Authored by Phil Cohen
This is the eleventh installment in our Starting a Staffing Company series. Bookmark us and follow #startingastaffingcompany on Twitter for more information about starting your own temporary staffing agency.
In our last installment, we discussed how payroll financing can help your staffing company overcome periods of lean cash flow. There are many great options you can pursue, but getting started can be daunting when you attempt to juggle your day-to-day operations with the search for funding.
Different financing options may be more attractive or accessible depending on your company’s location and situation. Whatever type of funding you seek, however, look for a payroll financing company that meets the following five criteria:
- Experience working with staffing companies, ideally in your specific industry. A company with this type of experience will have a firm grasp on payment schedules and your company’s needs with regard to working capital. They can also offer valuable advice for managing your cash flow. A company not accustomed to working with staffing companies may be ill-equipped to handle the unique needs of the industry.Also, as with any business relationship, make sure your funding source can meet your company’s needs. Be clear about what arrangement will best benefit your business; a good funder will accommodate your requests when they can and will fully explain when a request is untenable.
- A solid reputation of service, built on trusted recommendations from your colleagues and trade reviews. Financing is never a permanent situation in the best case, but look for a company that is well-regarded by past and present clients.Remember not to immediately discount an entire company based on negative reports of a single account manager. If the company is otherwise high on your list, you may want to investigate further. It’s possible that poor reviews of a manager were the result of one disgruntled client, or if the reports are verified then the manager in question may not be with the company any more.
- Access to cash so they can handle your funding needs. There is little more troubling to a staffing company in need of financing than to learn after you’ve signed a contract that your funding company can’t actually give you the cash you need.This is more than a question of the company’s solvency; they may be perfectly successful on a small scale, but if your staffing company does a large volume of business then a small funding company would be inappropriate to adequately boost your cash flow.
- Solid communication at every step of the funding process and throughout your work together. Working with a funding company is a relationship, after all, and should be treated with the same level of care and attention as any other business relationship.You should feel comfortable speaking with your funding contact at all times. A good contact will keep in touch with you regularly to ensure you have the support you need, and will give you an honest view of your account with them. They will also alert you to potential issues and work with you to resolve them.Your contact/account manager can make the difference between a good relationship and a bad relationship, so don’t hesitate to speak up if you are dissatisfied with the relationship.
- Flexibility to keep pace with your changing business. Clients come and go, and growing your company can create new funding challenges for you. Also, external pressures from the economy and competition will have different levels of impact on your funding needs. Seek a financing company that can change their focus and evolve their service to continue providing the highest level of service to you.
The key factor in choosing a payroll financing company is, to an extent, to keep your options open. This does not mean being constantly on the hunt for a new funding source; on the contrary, you have the potential for a much more successful relationship if you can build longevity with the right financing company.
However, you should be acutely aware of your company’s shifting needs and evaluate how your funder meets those needs on a regular basis. When you do an annual review of your business plan, for example, take the time to determine if your current funding arrangement is working. If not, let your funder know what isn’t working and how you can both improve the relationship.
Your changing needs may mean, of course, that it is time to part ways. If that is the case, stay on top of whatever requirements you have to end your current relationship – amicably, if possible – and come back to this list to begin the search anew.
Factor Finders provides payroll funding support to temporary staffing agencies in a variety of industries. Learn more about our factoring programs for staffing companies.
Read more about Starting a Staffing Company:
Payroll Financing Means Fast Funding for Staffing Agencies
When Your Staffing Company is Denied for Bank Loans
7 Ways Staffing Companies Can Improve Cash Flow