You know how important your cash flow is if you’re running a staffing agency. Besides, waiting for customers to pay their invoices may create painful cash flow gaps. To avoid this, you can consider invoice factoring, a kind of financing where you get paid for your invoices immediately instead of waiting for clients to pay.
It’s not uncommon that staffing companies wait at least four weeks after placing workers to get paid by the clients, even if they cover all the costs up to that point. That is why invoice factoring makes sense for most staffing businesses.
If you’re having second thoughts about using invoice factoring for staffing companies, here are the benefits you can enjoy:
1. Get Consistent Cash Flow
Lack of cash flow may harm your business. For this reason, it’s necessary to have a steady cash flow to keep your business afloat daily.
As with any business, staffing companies experience ups and downs. But even if your staffing business slows down, you still need to meet your financial obligations, such as keeping your company running and confidently manage payroll on time. Invoice factoring may also help you get over rough patches by providing a steady cash flow.
2. Offer Back Office Support
Other than financing, invoice factoring may help you run your staffing company more efficiently and allow you to save time. They assist in customer relationship management, collections, and accounts receivable reporting.
Once you work with a reliable factoring company, you get help running your back-office activities to have more time for essential tasks like recruitment. It’s another way that invoice factoring can help your staffing company grow and thrive.
3. Provide Competitive Advantages
If your staffing company provides products or services and then invoices clients on terms, you can enjoy competitive advantages by extending more generous customer payment terms. It provides a win-win scenario where customers have time to make payments on their invoices. Plus, your company gets access to the money earned as soon as customer invoices are generated on the same day. That is why invoice factoring can be a reliable form of financing for businesses.
4. Allow You To Focus On Growing Your Business
Whether you require working capital for growth opportunities, lessen your company’s expenses or compensate for temporary cash flow gaps and slow-paying customers, the advantages of invoice factoring for staffing companies can put you in the driver’s seat. Rather than chasing customer receivables or watching the days slip by, you may use invoice factoring to get the working capital your company needs.
5. Offer Simple And Fast Type Of Financing
Like other businesses, it’s never easy to apply for a business loan. Often, it can be a drawn-out and complicated process. It may take months or weeks to get approved and get the cash you need.
On the other hand, invoice factoring is simple and fast. Once you get the approval and submit your unpaid invoices, you’ll get funds deposited into your accounts right away. Banks limit how much you can borrow based on criteria, including how long you’ve been in the company and your credit score. With invoice factoring, you can get unlimited funds based on your receivables.
6. Avoid Pay Gaps
As staffing companies don’t typically get paid until after employees log a time card or after a specific time, having a consistent cash flow may improve financial forecasting when planning for the future of company operations. With advances in invoices, a staffing company can ensure that there’s a flow of money. It enables your business to execute your plans instead of dealing with employee turnover and some common issues that may come while waiting for any invoice payments.
7. More Favorable Than Traditional Financing
If your staffing company has trouble getting bank loans, you can consider invoice factoring instead. Unlike bank loans, the terms and conditions of invoice factoring are more favorable to your company’s financial health.
One of the best things about invoice factoring is that it doesn’t force you to take additional debts. You’re not taking out loans but simply leveraging your invoices. You don’t have to put up collateral like equipment or real estate properties. Some staffing companies also find invoice factoring less stressful. So, if you want peace of mind and convenience, invoice factoring might be a good idea for your business.
Tips To Find The Right Invoice Factoring Company For Your Staffing Business
Finding the right invoice factoring company specializing in the staffing industry may benefit you greatly. The best one will provide convenient, simple to understand, cost-effective, and easy to manage services. Other than supporting ongoing operations, the most reliable invoice factoring company can offer you the financial ability to grow and improve your business development.
Unfortunately, with the countless invoice factoring companies in the market, finding the right one for your staffing business can be a challenging task. So, make sure to keep the following tips in mind to choose the best:
A reliable invoice factoring company has a good reputation. To know how reputable a provider is, check the reviews. Check the review sites that specialize in verified customer reviews for companies or browse for the testimonials of their previous and current clients on their official websites.
Ask For Referrals
Referrals are an excellent way to find the best factoring companies for whatever you need, and it’s true when it comes to invoice factoring. You must also reach out to small companies that have used invoice factoring to gain deeper insights into financing.
Watch Out For Any Hidden Fees
You must understand and know the fees involved in the agreement. In several cases, particularly with traditional factoring businesses, the charges are hidden and difficult to understand.
Other notable fees to watch out for may include termination fees, draw fees, and monthly maintenance fees. If you don’t want to pay an unreasonable amount of money in the long run, always check if there are hidden fees.
Invoice factoring can significantly help staffing companies that suffer from cash flow crunches. It won’t only help you grow your business, but it can also boost your cash flow. Just ensure to work with the best invoice factoring service provider to reap the above benefits.