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Staffing agencies operate in a high-pressure environment where cash flow is everything.
Most firms are required to pay their temporary or contract employees weekly. This causes challenges with funding for staffing companies, as their clients’ extended payment terms mean it can take 30 to 90 days to receive payment for their invoices. This mismatch between outgoing payroll and incoming revenue can strain operations and limit growth.
When cash flow gets tight, staffing factoring can be the solution that keeps payroll on track. Factoring for staffing agencies provides fast access to working capital by converting your unpaid invoices into same-day cash.
Instead of waiting weeks or months to get paid, you can cover payroll on time while reinvesting in new contracts and recruiting efforts.
Learn how Business Factors & Finance provides flexible staffing company financing solutions in as little as 24 hours.
How Information Staffing Factoring Works
Turn Unpaid Invoices Into Working Capital Within 24 Hours
Here's how it works:
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Submit Your Invoice
After your employees or contractors complete their shifts, submit your timesheets and invoices for funding. We accept invoices for short-term projects, long-term contracts, and specialized placements.
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Invoice Verification and Credit Checks
We move quickly to review invoices and check client credit, not yours. That means you can still qualify even if your agency is new or growing.
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Advance Payment and Reserve
We can wire up to 96% of the invoice amount within 48 to 72 hours. Use that capital to cover payroll, recruit new talent, or handle operating costs without worrying about client payment schedules.
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Final Payout
Once your client pays, we release the remaining funds, minus a small factoring fee.
Costs and Fees
What To Expect With Factoring for Recruitment Agencies
For staffing agencies, cash flow challenges often come from delayed client payments and recurring payroll obligations. Understanding the true cost of financing options is essential to keeping your agency running smoothly. Many staffing firms consider staffing invoice factoring alongside traditional funding for staffing companies, including bank loans, lines of credit, asset-based lending, or revenue-based financing. Each option carries its own expenses, flexibility, and risks.
Staffing invoice factoring stands out because it gives agencies fast access to working capital by converting unpaid invoices into immediate cash. Rather than waiting for clients to pay, factoring ensures you have the funds to cover payroll, recruit talent, and take on new placements without interruption.
Before diving into how companies offering invoice factoring for staffing businesses structure their fees, let’s take a closer look at how its costs compare to other financing methods.
How Staffing Factoring Fees Are Structured
Factoring solutions, like their costs, are designed around the unique profile of each client. Fee structures can differ depending on the agreement, and staffing agencies need to know how those charges affect their cash flow. Two of the most common pricing models you’ll encounter are monthly and weekly fees.
Example 1: Monthly Fee Model
Your staffing agency factors a $100,000 invoice for a client contract with an 85% advance rate. That means you receive $85,000 upfront, while $15,000 is held in reserve.
If the factoring company charges a 3% monthly fee ($3,000) plus a one-time $200 setup fee, you’ll owe fees at the start of each month. If your client takes five weeks to pay, the total fees would come to $6,000. This shows how monthly fee models can become more expensive when client payments drag out.
Example 2: Weekly Fee Model
You factor that same $100,000 invoice at an 85% advance rate, but the factor charges 0.75% per week ($750).
If your client pays in five weeks, the total cost would be $3,750, which is less than the monthly model. However, if payments take longer, weekly fees can add up quickly and shrink your margins.
Hidden Fees and How To Avoid Them
Not all staffing factoring agreements are created equal. Beyond the standard discount rate, agencies should be cautious of added costs that can cut into margins:
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Monthly Minimums:
Some factors require you to submit a minimum volume of invoices each month or face penalty fees.
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Administrative Costs:
Processing, credit checks, and wire transfer fees that quietly chip away at profits.
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Long-Term Contracts:
Long-term agreements that are costly to break if your agency’s needs change.
Practical Tips To Avoid Hidden Fees
To make sure factoring works out in your favor, keep these best practices in mind:
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Demand Transparency:
Ask for a full list of all fees and penalties upfront.
