How To Use Factoring for the Staffing Industry
Factoring is one of the most time-tested methods of raising working capital quickly, but the key to getting your best results from it is understanding how it works in your industry. For those running staffing firms, invoice factoring can be integral to your cash management system, because it allows you to maintain consistent cash levels even when you have clients who are taking their time paying. To use this kind of financing in the staffing industry you need to have invoices for work that’s already been done, namely the labor of your staff at the client’s location. If you bill in advance or get cash payments upon performance, your business model probably won’t support this. Fortunately, invoices are the standard in this industry.
When you need cash to meet your commitments and you have a lot of invoices outstanding, that’s when it is time to contact the factor you would like to use. Having choices is the key here because sometimes you want to finance just a select group of invoices and other times you need to finance the whole lot. There are a few factoring agencies who do both, but most tend to operate one way or the other. Similarly, you have a choice between escalating fees and penalties if your customers go outside the payment window and flat fees that cost more upfront but provide you with the predictable costs that make it easy to keep your bills paid in the staffing industry.
Once you have picked a provider who offers you the options you want from your factoring cash advance, you’ll need to provide them with your invoices and the financial information they need to finish the application. Many providers make this part of the process as quick and easy as possible to make it easier to work with them repeatedly. Determinations on factoring advances tend to be made quickly, and the end to end timeline on the transaction for many companies is three to five days from application to cash distribution. That makes it one of the fastest methods of accessing short-term cash.
The predictable costs and quick distribution make factoring very attractive in many industries, and it’s easy to work those costs into estimates if you plan on using factoring for the clients who like to take their time paying after work is completed. Simplify your cash flow today, and increase your volume of business so you can take on bigger clients and rise to the top of the staffing industry.