Why Staffing Companies Rely on Factoring for Payroll Funding
Written by US Funding on January 4, 2016
The Benefits of Payroll Funding
All staffing companies depend on continuous cash flow in order to make all periodic payroll requirements. With most of them, there are various reasons why funds may not be available, and the need to rely on factoring is the most economical answer to their needs. Here are some of the reasons that factoring is the best solution to payroll funding for staffing companies:
- Bank loans are not an economical means to obtain funding (waiting period, credit check, high interest rates)
- Growth spurts generated by new clients
- Non-forecasted spike in sales during the year-invoices have 30-day payment terms
- Established agencies that have reached the ceiling of their credit line
- Investors don’t want to see loans on the balance sheet
Establishing a relationship with a factoring company will enable the staffing firm to obtain the funds needed without the need for navigating the rigorous process of obtaining the needed funds through traditional bank loans that can take time and may not be approved.
By using factoring, payroll funding for staffing companies can be assured by obtaining the necessary funds to deal with a stagnant or negative cash flow. That situation could stand between your company’s ability to grow, or not to grow, and even your company’s success or failure.
Your Need for Cash
As a temporary staffing firm, you invoice your clients for hours that are worked by a temporary worker you represent. Since you are not paid until after the job vacancy is filled and your staffer actually works, you are likely to experience periodic cash flow issues that can affect your operating expenses and suffocate your ability to grow.
Your firm must use operating funds to cover advertising costs and other recruiting expenses before the first invoice is paid by the client. Unfortunately, there must be considerable funds available while invoices are outstanding, and there is never a guarantee that outstanding invoices will be paid on time.
The Factoring Answer
Creating a relationship with a factoring company, such as US Funding, can make the difference in correcting an operational nightmare, or taking advantage of an opportunity to grow your business. A reputable and established factoring firm can make a significant difference going forward by offering the relief you need through:
- Fast Funding – your firm can rely on same day or next day funding.
- No minimums – borrow only what you need, when you need it.
- State of the Art Systems – will enable you to manage your account efficiently.
- Competitive rates – never watch your profits completely eroded by funding fees.
- Client Credit Analysis – know your client’s payment history and ability to pay.
The bottom line with any business looking to grow, is having the funds available for taking advantage of growth opportunities when they are presented. If your staffing business does not have those funds, most opportunities will simply pass you by, while you are negotiating with your bank or waiting for approval.
Your staffing company provides a vital service for other businesses to grow or maintain their business. Shouldn’t you be in a position to grow your business as well?
For more information about factoring for payroll funding for staffing companies, call toll-free at (866) 812-9771 to speak with an industry expert. We also invite you to apply on-line or over the phone.