Simple & Reliable
Simple & Reliable
Staffing factoring is a type of service that is offered by the payroll staffing agencies in which a factoring company finds a solution for the financial arrangement for staffing companies. The work goes as the hiring company delivers their accounts receivables (Factor) and converts them into continuous cash flow. Capital flow is required when there is a situation of giving your staff a weekly or daily basis salary. On the other side, you may have to wait for 30 to 45 days to get complete payment from the clients.
You can take the help of Funding companies for staffing agencies to get immediate cash in a day. This will help you to meet up all the expenses. Also, you can think of the further expansion of the staffing business.
The advance amount will be about 70 to 80 % of the total invoices. The rest amount is paid to the payroll staffing agencies, with subtracting the fees of the factoring.
Always check for the hidden charges, application form fees, or any other expense as all these will increase the overall cost of the factoring.
What Is Factoring For Staffing Companies?
Factoring for the unpaid invoices and converting them into immediate capital flow is called factoring for staffing companies. Factoring does not mean that you are taking a loan; you have to not pay the amount on the term or monthly basis with interest to the companies. If you take a loan from the bank, then you have to go for many paper works.
You have to deposit some assurance paper in the bank so as to get the required amount from them. If you miss paying the amount on the specific time, then your assurance may be sold to fulfill the amount. But if you choose funding companies for staffing agencies, you may not face the same problem. You have to not deposit any assurance in change for cash.
The Factoring Company is taking your unpaid invoices, so they are now responsible for collecting payment from the clients.
Is Factoring Company Is Suitable For You?
A staffing agency acquires many candidates at different times, so there can be a need for cash at any time. Payroll staffing agencies made it possible to pay them whenever there is a need. You should have a good credit history to have excellent advance cash. Many agencies like to acquire staffing factoring generally
Factoring provides funding for staffing companies, through which they can meet up significant expenses. The staffing agencies require a continuous flow of capital because they do not get the full payment by the agencies till the time their candidates are not placed. The time of payment can be days, months due to the company’s terms and conditions. A company cannot be run without cash for many months.
You cannot stop your business with these small hurdles. Some companies are not aware of the factoring services, so they do is to wait, and as a result, their agency gets retardation in growth. The companies that are well aware of the factoring agencies are taking their staffing agencies to a new height.
The factoring for staffing agencies is completed generally in 24 hours after the successful submission of the amount receivables. All you require to do is to find a suitable and experienced factoring for staffing companies.
Pros and cons of having a factoring for staffing companies
While facing the delayed client’s payments, staffing factoring can make a more comfortable funding option for the company. We have learned that factoring is beneficial, but it can be troublesome if the staffing agency fails to provide time to the time amount receivables. We have prepared some advantages and disadvantages of the factoring agencies that are as follows:
Quick payment:when the staffing factoring is assured of your invoices, then they immediately pay you for it in advance, in approximately 24 hours or maybe less. The advance payment will be based on an excellent credit history. The rest amount will be paid after the successful collection of the total amount from the clients. The company will automatically cut their fees from it.
- Advance with new customers: Staffing agencies need quick payments to advance ahead and deal with a new client for preparing him. But due to unpaid invoices, they cannot do it. So the staffing factoring will help them overcome this problem, and now they can handle new clients with the advance payment.
- Concentrate on the future of the company: Using the service of factoring will help the companies to get advance payment and can now think of further growth of the company. This is going to save time and essential sources of the agency.
- Arrange the anticipated capital: The agency is always unpredicted with the amount that they are going to get from the company. Now the agency is aware of the economy; they are going to get all thanks to the factoring company. When you finance your amount receivables in exchange for capital, you will know about how much cash is you are going to get.
- Pay an excellent wage to your employees: The staffing agencies find themselves in distress because of the delay payments of the clients. Now with the staffing factoring, you can offer an excellent wage to your employees who are equal to the competitors. Better financing option will help you to be intact in the competitive market.
- High charges: when you given charge of handling the account receivables to the factoring companies then you have also made an agreement of paying them some fees exchange of their service. You may be asked to pay extra hidden charges such as processing charges or application fees. Be aware of such things and carefully read all the terms and conditions.
- You may be liable to the agreement: There are numerous ways of using invoice services such as you maybe ask to bear all the risk alone or sometimes have to buy back the unpaid invoices at a higher rate. These can in place of profiting you take you to a significant loss. The company takes such action to keep them safe from the non-paying clients.
- Advance payment according to credit score: The credit score cannot determine the amount you should get in exchange for the unpaid invoice. Many staffing factoring companies make the decision to pay the advance cash according to the history of customer credits of the company. The better time the clients settle their debt, the best percent of the amount will you get.
- Loss of direct control: You may lose direct control and interaction with your valuable customers. The staffing factoring company is going to handle them now, so there may be a difference in customer interaction. This may create a bad image of the company on the customers. Some customers don’t like to be indulged with the factoring company so they may also further don’t do business with your company.
How To Find The Best Staffing Factoring Company?
There may be a problem with finding a factoring company today because there are numerous companies in the markets. All of them assure you to give the best service to the agencies. But wait are you sure they are right for you? We have made some points for you with which you can find the suitable staffing factoring for you:
Renowned funding company for staffing agencies The staffing factoring company should be trustworthy and well known in the market. Always ensure to do some research on the background of the company before giving them work to handle. Ask your known persons or companies that have already taken the service of factoring companies.
Search online or in the newspaper about the company. Contact to the verified clients of the company that have taken the service. The factoring staffing company should have a good credit history so that they provide you capital at the promised time.
Expertise in a specific type of factoring
You should go in contact with the company that expertise the required factoring for many years. Find the company that has a solid background in providing the required factoring from much time. The factoring company should able to prove their trust and financial status when asked to. Staffing factoring agencies that are experts in a specific type of financing with more than five years of experience are considered best.
The companies should be able to provide flexible payment options. The terms and conditions of the factoring company should be fair and with the lowest interest rates. You can go to various factoring companies to decide which company would be best for your staffing company. Read the terms and conditions of the companies to thwart away any hidden charges or rates. These hidden charges can increase the overall rate resulting in a significant loss. Flexibility will help you to choose the account receivables that you need to be factored. Before finalizing all the work, discuss and tell the conditions to the factoring company accurately.
The best factoring companies have understanding of business and the changes that are taking place in the market. If they are well experienced with the factoring services that they are providing, then they know how to arrange funds for the company.
Some Staffing factoring companies provide supplementary services with the financing of the fund. These supplementary services will help to ease the load of the company. The service can be handling accounts or managing the staff of the hiring company. If any you should have proper command on it. If your company is a new startup, then an administrative support service can help you a lot. These administrators are experienced for many years and can boost up your business. They can also look out for maintaining the accounts and distributing the payroll among the employees.