Funding for Staffing Agencies

Where do I get funding or financing for my staffing agency?

Most new staffing agencies will turn to an accounts receivable factoring or payroll funding company to fund or finance their staffing agency. They use this method as it allows a staffing agency to make sure they are always able to have their employees paid on time each payroll period even if their clients take 10-90 days to pay the staffing agency’s invoices.

How does it work?

In a typical scenario, you submit your invoices and timecards for the prior week to the payroll funding company. Then a payroll funding company (often known as an invoice factoring company) will finance those invoices for a small discount so you are able to have 90-95% of the value of those invoices in your bank account the same or next day. This enables you to meet your obligations for that week while the rest is held in reserve until the client pays the invoices.

Once your client pays then you receive the rest of the value of your invoices less the small fee the payroll funding company will take for providing the service. This ranges from company to company based primarily on how long it takes your client to pay. Typical fees range from 1% to 3% of the invoice value.

Alternatives to payroll funding

Typically we see a few main ways staffing agency owners fund their business without the use of a payroll funding company: