Small business owners who are primarily engaged in the staffing sectors have multiple things to look after. They must ensure that they have the right pool of people when their customer demands manpower at any time. Besides this, it is also necessary for them to pay their staff on time and get payments from the customer on time. This is where staffing factoring comes into the picture. Staffing factoring resolves the payment gap between the customer and the workers and helps in keeping the cash flow of the business constant without adding more debts to the same.
Importance of Staffing Factoring
With most B2B transactions, the payment terms are usually 30 days from the date of invoice. In the staffing industry, however, billing occurs immediately and requires payment upon receipt. This is in large part due to the nature of the temporary staffing industry.
The customer receives immediate benefits from having workers fulfill certain duties. Those workers expect to be paid much sooner than 30 days. Therefore, the staffing agency must have enough cash to meet the weekly payroll. If not, the agency will not keep the best talent for their clients’ needs.
Things to keep in mind while having a Staffing Factoring Partner
This fairly simple process works best when staffing agencies partner with a staffing factoring company that understands the nature of the industry. There are many factoring companies, yet not all are right for the temporary staffing industry.
The reputation of a staffing factoring company is important in the selection process. A staffing agency should determine if the staffing factoring company has the industry experience and financial strength to serve its needs. A demonstrated track record for funding payroll successfully is a must.
Experience and Knowledge
Staffing Factoring companies with permanency will have a proven track record of successful payroll funding. Well-established staffing factoring partners will have 10 years or more in the business. This demonstrates the company’s financial stability throughout different business cycles.
Competitive Pricing and Flexible Terms
Businesses should compare different companies to determine what is considered an industry-standard rate. What is fair in one industry might be unreasonable for temporary staffing agencies to manage. Some factoring companies offer low rates, but that could include hidden fees and lengthy terms that obliterate the original low rate.
Flexible terms should enable the business company to choose which invoices to factor. Other terms such as fees and conditions of payment should be included in any contractual agreement before the money is provided for the value of the invoices.
Lastly, a good partner offers optional services that help to support other needs staffing agencies may have related to invoicing. Examples of this include back-office support services, accounting systems, and credit checks on potential clients’ ability to pay.
Choosing a staffing factoring company requires careful consideration. A staffing factoring partner that does more than provide funding is ideal. In their haste to get fast cash, taking a few extra minutes to weed out factors with less than stellar track records will ensure agencies hire a dependable company.