Why Staffing Factoring Works Best for Recruitment Agencies

The recruitment and staffing business is one of the most vibrant industries in the world. In the United States, the staffing industry accounted for $117 billion in sales in 2012, according to the American Staffing Association.  In Canada, the industry is worth more than $7 billion.


The industry performs even better when the economy picks up as companies expanding need more manpower for their operations. But it does not mean that staffing companies are immune to financial problems. Since the clients of recruitment companies typically pay within 30 to 90 days, staffing firms are prone to cash flow challenges. Likewise, there are seasons when sales are low. Staffing factoring is a practical solution for recruitment firms that experience cash flow challenges.


Staffing companies are engaged in various employment-related services. These include providing recruitment and permanent placement of workers, outsourcing and outplacement, as well as training and human resources consulting.


Financial Issues


These companies often face unique issues when it comes to finances.  One is the cash flow problem. Staffing firms directly pay the workers they have hired, usually on a weekly or biweekly basis. In turn, these companies bill their customers after a month. Most customers pay after 30 days but slow paying clients do so after 90 days. Thus, recruitment firms face liquidity problems as they need to pay for their workers. Of course, these firms also have to deal with other expenses like rent and payment for utilities.


Recruitment agencies also experience cyclical sales patterns. Companies traditionally don’t hire workers during the last quarter of the year, for instance. Most staffing firms avoid getting a banking loan as it takes time to process and only adds up to the company’s debt. Simply put, cash flow problems can slow down a recruitment agency’s growth.


Invoice Factoring


Staffing factoring is considered a more practical financial solution for cash-strapped recruitment agencies.  Also called invoice factoring, this financial solution requires a recruitment agency to turn in their invoices in exchange for cash. Unlike bank loans, factoring takes only a few days to process. It also comes in flexible terms and rates.


Companies that apply for factoring can get cash in as fast as 24 hours, especially if they have established a favorable relationship with the factoring agency. Recruitment firms applying for the first time may have to wait for 4-7 days to have the money deposited into their accounts. Factoring agencies look at certain considerations like creditworthiness of the recruitment agency and value of the accounts receivable in approving an application.


Apart from providing cash for day-to-day operations, invoice factoring provides numerous benefits to recruitment agencies. The money can be used by the recruitment agency for expansion, like hiring another sales executive who can bring in more clients. It can also be used for advertising to reach out to more job candidates. Staffing factoring also does not require the recruitment company to put up collateral. Finally, the money received from invoice factoring is typically higher than what a company would be able to borrow from a bank.


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All you need to do is send in your weekly timecards and invoices, and you can get between 80% and 93% of the cash in your account the very next day.
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There are a lot of businesses out there that fund payroll and growth for staffing companies. There are multiple businesses all across the U.S. and Canada that deliver reliable, timely service to their clients. You should choose a company based on the ability to provide maximum cash flow, so that you can bill today and get paid in full the next day, one that lets you eliminate bad debt, such that you get free credit protection on your customers, one with full payroll services, one that accepts young companies, one that doesn’t have a minimum volume required, and one that lets you only pay for what you use.


When you sign up as a client at a great company, there should be a program that is tailored and works for you. It should provide as-needed cash flow, maximum cash flow, and cash plus total services. As-needed cash flow means that if your cash flow happens to suffer sometimes from peaks and valleys at seasonal times, or because of customer frugal behavior, or unexpected orders, then a cash program can really do the trick. When you have to have the cash, send in your timecards and invoices on customers that are credit-approved. The cash will be transferred, minus the fee for the service, and it will be transferred into your account the very next day too.

A company should also provide maximum cash slow so that if your company is expanding, you will need to get maximum liquidity from your assets. You can join up for maximum cash flow with a great company that will help you get that much-needed cash right when you need it. All you need to do is send in your weekly timecards and invoices, and you can get between 80% and 93% of the cash in your account the very next day.

When you need a complete A/R and credit office, and you want to cut your expenses and eliminate bad debt, while reducing overhead, then go with a company like this. You need to concentrate your staff on building a business, not making calls for collection. Cash plus total services offer a complete working solution for administration and working capital. You can use a full-service approach if you want. Even more than any other package available, you will get the resources you need to help grow your business. You can start the process, and the company can take it from there afterward.


Now that you’ve had a thorough introduction to invoice factoring for staffing companies, and what it can offer, you’d be wise to hook up with an invoice factoring company right away to get the money you need for your struggling staffing company business. If you’re going through a hard time with your own staffing business, it may be the only way to get the much-needed working capital you need to survive. It is imperative that your business doesn’t suffer since there is a lack of working capital, and you need to secure that through a reliable company.


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Meet Payroll Fast With Neebo Capital’s Staffing Factoring

This article is focused on using factoring effectively to meet payroll quickly

One of many consequences of the recent economic downturn is that organizations have become more guarded and conservative with their cash flow. For example, many  companies are conserving cash by paying their invoices more gradually.

In return, this has impacted smaller companies who depend on steady predictable cash flow to have the ability to meet their obligations. Also, smaller companies are also doing the exact same thing and striving to pay their invoices slowly as well. Ultimately, everyone’s cash flow is being affected.

The problem with this is that many small companies live one invoice to the next (not unlike paycheck-to-paycheck) and a hold up in invoice payments can quickly jam up their cash flow. And also since few small companies have any meaningful cash reserves, a holdup may affect their ability to pay vendors – and more importantly – their ability to meet payroll.

Missing out on payroll can have substantial negative outcomes that could in the end lead to the closing of the business. A line of defense to prevent a cash flow shortage is to develop a cash reserve. For businesses today this is easier said than done due to the fact most small businesses don’t have the ability to build a cash reserves.

However if you can build a cash reserve, your organization will be in a better situation to weather the inevitable storms that will hit your cash flow. If creating a cash reserve is not an option, then you should think about using a business financing solution that can enable you to cover payroll and other expenses if things get tight. Invoice factoring is a business financing solution which might be used to correct cash flow challenges relatively rapidly and without the hassles related with conventional financing.

It works by repairing the problem at the source. It supplies you a cash advance for your slow paying invoices, offering the cash you need to meet payroll and other essential expenditures. Using an invoice factoring remedy you can get rid of the uncertainty of client payments, enabling you to obtain a more foreseen cash flow.

One of many advantages of factoring is the most important thing you need to have to qualify for this type of financing is solid commercial customers. It’s ok if your customers pay slowly – given that they pay reliably. Aside from this, your business needs to be free of legal and tax issues. And factoring can be implemented fairly quickly – usually in a week or two.

One more advantage of factoring is that it’s tied directly into your sales. What this means is that it can be increased easily as your sales increase, provided that you are invoicing credit worthy customers. This makes invoice factoring the perfect solution for small companies with good potential customers that are hindered by cash flow problems.