More companies in the private sector, as well as agencies in the public sector, are turning to staffing agencies to fill roles while lowering overhead. As demand increases, staffing agencies need to source skilled workers, cover overhead, make payroll, and market to new industries, all of which require capital. But when revenue means waiting on customers to pay for the employees they are using, cash flow can become strained.
Staffing, Contracts, and Cash Flow
Staffing agencies provide an essential service to businesses and government agencies. However, the organizations that use staffing agencies are usually lax in paying their invoices. Staffing agencies can end up waiting 30, 60, or even 90 days for payments. In that time, staffing agencies need to pay employees and cover other expenses, turning finances upside-down. To eliminate cash flow strains, agencies use staffing factoring in the Service Market.
Instead of waiting for customers to make payments, staffing agencies use invoice factoring to turn their unpaid receivables into cash. Since invoice factoring is a very fast process, staffing agencies can boost their cash flow, cover expenses, make payroll, and even build up capital so they can expand into new markets. Factoring also prevents staffing agencies from having to take out debt-based loans to smooth out uneven revenue cycles.
How Staffing Factoring Works
When a staffing agency generates an invoice, it is submitted to a factoring company. The factoring company then converts the invoice into cash and makes funds available (minus a small processing fee) to the staffing agency. The process eliminates the need to wait a month or longer for customers to pay, as well as the need to take out loans. The net result is an accelerated cash flow, the ability to cover expenses, more capital on hand to source talent, and room to grow by courting larger accounts. Staffing factoring does not place debt on the books and does not impact credit ratings.
New Century Financial is an invoice factoring company that offers comprehensive services for staffing agencies nationwide. There are no long-term contracts or hidden fees, and we let staffing agencies customize their plans by factoring the invoices or parts of invoices they want. We ensure funds are made available within 24 hours of receiving invoices. To get started, contact New Century Financial today.