.

• An approval cutoff written into the client onboarding, with a named backup approver for every supervisor, recorded in the assignment record.
• A same-day reminder to any approver who misses the cutoff, and a second message to the client contact named in the agreement the next morning.
• No pay-rate change is saved without a recorded bill-rate decision next to it: passed through, absorbed, or waiting on the client.
• Overtime and expense lines checked against the client agreement before the invoice leaves, not after a dispute.
• A weekly read of the three piles, by client, with last week’s numbers beside this week’s.

Software that turns an approved timesheet into an invoice automatically can help, once the count shows where the days and dollars sit. It does not decide what happens to an unapproved timesheet, a rate change or an overtime rule, so the owner and the rules come first. One boundary belongs here as well: whether and when a firm may delay a worker’s pay because a client has not approved hours is a legal question, not an operations one. The California text above ties the pay date to the work week. Ask an employment attorney before changing anything on the pay side.

What should a staffing agency invoice include?

A staffing agency invoice should carry, for each worker and each work week, the hours the client approved, split into straight time and overtime, at the bill rate in the client agreement, with the reference numbers the client needs to match each line to its own approval record. The test is plain: someone in the client’s payables office should be able to tick every line against the approved timesheet without calling the firm.

Illinois adds a reason to keep the per-worker detail. Under 820 ILCS 175/12, an agency covered by the Day and Temporary Labor Services Act, whose definition of day and temporary labor excludes work of a professional or clerical nature, must make records related to the number of hours billed to a third party client for an individual worker’s hours of work available for review or copying within 5 days following a written request, and must keep its records under that section for 3 years from their creation. An invoice that lists hours by worker and week answers that request from the file; a lump-sum invoice leaves someone to rebuild it. How the Act applies to a particular firm is a question for its employment attorney. Not legal advice.

Programs run through a client’s vendor management system set their own invoice format and can send back a line that does not match it. Outside a VMS, the firm’s own invoice layout is the place to build the match in once, so every later invoice carries it.

• Header: the firm’s name, the invoice number and date, the client’s PO or contract number and cost center where the client uses them, and the payment terms with a printed due date.
• One line per worker per week: the worker’s name, the week-ending date, straight-time and overtime hours, and the bill rate for each.
• The approval reference for each line: the approver’s name and approval date, or the timesheet ID from the client’s system, so the line points to a record the client already holds.
• Separate lines for charges other than straight-time and overtime hours, such as shift or holiday differentials and reimbursable expenses with receipts, each only where the client agreement allows the firm to bill it.
• Hour totals per worker and per invoice that equal the approved hours in the timesheet export, so any difference shows up before the invoice leaves.

When to do this in-house, and when not to hire anyone

Everything above is in-house work: three exports, an afternoon of matching, a weekly list and a named owner. A firm whose invoices for every week leave within a day or two of payroll, and whose four-week count shows matching hours with nothing in the third pile, does not need outside help with this hand-off. Spend the time elsewhere.

It is worth a second look when the count keeps finding hours in the third pile, when the days from week-end to invoice vary widely by client, or when this gap sits next to others: invoices kicked back by a client’s VMS, conversion fees never invoiced, clients paying well past terms. The page on staffing agency consulting lays out where a staffing firm’s cash waits, hand-off by hand-off. The Revenue Review is a read-only engagement that takes two weeks: we read the firm’s own payroll, timesheet and invoice records, measure the days and dollars between hours worked and hours invoiced, and put a monthly dollar figure on each leak, with a written report and a 90-day plan. We do not contact candidates, contractors or clients, and legal questions stay with the firm’s attorney. A free 20-minute call is enough to tell whether a Review fits.