Your Staffing Accounts Receivable are Very Valuable Assets

When you’re running a staffing agency, your accounts receivable can be a source of frustration. Staffing companies have a constant need for working capital because of how staffing accounts receivables are set up.

How Accounts Receivables Lead to Working Capital Drain

So let’s say you have a customer (a company) who needs at least 6 workers from you working for 6 hours a day. Sometimes they may ask for more workers, and sometimes the workers may work for up to 10 hours.

Once the work week is complete, your task as the staffing agency is to make sure that the workers are paid. When you pay your workers late your business will fold up in no time. Even doing it once can have catastrophic results.

Meanwhile, at the end of each week, your customer generates an invoice that requires them to pay you for the work done after 30 days. That means you need to have enough money on hand to pay your workers, while you twiddle your thumbs waiting to get paid.

Companies tend to take a long time to pay because they also have their own red tape to deal with. They will need to verify the man-hours they got, and the payment may come from another office or location of the company.

Accounts Receivables and Working Capital

Nowadays you don’t have to wait to get paid. Factoring is a funding method that gets you about 80% of the value of the accounts receivable right away. So that means no more waiting!

In fact, this method of funding is also very easy to secure, in stark contrast to trying to get a bank loan which can take several weeks. In factoring, you will know if you will get your funding quickly (which is more likely, by the way) in a few days or even in 24 hours.

Additional Benefits of Factoring

With factoring, you can even fuel your own growth as a staffing agency. Growth opportunities such as greater demands for more workers can be accommodated because you have the working capital needed to hire and pay more workers.

In addition, you also won’t have to deal with red tape shenanigans when collecting payment. The factor does the collection for you, but you’re updated on the progress. So finding the contact person in the company you do business with and dealing with the payment collections and notifications become the tasks of the factor.

Factors can even investigate the trustworthiness of new customers. Factors review their credit instead of yours, and in doing so they can help you avoid those with poor credit.

So don’t let your staffing accounts receivable frustrate you. They can give you the working capital you need with the right factoring company.

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