Direct Hire Recruitment to Temp/ Contract Staffing

October 27, 2017
What many direct hire businesses find

Many recruiters will start their own direct hire recruitment businesses and very quickly have a satisfied client base and gain greater expertise to run a successful business in the industry.

But something we often hear is that it is very transactional. If clients are hiring and the recruitment business is placing, it is a great way to make money. However, if the opposite is true, it can be tough. We hear the expression feast or famine. They wonder how much enterprise value is really being built in their business.

This makes many in this direct hire/permanent placement space consider adding a temporary or contract staffing service side to their business. This quickly builds a residual income and a company that has greater value in case of a future exit.

Even with a great sales network and clients, this portion of the business has some hurdles to overcome, like having the funds to make payroll and workers compensation for your payroll employees.

What are some solutions to these hurdles?

Let's consider capital first.

Payroll Funding / Invoice Factoring

The primary way new companies can fund a new and rapidly growing payroll would be through the use of a payroll funding or invoice factoring company. These businesses are able to fund your staffing business based on your outstanding invoices allowing them to make sure they have the funds to meet payroll and other obligations each week.

Workers Comp/ Payroll

There are many different options for a new staffing company to provide for these two very important pieces of their business:

Internally - One way  we see is internally doing the payroll with some software and then the company goes and acquires workers comp through the state or an insurance company. This can be a great option if you have the internal staff do it and you are in a state where workers comp can be acquired in this way.

A PEO Or EOR - Partnering with a Professional Employer Organization or an Employer of Record allows you to do what you do best as a recruiter but offloads a lot of the administrative tasks, human resources and provides workers compensation.

If you are considering adding a contract or temp division to your business, Meritus Capital would be happy to discuss this with you in further detail. Meritus Capital's Payroll funding program coupled with our connections in the workers comp and payroll industry make us a great phone call on your way to getting set up for the new portion of your business.

Give us a call today at 1-877-648-3709!


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