Authored by Phil Cohen
Large staffing clients create some of the highest payroll risk because payroll increases immediately while payment risk concentrates in a single account.
Winning a major client feels like a growth milestone, but without proper controls, it can expose a staffing agency to serious cash flow, credit, and operational risk. This guide explains how to onboard large clients safely without putting payroll at risk.
Why Large Clients Increase Payroll Risk
Large clients change the risk profile of a staffing agency overnight.
Common characteristics include:
rapid increases in weekly payroll
long payment terms, often Net 45 or Net 60
complex approval processes
invoice disputes that delay payment
high concentration of revenue in one account
The risk is not the client’s size.
The risk is how quickly payroll obligations grow compared to cash inflow.
The Most Common Payroll Mistake Agencies Make
The most common mistake is onboarding a large client using the same process used for small accounts.
This usually means:
extending full payment terms immediately
increasing headcount before funding is secured
assuming payment will be “on time”
funding payroll based on optimism instead of structure
When one large client represents a meaningful share of payroll, even a short delay can cause major stress.
Step 1: Separate Sales Wins From Payroll Commitments
A signed client agreement does not equal payroll readiness.
Before increasing placements:
confirm funding availability
model payroll exposure week by week
evaluate how much cash is required before the first client payment
stress-test delays of 15, 30, and 45 days
Payroll decisions should be made only after funding is secured, not when contracts are signed.
Step 2: Assess Client Credit Before Extending Full Terms
Large clients are not automatically low risk.
Before onboarding:
review payment history with other vendors
understand internal approval and dispute processes
confirm who authorizes invoices
identify any history of delayed payments
Credit evaluation protects payroll by preventing overexposure to a single account.
Step 3: Limit Initial Exposure During Ramp-Up
Early onboarding is the riskiest phase.
Best practices include:
starting with a controlled number of placements
limiting initial payroll exposure
increasing headcount gradually
reviewing payment behavior before scaling further
This approach allows risk to be evaluated before payroll reaches critical levels.
Step 4: Align Payroll Funding With Invoices, Not Promises
Payroll should be funded based on:
approved hours worked
invoices issued
documented receivables
It should never rely on:
expected payments
verbal assurances
“they usually pay on time”
Funding tied to invoices protects payroll from client-side delays.
Step 5: Avoid Concentration Risk
Large clients often represent a growing share of payroll.
To reduce concentration risk:
cap payroll exposure to any single client
diversify placements across multiple accounts
avoid allowing one client to dominate weekly payroll
If one client controls payroll outcomes, the agency is exposed.
Step 6: Implement Faster Billing and Approval Processes
Payroll risk increases when billing slows.
Reduce delays by:
using standardized timesheets
enforcing approval deadlines
billing weekly instead of biweekly
correcting invoice errors immediately
Faster billing shortens the gap between payroll and funding.
Step 7: Monitor Payment Behavior Weekly
Risk does not stay static.
Track:
payment timing trends
dispute frequency
approval delays
changes in client contacts or processes
Small changes often signal larger issues ahead. Early detection protects payroll.
Step 8: Build Contractual Protections Where Possible
Contracts should support payroll protection.
Consider:
clear payment terms
dispute resolution timelines
approval requirements defined in writing
penalties for excessive delays
language allowing adjustment of terms if payment behavior changes
Contracts do not eliminate risk, but they provide leverage when problems arise.
Step 9: Maintain a Payroll Contingency Plan
Even well-managed onboarding can encounter surprises.
A contingency plan may include:
temporary placement caps
backup funding access
internal payroll buffers
escalation triggers for leadership review
The goal is not perfection. The goal is resilience.
What Happens When Payroll Risk Is Ignored
Agencies that ignore payroll risk during onboarding often experience:
missed or delayed payroll
leadership stress and firefighting
damaged employee trust
stalled growth
strained client relationships
These outcomes are preventable with structured onboarding.
Key Takeaways
Large clients increase payroll risk quickly and quietly
Payroll obligations grow faster than payment certainty
Funding must be secured before scaling placements
Credit assessment and gradual ramp-up reduce exposure
Payroll should never depend on client promises
Monitoring and controls protect growth without slowing it