Technically speaking, there are several ways of obtaining staffing agency funding. You can approach a bank and apply for a loan or line of credit. You may sell shares of your company to a venture capitalist in exchange for some capital. Some are even tempted into use their credit cards to pay for expenses necessary to run a staffing agency.
However, many agencies have discovered the many benefits of factoring staffing accounts receivable. In factoring, you don’t have to wait for your clients to pay you in full in 30 or 60 days. Instead, you get about 75 to 85 percent of the value of the invoice at once from the factoring companies, and you can use this money to pay your workers and hire new ones.
So what makes factoring such an advantageous option? Here are some of its very beneficial features:
You Can Get Your Funding Even With Bad Credit
It’s not very easy to get a loan from a bank, even at the best of times. And if you’re familiar with banks these days, you know that it’s never the best of times. And so if your staffing agency is new or has bad credit, getting the funding can be virtually impossible.
That’s not the case when you approach a factoring company. These factors don’t really give a damn as to what your credit score is. They’re much more concerned with the credit worthiness of your customers. When the factor advances you the money, your customers are instructed to pay the factor directly, so it makes sense that the factor wants your clients to have a good history of paying their bills in full and on time.
You Don’t Need Collateral
When you obtain a loan from a bank, in most cases you’re going to be asked to put up property as collateral to secure the loan. Since you’re running a staffing agency, your company doesn’t have a lot in the way of heavy or expensive equipment. So as the owner you may have to put up your own home as collateral.
In factoring, there’s no need for this sort of thing. You don’t need to put up your corporate assets and your personal assets are untouched. The factors only need a lien on your accounts receivable. That’s it.
You Can Scale Your Funding
You have lots of leeway regarding how much advance money you get so that you can boost your readily available working capital. In a way, it’s like having a line of credit or using a credit card. You can only take as much money as you need. If you don’t need much, you can just submit several invoices instead of all of them.
But lines of credit and credit cards have limits imposed by the lender. With factoring, the limits are only defined by the volume of your sales. So the more successful you become, the more advance money you can have available for your staffing agency.
So if you’re in need of staffing agency funding, think about factoring. It may be the key for the growth of your staffing agency.