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Invoice Factoring for Staffing Agencies
When it comes to needing liquid capital on hand to operate, almost no industry can come close to staffing. Staffing agencies have to pay their workers for the labor they perform, but frequently don’t get paid by the clients they are working for on the same time table. This can put many companies in a pinch, especially if they have a large project that needs filled or similar high-pressure demands. While you’ll bill your client, you may offer NET30, NET60, or even NET90 terms, which means it can be months before you see the money that you owe in salary, and a failure to cover payroll is essentially a death warrant in the staffing industry. That’s why so many staffing agencies have turned to invoice factoring.
What is Invoice Factoring for Staffing Agencies?
Invoice factoring is a business process whereby you sell an invoice or account receivable to an outside firm for upfront cast. The factoring company will pay an initial funding rate of 80-95%, and you’ll get the rest, minus their discount rate, when the invoice gets paid. As a result you’ll have access to the cash you need when you need it.
Benefits of Invoice Factoring for Staffing Agencies
One of the worst situations a staffing agency can face is possibly having to turn down a job because it’s too big. This causes you to lose out on valuable revenue, and sends a message that you aren’t able to handle anything your clients throw at you. Invoice factoring solves this because you can get cash up front for your invoices, giving you the on hand liquid capital you need to keep your staffing operation humming.
Additionally, most invoice factoring companies will provide funding within 24 hours of the invoice being submitted. This means that you can get cash for your projects before a client actually pays you. As a result, you can be confident that you’ll have the resources to tackle any staffing request, no matter how large or small.
Finally, invoice factoring helps keep your books simple. Instead of keeping track of when payments come in, you can factor all of your invoices, get a direct deposit within 24 hours, and be ready for the next big expense. As a result, you can focus more on growing your business and worry less about the accounting tasks that keep you away from your passion.
As you can see, there are many benefits invoice factoring can afford small businesses, and there are many factoring companies that focus on small businesses, so if your small business is facing a cash crunch, try invoice factoring today!