As more businesses and government organizations pivot to contractors instead of full-time employees, the demand for staffing agencies is rising. At the same time, staffing agencies have used invoice factoring for staffing companies to make the most of these new partnerships.
1. Using Invoice Factoring to Manage Receivables
Staffing agencies provide skilled workers across every sector, from IT to healthcare, manufacturing, administration, and more. Employees have contracts with varying pay scales, payment periods, and renewal rates. Instead of devoting internal time and resources to chase after payments on those contracts, staffing companies use invoice factoring. Invoice factoring helps to automate accounts receivable by converting invoices into cash as they are generated.
2. Filling Roles in New Markets
Staffing agencies compete to fill roles all over the United States and worldwide. But to do so, staffing companies need to have capital on hand. Invoice factoring allows staffing agencies to build capital reserves to advertise in new markets, court larger client accounts, and increase their presence in public and private sectors.
3. Reduce and Eliminate the Need for Debt-Based Loans
When tight cash flow and money is tied up in unpaid invoices, many staffing agencies turn to short-term loans. While short-term loans can act as temporary solutions, they place debt on the books, impact credit ratings, and the balance owed can further strain finances. Additionally, the source of the problem – unpaid invoices – can make cash flow issues a recurring concern. Instead of taking out loans for payroll funding and more, staffing companies use invoice factoring. The accelerated cash flow resulting from invoice factoring for staffing companies eliminates the need for short-term loans. What’s more, invoice factoring is not a loan. No debt is placed on the books because factoring unlocks revenue from unpaid invoices.
New Century Financial is a leader in invoice factoring services. We turn unpaid receivables into cash within 24 hours and let staffing agencies choose which invoices, or parts of invoices, we factor. There are no hidden fees or long-term contracts, so staffing agencies get the transparency and flexibility they demand. To get started, reach out to the team at New Century Financial today.