The invoice is the last step of payroll,
not the first step of accounting.
Approved attendance already knows who worked, at which client site, on which day, in which state. The invoice should follow from that record — with your rate card applied, the right GST treatment for that service line and that client, and the attendance evidence attached.
Instead, most agencies rebuild it. Days after payroll closed, in a different system, from a spreadsheet somebody assembled.
Four steps, one record
A single contiguous data path from 6am gate muster to collections reconciliation.
Approved Muster
The day both sides stand behind — captured at the site gate, approved with a named supervisor timestamp.
Worker Payroll
What the worker was paid, and the statutory liability (PF, ESI, PT, LWF, bonus) that attached to the day.
Client Invoice
Billable days or units at that contract's rate card, with your agreed agency markup accurately applied.
GST & Collections
The correct tax treatment for that service line and client, raised with evidence attached, tracked and aged.
Billed days cannot drift from paid days, because they are the same row. Calculated separately — which is what happens when attendance lives in one place and invoicing in another — the two numbers diverge quietly, every month, in your client's favour more often than yours.
The invoice carries the attendance evidence with it. That is not a nicety: an invoice a client can verify without asking you for backup is an invoice that gets approved in days rather than weeks.
Every client bills differently. That should be configuration, not re-keying.
Contract terms configure into the billing engine once, eliminating month-end Excel calculations.
Per-contract rate cards
Rates by skill category, shift, and site. Overtime multipliers and statutory pass-through provisions held against the contract and versioned.
Supported markup models
Percentage on cost, fixed fee per deployed head, per man-day billing, or fixed monthly lump-sum service management charges.
Consolidated or split
One client, multiple sites, multiple service lines (housekeeping, technical, security) — billed as one consolidated invoice or separate bills.
Computed statutory cost
Where contracts pass through employer PF, ESI, and bonus, invoices use the exact figures produced by payroll, not rough percentage estimates.
Contract metadata tracked: Billing cut-off dates, credit periods, minimum headcount SLA thresholds, escalation clauses, and retention deposit terms.
Four GST questions specific to your business
Manpower and security services have mechanics most accounting software treats generically. Getting them wrong creates client disputes, credit problems and, in one common case, an exposure that compounds quietly for years.
4.1 Forward charge or reverse charge — and it can be both on one client
Notification 29/2018Security services (supply of security personnel) supplied by a person other than a body corporate (partnership, LLP, or sole proprietorship) to a registered person fall under reverse charge (RCM). Where the agency is a body corporate (Pvt Ltd / Ltd), forward charge applies as normal.
Housekeeping, soft services, and general manpower supply remain forward charge (FCM) regardless of the supplier’s entity constitution.
The yfy billing engine applies the tax treatment per service line and per client, rather than globally per company.
4.2 The pure-agent question
High Audit RiskSome agencies attempt to invoice GST strictly on their agency service charge, treating the salary and statutory component as a reimbursement under pure-agent rules.
The established position under GST law is that this does not hold for manpower supply. Because the staffing agency is the employer of record and is itself legally liable to pay its workers, the pure-agent test fails (pure-agent requires the recipient to be the party liable to the third party). Consequently, GST applies to the gross consideration including wages, not to the margin alone.
4.3 Place of supply when operating across states
Multi-State ArchitectureYour registered office is in one state. Your client’s operational facility is in another. Their billing GSTIN may be in a third state.
For manpower services supplied to a registered person, place of supply is generally the location of the recipient — which dictates whether an invoice carries IGST or CGST + SGST, and which of your state GSTINs must raise the bill.
yfy holds multiple GST registrations per tenant and resolves the correct state GSTIN and tax heads (IGST vs CGST/SGST) per invoice line automatically.
4.4 e-invoicing and government TDS
IRP & Section 51e-invoicing: For agencies exceeding the notified aggregate B2B turnover threshold, invoices require an Invoice Reference Number (IRN) and signed QR code generated via the Invoice Registration Portal (IRP). Built-in GSP API workflows generate IRNs seamlessly.
