How Factoring Can Help Staffing Companies Across Texas

How Factoring Can Help Staffing Companies Across Texas

Building a staffing company is challenging. You’ve already done the hard work of finding customers, hiring top talent, and navigating a complex regulatory environment. However, you now face a cash flow crunch as your customers take 30-60 days to pay, yet you need to pay your employees much more quickly.

Thankfully, invoice factoring for staffing companies is a potential solution to help you get those invoices paid faster, enabling you to make payroll and keep your employees satisfied.

Here are three benefits of invoice factoring to consider as you decide whether factoring is the right solution for your staffing company:

1. Selling Your Invoices Can Help You Get Cash Quicker to Make Payroll. Invoice factoring involves selling invoices at a discount so that you can get your cash more quickly and use it for any business expense, including payroll. Typically, a factoring company will advance 85-90% of the invoice upfront and then return the remainder once the invoice is paid less than their factoring fee. Depending on how long it takes your client to pay, a common fee is between 2-4%. This can be well worth it in order to bridge the gap between when your expenses are due and when you get paid.
2. Avoid Working for the Wrong Customers. Another way factoring can help staffing companies is by assisting with credit checks on customers before you decide to begin work. There is nothing more devastating to a growing staffing company than having a customer go bankrupt and not pay. Factoring companies have experience working with many customers in the staffing industry and know which to watch out for. Factoring companies also subscribe to expensive credit checking bureaus, which gives them intel into customers’ pay history. Utilizing your factoring company on the front end can help you make sure you don’t make the potentially fatal mistake of working for the wrong customer.
3. Allowing You to Focus on Your Core Business. Let’s face it: every second you spend worrying about collecting invoices is a second that is not spent focusing on your core business. Outsourcing the process of following up on invoices to your invoice factoring company frees you up to focus on getting new customers and running a great business. This focus can help you continue growing your business while someone else worries about the back-office task of making sure that the invoices actually pay.

If you are a staffing company struggling to make payroll or other expenses because your customers are paying too slow, invoice factoring could potentially be a solution for you.