What is it & How does it work?
Thousands of staffing companies across the U.S and Canada utilize ‘staffing factoring’ to make sure they are able to pay their employees on time each payroll period. This helps smooth cash flow regardless if payment terms from their customers are 10 days or 90 days. Staffing factoring specifically then, is how temporary staffing companies turn their outstanding invoices into cash by using invoice factoring companies. They do this by submitting invoices to the factoring company at the beginning of a payroll week for hours that their employees have worked. The factoring company verifies the work has been completed through timecards or other methods and then the factoring company advances funds based on the receivables.
How staffing factoring works
Typically a temp staffing agency will submit their invoices and timecards from the prior week to the staffing factoring company for funding. Then, the staffing factoring company will fund 85%-95% of the value of those invoices to the temp staffing agency. This often allows the staffing company access to funds the same day invoices were submitted to the factoring company, enabling almost instant cash flow as needed.
Once the customer pays the invoice, the staffing company will receive the remainder of the value of the invoice 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 customer to pay. Typical fees range from under 1% to 3% of the invoice value depending on a number of factors.
How to qualify for staffing factoring
Qualifying for staffing factoring is really quite straight forward. The two main things a factoring company wants to see when onboarding a new client is that the invoices are good and the customers have the ability to pay their bills. With a simple customer list, factoring companies can check with the credit bureaus to see if the customers’ credit is good and if they look likely to pay their bills. Staffing companies make great factoring candidates as they typically have signed time cards along with the invoices which proves that the work has been done. Outside of this, the factoring company just wants to see that you have a plan to stay in business. Meritus Capital does not require any particular credit score, time in business, or volume of business to qualify!
Benefits of partnering with a factoring company for a Staffing business:
- Access to the cash you need to make payroll each payroll period
- Capital to grow as fast as a business can place
- Years of experience in credit and collection
- Get cash without adding crippling debt
- 24/7 online reports
- Having a partner that is working for your success
About our program:
Staffing Factoring Lines
The Meritus Capital Difference
If you are considering staffing factoring for your business, please check out our many articles here or please do contact us toll-free at 1-877-648-3709