GST TDS: Government departments, PSUs, and public sector bodies deduct 2% tax at source under Section 51 on contracts exceeding ₹2.5 Lakhs. yfy tracks GST TDS deductions as a separate ledger line, reconciling certificates against your Electronic Cash Ledger.
We handle the mechanics. Which treatment applies to your constitution, your client mix and your contract terms is a question for your CA — and we will say so on the page rather than let you assume otherwise.
Deductions, credit notes, and a deadline most agencies miss
Clients deduct for absenteeism, unfilled shifts, or SLA claims. That creates a statutory GST problem that compounds quietly for years.
If a client deduction is accepted and invoice value reduces, the output GST already declared on the original invoice is overstated. Correcting it requires a credit note issued within the statutory window (up to 30th November following the end of the financial year). Past that deadline, the commercial deduction stands, but the GST adjustment is forfeited. You have paid tax on revenue you never received, permanently.
| Deduction Control | How the Billing Engine Manages It |
|---|---|
| Deductions recorded against invoice lines | Never netted off as an untracked bank payment difference; the deduction amount and reason stay visible on the ledger. |
| Reasons tied to the underlying record | An absenteeism deduction reconciles against the site muster; an SLA deduction reconciles against contract headcount terms. |
| Credit notes generated from deductions | Carries the original tax invoice number, date, and HSN code to satisfy Section 34 compliance. |
| Ageing against the statutory window | Surfaces accepted deductions nearing the annual deadline so credit notes are issued before tax write-offs become permanent. |
Disputed deductions:Retained as "Disputed" in aging reports rather than accepted, clearly distinguishing slow payers from unrecoverable billing disputes.
On a three per cent margin, collections is not an admin function
Protecting thin agency operating margins by identifying exactly where and why invoices are held up.
Ageing by contract & site
Clear visibility of what is raised, what is client-approved, what is overdue, and exactly how many days it has aged.
Why an invoice is stuck
Categorizes bottlenecks: unapproved by client, disputed on days, disputed on rate card, short-paid, or approved and delayed.
Compliance pack dependency
Highlights invoices where enterprise clients are legally withholding payment pending monthly PF/ESI challans.
Retention deposits tracked
Monitors security deposits and contractual retention money so funds are not misclassified as overdue receivables.
An invoice a client can verify without asking you for backup gets approved faster. The attendance evidence travels with the invoice, which removes the most common reason a manpower invoice sits in someone's queue.
Which contracts are actually making money
Most agencies know their gross margin across the business, but cannot pinpoint which client contracts are subsidizing loss-making ones.
| Cost Component | How yfy Derives True Contract Margins |
|---|---|
| Wages actually paid | Derived per worker, per site, per day from the approved muster and payroll register. |
| Employer statutory cost | Actual PF, ESI, LWF, and bonus liabilities as computed by payroll — never flat percentage estimates. |
| Overtime and allowances | Directly pulled from the approved shift muster records. |
| Deductions & credit notes | Mapped directly against the specific client contract that incurred them. |
Know your net margins by client, site, service line, and month. Instantly spot which contracts a state minimum wage revision just pushed into loss, before you sign a renewal.
Honest limits: What we do not do
We define the boundaries of our billing engine clearly.
- We are not an accounting system. No general ledger, no trial balance, no balance sheet reporting. We generate the invoice, tax schedule, and receivables ledger; your core books remain in Tally, Zoho Books, or your ERP.
- We do not file your GST returns. We produce the GSTR-1 ready invoice data and sales registers. Return submission remains with your in-house tax team or CA.
- We do not give tax advice. The reverse charge, pure agent, and place-of-supply positions detailed here represent our understanding of the statute. Always confirm treatments with your tax counsel.
- We do not chase your money. We provide aging dashboards, dispute tracking, and automated reminder templates. We do not operate a manual collections calling service.
- India only. Specifically built for Indian GST regulations, state minimum wage notifications, and statutory compliance.
Invoicing, tax mechanics & collections answers
Reconcile one month, both sides
Send one month: your deployed roster with client sites, that month's payroll register, one client invoice, and your PF and ESI challans. We reconcile billed days against paid days per client site, test wages against the notified floor for each site's state and skill, and show you where the two sides diverge. Plus a sample client-facing compliance pack for one contract.