Authored by Phil Cohen
If you’re running a staffing company in 2024, you already know the stiff challenges you’re facing: managing shifting client loads, filling mounting job orders, and chasing payments from customers. And when your clients pay on net 30, 60, or even 90 days, it’s all too common to feel strapped for cash when it’s time to make payroll for your workers. Factoring provides a way to get working capital immediately by selling your unpaid invoices.
New to factoring? Here’s what staffing companies need to know, plus how a factoring broker can help you streamline the process.
Why Factoring Works for Staffing Companies Today
When you use a factoring service, you sell your outstanding invoices and get an advance of capital (up to 90% of the invoice value). Your clients pay their invoices according to their contract terms, with the funds going to the factoring company. Then the factoring company sends you the remaining balance, minus their fee.
Instead of waiting up to three months to receive payments from your clients, you can get cash right away by factoring your invoices. The factoring company takes on the risk in exchange for their fee, and you can make payroll, no sweat – and no debt.
Attract and Retain Employees with Timely Payroll
Staffing companies feel a lot of pressure to keep quality employees on board, and you risk losing your ability to fill roles if they leave over late pay. Factoring removes the payment chase from the equation, making sure you have the cash flow you need to pay employees on time.
Your clients depend on those payment terms, and being able to offer up to 90 days can keep you competitive in the staffing market. Factoring companies that understand the nuances of staffing services let you stop worrying about cash flow so you can focus on your core strengths: finding top candidates for your customers.
Get the Funds You Need without Debt
Business loans could solve the cash flow problem, but that’s debt that affects your bottom line. With factoring, you get the cash you need without the headache of loan payments and interest rates.
Operating without debt also gives you the confidence to take larger staffing contracts, because you know you’ll still be able to cover employee pay on time. How could your staffing business scale if you knew you could accept more contracts without fear?
Staffing agencies that choose the right factoring company can ease their cash crunch and act proactively to grow their business with intention, instead of making business decisions based on debt load and restrictive contract terms.
Stay Competitive in an Uncertain Economy
Reaction time is more important than ever as the companies you work with change direction rapidly to keep up with everything from market events to the latest jobs report or Fed rate decision. For staffing agencies, that means agility is the name of the game. Factoring helps you weather changing tides and the feast-or-famine nature of staffing by giving you a predictable cash flow to keep your business running. And when you match with the right factoring company – one who understands that timing is everything in staffing – then you could get funded in as little as 24 hours, ensuring you stay competitive even in a volatile market.
Get Expert Help from Someone Who Knows Staffing
Not all factoring companies are the same. It’s critical to find a factoring company who gets the staffing industry and understands what you need and why you need it. Here’s what staffing companies should look for in a factoring company:
- Immediate response times: Slow communication from a factoring company could be the reason you lose out on a contract. Factoring for staffing companies requires responsive communication.
- Specialized in staffing: Don’t waste time with factoring companies that don’t understand how your industry works. You need a company with specialized experience in staffing to help you succeed.
- Manageable fees: Keep more of your money and boost your bottom line by seeking out factoring companies with fees that align with your business goals and accounts receivable.
Skip the Hassle with a Factoring Broker
But exactly how do you find the right factoring company? If speed is your priority, factoring brokers are the solution. Factoring brokers find the right factoring company for you, saving you time and headaches. The best factoring brokers have a wide network of factoring companies that specialize in your industry, so you don’t have to waste time whittling down your options or waiting for a phone call.
All you have to do is get your cash and get on with your business.
The Bottom Line
In 2024, factoring for staffing companies is a strategy for growth and a tool for flexibility. It allows you to make payroll regardless of your payment terms, client load or economic turmoil.
Using a factoring broker speeds up the process even more by connecting you with the right factoring company for your needs. At Factor Finders, we’re a factoring broker, not a factoring company. We exclusively work with companies like yours to find the right factoring solution for your needs. Contact us to connect with the right factoring company for your staffing firm.