As the economy reopens and businesses try to fill roles, staffing agencies are in high demand. However, to reach new clients and source skilled employees, staffing agencies need working capital. There has to be a way for these agencies to strike while the market is hot without taking on debt to fund growth that will eat into revenue further down the line.
Loans and Staffing Agencies Don’t Mix
For the most part, staffing agencies operate on a very lean business model. Some are based in home offices, and those with physical locations try to keep the in-office staff to a minimum to maintain low overhead. Reaching out into new markets and courting new client accounts require capital, yet taking out a loan is a counterintuitive solution. Loans place debt on the books, which adds another division to revenue.
Instead of just going to cover overhead, marketing, and payroll, a good portion now needs to be diverted to repaying the balance of the loan. This is further complicated by clients who pay their invoices on staggered payment schedules of 30, 60, or 90 days. Those payment schedules can cause delays in revenue which can strain cash flow and prevent loan staffing agencies from paying down the balance on any loans they have. There needs to be a better way to grow operations without straining cash flow with unnecessary debt.
Enabling Growth Without Debt
Capital is the biggest obstacle preventing staffing agencies from reaching new markets, sourcing skilled workers, and achieving growth. The reality is that a lot of the capital required for growth is tied up in unpaid client invoices. Accounts receivable factoring eliminated staggered payment schedules by converting unpaid invoices into cash. Because accounts receivable factoring is not a loan, staffing agencies can use this service to boost cash flow, build up capital, and achieve growth without placing debt on the books or compromising credit ratings.
New Century Financial works directly with staffing agencies to provide comprehensive accounts receivable factoring services. Staffing agencies can choose which invoices or parts of invoices we factor, and we make funds available within 24 hours. Contact our offices today to get the solutions you need to grow your staffing agency.