There are disadvantages of being a middle man, especially when you are a staffing agency. The payment structure which makes staffing companies profitable – invoice for services – causes delays in processing payment that can make it difficult to pay employees timely. However, there are organizations that specialize in payroll funding for staffing company that have problem managing their temp agency payroll.
These specialty lenders and banks provide short-term payroll funding for staffing agencies or companies, giving owners more governance over cash flow. Here are some of the benefits of payroll funding for staffing companies.
- For any business access to working capital is one of the major benefits. Yet staffing companies often find their assets as well as their cash flow tied up in the business and inaccessible when they in need of them mostly. Lenders who provide payroll funding for staffing companies will work with you to get you short-term cash when you wait for an invoice or funds transfer, so you will have a steady cash flow to put toward growing areas of the business of yours and new endeavors.
- In the uncertain economic environment these days security is harder to come by for companies. But for staffing companies a financial cushion is offered by payroll funding. Having wiggle room in your budget better positions your staffing company to handle a short-term imbalance between Expenses and income that could otherwise be threatening for your business.
- For any staffing agency financial flexibility is considered major asset, which must navigate the tide of client demand. Financing temp agency payroll is helpful for the agencies to survive the busy times and the lean times by allowing the owners to ramp up or scale back their payroll funding. In case of staffing companies, some banks will let you put up your accounts receivable as collateral, so you can request for a funds transfer during the times of year when you need it most.
- Happy employees can make clients happy, which is good news for a staffing business. Payroll financing helps you to close the gap between getting a job contract and processing payment – sometimes 30 to 60-days – for paying staff in a timely manner. Instead of paying employees out of pocket until invoices come in, a lender can provide the short-term cash flow for covering payroll. Funding for staffing companies keeps you from having to dip into your own pocket, a win-win.
Drawbacks of payroll funding for staffing companies:
Having cash flow for supporting payroll is critical to successful operations, but there are also some drawbacks of payroll funding for staffing companies. Depending on financial strength of your agency and the current lending environment, it can be tough to qualify for temp payroll financing. For staffing agencies some lenders don’t want to provide payroll funding, especially when they have risky credit histories or few assets. As a high-risk business, there are your possibilities of getting stuck with higher interest rates and fees. If you’re interested in financing payroll funding then you better apply to multiple lenders and banks for sniffing out the best deal.