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Choose a Staffing-Savvy Factor:
Work with a provider that understands payroll cycles, seasonal demand, and the urgency of staffing cash flow.
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Monitor Invoice Handling:
Stay engaged in how invoices are processed and applied to ensure there are no surprise deductions.
Why Your Staffing Agency Needs Factoring
Finding Staffing Company Financing Solutions To Address Cashflow Gaps
Staffing agencies face a constant challenge: payroll is due weekly or bi-weekly, while client payments may not arrive for up to 90 days. Payroll factoring bridges this gap by advancing funds against your invoices, ensuring employees and contractors are paid on time.
For agencies operating on thin margins or managing large rosters, factoring, whether through startup staffing factoring or medical staffing factoring, provides reliable cash flow without relying on loans or credit lines. Funds are available within 48 to 72 hours, giving you the working capital to cover payroll, recruit talent, and keep operations running smoothly.
Factoring also supports growth. Taking on new contracts or scaling your roster requires upfront costs, and waiting for clients to pay can stall expansion. Because approval is based on client creditworthiness, not your agency’s, factoring is accessible, flexible, and designed to grow with your receivables.
Industries That Benefit From Staffing Factoring
Flexible Funding for the Teams You Build
Staffing company financing provides fast access to capital for all types of recruitment agencies. Our staffing factoring company can help meet your unique cash flow needs.
Temporary and Contract Staffing
Permanent Placement Firms
Light Industrial Staffing
Clerical or Admin Staffing
General Labor and Warehouse Staffing
Seasonal and Event Staffing
Which Model Fits Your Business Needs?
Both factoring and asset-based lending unlock working capital tied up in receivables, but they differ in cost, structure, and requirements. The right option depends on how quickly you need funds, the size of your asset base, and the level of financial oversight your agency can manage.
Factoring
Asset-Based Lending (ABL)
With factoring, your agency sells outstanding invoices to a third-party staffing factoring company at a discount. In exchange, you receive most of the invoice value within two to three days. The factor advances the bulk of the funds upfront, holds a reserve, and releases the balance (minus fees) once your client pays.
Benefits of Factoring
- Immediate access to cash for payroll without taking on debt.
- Approval is based largely on your client’s credit strength, not your agency’s.
- Flexible programs for occasional use or ongoing receivables management.
Risks of Factoring
- Fees may be higher than traditional financing.
- Extra costs, such as minimums or admin charges, can reduce margins.
- Client relationships may be affected if the factor manages collections directly.
ABL gives agencies a credit facility secured by assets such as receivables, equipment, or inventory. Instead of selling invoices, you borrow against the value of your assets, usually through a loan or revolving credit line.
Benefits of ABL
- Typically lower financing costs compared to factoring.
- Ability to leverage more than just receivables.
- Credit capacity grows as your assets and client base expand.
Risks of ABL
- Requires a stronger financial foundation — often six months or more in business with at least $1M in eligible assets.
- Borrowing limits can fluctuate as your receivables are re-evaluated.
- More reporting and compliance requirements than factoring.
Don’t Wait for Your Cash Flow To Turn
Reliable Staffing Industry Financing Solutions That Support Your Growth
Start funding your operations in as little as 48 hours. Business Factors & Finance is your trusted staffing factoring company that keeps your team paid and your agency growing.
FAQs
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What’s the difference between asset-based lending and factoring?
Factoring provides staffing agencies with immediate cash by selling unpaid client invoices, while asset-based lending (ABL) offers a loan or credit line secured by receivables or other assets.
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Do I qualify for staffing invoice factoring?
Unlike traditional loans, staffing factoring approval depends more on your clients’ creditworthiness than your agency’s financial history. Most providers only ask for a simple application, an accounts receivable aging report, and proof of workers’ compensation or liability insurance.
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How does factoring help with payroll challenges?
Payroll is the biggest ongoing expense for staffing agencies, but clients often take 30/60/90 days to pay invoices. Factoring solves this by advancing cash within 48 to 72 hours of submitting approved invoices. This ensures your employees and contractors are always paid on time, even when client payments are delayed.