Janitorial and maintenance companies are one of the mainstay services in any type of business. Find any type of company, and there’s always a need for a janitor or someone similar to clean up after the workers have left.
It’s obviously a growing industry, as the Bureau of Labor predicts that there will be a 12% increase in the employment of janitors and building cleaners from 2012 to 2022. In 2012 there were about 2.34 million janitors and cleaners (not counting maids and housekeeping cleaners). By 2022, there will be more than 2.6 million of them.
Commercial customers for cleaning services include office buildings, hospitals and other healthcare facilities, industrial plants, schools, retail stores, shopping malls, and restaurants. More companies are also outsourcing their cleaning services, so maintenance companies are likely to benefit more from this growth.
With such a favorable outlook, what’s wrong with the maintenance industry? That’s simple enough to answer: their customers take 30 to 90 days to pay up. That means a maintenance company has its money tied up, so they don’t have money to use for various necessary expenses. And with maintenance companies, the expenses are plenty.
- Maintenance companies must meet payroll requirements. This is absolute, because not being able to meet payroll can be disastrous for any type of business. There are legal consequences, and the bad PR can destroy a company’s reputation.
- You’ll need to hire new workers on a regular basis. You’ll need to hire new workers when you get a new contract. Without the cash reserves ready, you won’t be able to go after new contracts.
What’s more, you may even fail to meet the demands of your current contracts. That’s because the turnover rate for personnel in this industry exceeds 50%. Too many workers quit, are hired by other firms (or hired directly by a client), or open their own small-scale maintenance business.
The continuous search for new workers can be very expensive. Advertisements must continuously be posted, and you need a department to interview applicants and choose among them. You may even have to provide additional training as well.
- Cleaning supplies must be bought at regular intervals. Wash cloths, paper towels, cleaning solutions, and other similar items are consumed regularly, and they must be replaced. Cleaning appliances must also be bought, and they must be maintained properly as well.
How Factoring Helps
If you’re running a maintenance company, then the factor advances you about 80% of the value of the invoice that your clients pay after 30 days or so. You get the rest (minus the factor’s fees) once your client finally pays you in full.
Because you get your money immediately, you can then spend it on whatever expenses you deem vital for your maintenance company.
Another advantage of factoring is the speed in which you can set up the agreement with a factor. Unlike bank loans which take so much time to process, getting approval for factoring can take only a day or so. And what’s more, the approval rate for factoring is much higher than the approval rate for traditional bank loans.