Staffing companies are often faced with a dilemma: clients only pay in full once the job is complete. Most of the income and working capital is tied in pending invoices. This means that business owners need to pay for operational expenses, overhead costs, and more even before they receive payment for services rendered. Invoice factoring for staffing companies helps free up cash flow to fund daily operations. If you have pending invoices, as most staffing companies do, you’re eligible to apply for invoice factoring to address cash flow issues.
Invoice factoring allows you to sell outstanding invoices to a factoring company at a discount. The factoring company will give you 80% to 90% of the total invoice value upfront so you don’t have to wait for months for invoice payments. They’ll give you the remaining percentage, minus a small fee, once your customers pay their invoices.
With that said, here are some of the ways staffing companies benefit from invoice factoring.
1. Support Rapid Business Growth
Business owners want to grow their business, but sometimes, rapid growth can lead to cash flow issues. If your client base is growing quickly and you don’t have the funds to cope with the growth, invoice factoring is an effective funding option. You can use the funds you receive from factoring to grow your staffing company and meet the demands of your existing and new clients.
2. Reduce Employee Turnover
If invoices are paid on time, staffing companies will have no problem hiring more employees, paying for bonuses and benefits, as well as making payroll. Unfortunately, this isn’t always the case. Staffing companies often wait for 30, 60, or 90 days before receiving payment for their services. Without income and working capital, you won’t be able to pay your employees; if you don’t pay them, they’ll move to another company that could. If used wisely, the funds from invoice factoring can help keep your employees happy and therefore reduce employee turnover.
3. Immediate Funding
Unlike traditional business loans, you don’t need to undergo a rigorous application process with invoice factoring. In fact, with the right lender, you can receive funding within one to three days. Furthermore, there’s no limit to the amount of financing you can receive. As your business grows, the amount of working capital you can access grows as well.
4. Reliable Cash Flow
Did you know that cash flow issues are one of the main reasons why staffing companies fail? As a staffing business owner, you can leverage invoice factoring to keep your business financially stable regardless of the season it is in. Invoice factoring can pay for worker compensation, equipment, insurance, and more.
Invoice Factoring for Staffing Companies
Many companies offer invoice factoring for staffing companies in the United States because they understand the urgency of your working capital needs, so they offer immediate funding in as little as 24 hours.