Invoice Factoring for Staffing Agencies

Regulate Cash Flow with Staffing Factoring

Slow cash flow can hinder a staffing company’s ability to grow, but there is an option for immediate cash that is not a traditional loan. Invoice factoring for staffing companies involves the agency selling its unpaid invoices to a factoring company for a cash advance. When you work with a factoring broker, you can expect to have cash in hand within 24 hours after approval. Get the cash you need when you need it so you can grow your staffing agency.

What is Invoice Factoring?

Invoice factoring is a type of financing that allows staffing agencies to sell their outstanding invoices to a factoring company in exchange for a cash advance. This process provides staffing companies with immediate access to working capital, which can be used to meet payroll, pay overhead expenses and take on new clients. Invoice factoring is also known as staffing factoring, staffing agency factoring or payroll factoring. By converting unpaid invoices into instant cash, staffing agencies can bridge cash flow gaps and ensure smooth operations without waiting for clients to pay. 

Is Invoice Factoring Right for Your Staffing Business?

Is invoice factoring right for your staffing business? If you answer yes to any of these questions, now is the time to start invoice factoring:

• Would you prefer to get paid instantly, instead of having to wait 30-60 days for invoice payments?
• Is most of your working capital held up by outstanding invoices?
• Is the expense of trying to collect payments on invoices more costly than it’s worth?
• Has uneven cash flow ever stopped you from being able to take advantage of an opportunity for growth?
• Are your worries about being able to make payroll clashing with your desire to start a staffing company?
• Would more working capital enable you to grow your company?
• Have you been rejected for a bank-loan, because of size, credit, experience, or because your company was going through rapid growth?

Qualifications and Requirements

To qualify for invoice factoring, staffing agencies typically need to meet the following requirements:

• Sell to other businesses (B2B)
• Have creditworthy customers
• Have a managed tax balance with the IRS and/or CRA
• Have a minimum monthly volume of invoices to factor

However, qualifications may vary across different factoring companies, so it’s essential to check with each provider. By meeting these basic criteria, staffing agencies can unlock the benefits of invoice factoring and improve their financial stability. 

Choosing a Factoring Company

When selecting a factoring company, staffing agencies should consider the following factors: 

• Experience with staffing companies and agencies
• Quick and easy setup
• Competitive rates and flexible terms
• Industry-specific expertise
• Recourse vs. non-recourse factoring
• Notification factoring
• Whole ledger, partial, or spot factoring
• Minimum volume requirements

It’s crucial to research and compare different factoring companies to find the best fit for your staffing agency’s needs. A factoring company with a deep understanding of the staffing industry can provide tailored solutions that align with your business goals. 

Cost and Terms

The costs and terms of invoice factoring vary across different providers. However, here are some general factors to consider: 

• Factoring rates: typically range between 1%-5%
• Advance rates: usually between 75% and 95%
• Discount rates: may vary depending on the factoring company and the creditworthiness of the client
• Fees: may include origination fees, transfer fees, invoice upload fees, and lockbox fees
• Terms: may include minimum monthly volume requirements, contract lengths, and termination fees

It’s essential to carefully review the costs and terms of each factoring company to ensure you understand the agreement and can make informed decisions for your staffing agency. By doing so, you can select a factoring partner that offers the best value and supports your financial needs. 

Invoice Factoring is Easy 

Invoice factoring is easy to apply for, easy to receive, and the factoring process itself is also simple! 

• Sell your invoices to the factoring company
• Receive up to 90% cash back immediately
• The factor collects invoice payments from your clients, subtracts a small fee, and returns the remainder to you
• You can repeat as often as necessary

Your Company Can Reap All of the Benefits of Invoice Factoring

The many benefits your staffing company can take advantage of from invoice factoring include: 

• Doesn’t create any debt
• Bad credit is OK (this is because factors care more about your clients’ credit)
• Best rates in the industry: 0.69% to 1.59% for 30 days
• First time accounts can be funded within days
• No hidden fees
• Flexible contracts
• Risk-free
• No minimums or maximums
• Up to 90% immediate cash back

All Staffing Industries Can Receive Instant Funding from Invoice Factoring

Staffing companies in all industries can improve their payroll with factoring, including: 

• Construction
• Engineering
• HR
• IT
• Janitorial
• Manufacturing
• Nursing
• Security Guard
• And much more!