Striving Towards Financial Stability in the New Decade
2020 has arrived, and for many companies the new year brings with it new goals to strive for over the coming months as well as the decade ahead. These ambitions can take a variety of different forms, but for many staffing agencies growing to accommodate more employees, and achieving financial success are among the list.
While there are many ways to promote a steady cash flow, one of the oldest and most common ways is through invoice factoring. By partnering with an accounts receivable company, a business can gain access to the funds they need to ensure that they can achieve those next steps in expanding their staffing agency’s operations
Is Invoice Factoring Right for My Staffing Agency?
Ensuring you have the information to determine whether invoice factoring is right for you is an important step before making any decisions.
Compiled here are several helpful pieces of information about invoice factoring and what benefits the service can provide to a staffing agency looking to improve cash flow, no matter the reason
- What kinds of staffing agencies typically use invoice factoring: Many types of staffing agencies utilize the services of an invoice factoring company. However, there are certain types that are more likely to the use of invoice factoring as the nature of the work, and the working contracts established with employers may create periods of time with significant gaps between payments. When determining if invoice factoring is right for you, look at your cash flow, and the movement of capital within your company. Ensuring that capital is steadily coming in, and that your company is not accruing debt is an important step in ensuring longevity. Some of the most common types of staffing agencies that often utilize the benefits of invoice factoring are:
- IT staffing agencies
- Healthcare firms
- HR consulting firms
- General temporary agencies
- General staffing agencies
- What invoice factoring does for staffing agencies: As many staffing companies work with employees that are temporary or contract hires, there is typically a working period between when that person is hired, and when the staffing agency receives payment. This leaves the staffing agency in the position of having to pay these employees with no money coming in, creating a financial stress on the agency. Invoice factoring helps reduce the stress of payroll funding for staffing companies by paying an agreed upon percentage for invoices and distributing the funds typically within a 24-hour period, drastically reducing gaps in payment timelines. The factor company then handles getting the client’s payment, and then pays you the rest of the balance, minus whatever fees they are owed.
- What to look for in an accounts receivable company: While there are many variables to look at when considering working with a factoring company, there are some very important ones that can ensure a healthy relationship that benefits your needs:
- Experience: While a new factoring company might offer a hot deal that sounds good on paper, in practice they may not be the best fit. Likewise, a company that has no experience understanding the needs of a staffing agency may not be able to accommodate the unique demands the business requires. Look for a company that has been around for several decades that not only has the experience but is proven to know stable financial practices to ensure they understand the needs of a staffing agency.
- Reputation: Having a demonstrated track record of loyal clients and professional care is crucial to ensuring that you’re entering a working relationship with a company that cares. Do research on any factoring company you are considering a partnership to ensure that the company is well reviewed (https://www.merchantmaverick.com/reviews/american-receivable-review/) and can keep long term clients. On top of this check customer service, as communication and transparency are both crucial to ensuring that you know the deals and terms you are agreeing to when first establishing a working relationship.
- Flexible terms: Even if they are working in the same industry, no two staffing agencies are the same. Making sure that a factor can work with you and your company’s needs to best suit them can help ease the process of working with them and allow you to focus on other aspects of the agency. A reputable factoring company will work hand in hand with your staffing agency to streamline the process of getting your invoices paid and allow you to focus on ensuring your employees are paid and the company growing.
Planning for the Future
Whether you are a staffing agency with years of experience, or one just starting out, having a stable flow of capital is crucial to smooth operations, and taking on new clients.
With four decades of experience and a reputation of care and sensibility, American Receivable can help with your invoice factoring, and ensure your business is ready for the future. To find out more call us at (972)-404-4726, or contact us via email to get a free quote and see what we can do for your future.
