The COVID-19 pandemic significantly impacted the staffing industry when it caused massive business shutdowns all over the country and the world. With businesses closing or reducing their operation hours and capacities, there was a much lower demand for staffing services. Your business might have suffered losses from 2020 to early 2022 as a result. But now that the government is making a concerted effort to restart the economy by encouraging and providing financial aid to local businesses, there is also a resurgence of staffing needs.

Staffing factoring can help staffing companies at this crucial period, and here are four reasons why.

The Advantages of Factoring for Staffing Companies 

Staffing factoring can provide the short-term assistance banks cannot.

Institutional lenders like banks, credit unions, and life insurance companies operate for profit. They lend to customers whom they believe can repay their loans. When these loans no longer bring in profit, institutional lenders have no choice but to cut off those agreements. Sadly, borrowers get extra detriments: a demotion of their credit score and a bad record in their credit history. A snowball effect follows: Other banks are now less likely to grant loans to borrowers because their credit scores do not meet lending requirements. They are a risk, and banks do not like to lend money to high-risk borrowers, even for the short term. 

Factoring companies can step in where banks would instead opt-out. So if your staffing agency suffered financially because of the pandemic and your loan applications are now getting denied because of low credit ratings, you can use staffing factoring instead. 

With factoring, it doesn’t matter if your business has a low credit score because your clients’ creditworthiness is more important. As long as you have pending invoices from faithfully paying clients, you can get immediate funding that you can use for daily operational expenses. This is the significant difference between banks and factoring companies that benefits struggling staffing agencies.

Staffing companies struggling despite having received stimulus funding can lean on staffing factoring.

Many businesses received government funding to stay operational during the pandemic or restart their operations when the restrictions were lifted. Unfortunately, the stimulus funding became a band-aid solution for staffing companies whose payables far eclipsed their revenues at the height of the pandemic. The money that ideally should have been used to launch a new service or invest in a project that would stimulate income generation went into paying debts instead. They got out of the red, as a result, but they weren’t profitable either.

Staffing factoring will be most helpful if your agency is in a similar situation – not indebted but cannot move forward for lack of operational funds. The money you will receive is not a loan but an advance for the payment that will inevitably come from your loyal customers. Factoring for staffing companies is perfect in this situation because with the advance from the unpaid invoices, you can get the working capital necessary to resume your services for existing clients and accept new contracts.

Staffing companies that use factoring can build a long and mutually beneficial relationship with factoring companies.

Buying invoices for new customers with short credit histories is a risk for factoring companies because there is no guarantee that the customer will or can pay on time. However, if you are a valued customer who has proven that doing business with you is worthwhile, staffing companies won’t hesitate to buy your invoice and give you working capital when you need it. 

Staffing companies can prepare for a recession. 

Selling invoices to factoring companies is one of the easiest ways to obtain working capital – this is the biggest appeal of factoring for staffing companies. It can instantly improve your cash flow and give you cash on hand for essential expenses like payroll and supplier invoices. 

You can use the advance from your factoring company to:

• Pay your staff’s salaries on time
• Hire additional workers and meet your customers’ sudden staffing needs 
• Attract top talent by offering competitive salaries

These perks can give your staffing company a competitive advantage and improve your relationship with your customers because you can meet their staffing needs whenever they need it.

Taking advantage of staffing factoring and getting your business to a good standing now will help you weather future economic difficulties. Economists expect a recession in 2023. Whether this will come to fruition or not, it is in your best interest to prepare your business as best possible. 

Explore Invoice Factoring for Staffing Companies

Invoice factoring has been the saving grace for many staffing companies, and it can also be yours. But a lot is riding on the capabilities of the factoring company. Even if you have many invoices to sell, you’ll only get a small amount if the factoring company can only afford to buy a few.

To maximize the benefits of staffing factoring, choose Business Factors & Finance. Founded by industry pioneers who’ve been in business for 40 years, the factoring company offers many invoice factoring options and can process invoice purchases faster than most competitors. 

Improve your cash position by sending a funding application to Business Factors & Finance. Call (800) 672-3844 or fill out our contact form.

Improve Your Cash Position

Get a Risk-Free quote from Business Factors for immediate working capital and 24/48 hour invoice factoring

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