Table of Contents
Maintenance staffing factoring is a short-term financing solution wherein a third-party – the factoring company – buys outstanding invoices and immediately pays the business owner up to 96 percent of their value. Factoring unlocks the cash tied up in unpaid invoices and gives maintenance staffing companies cash on hand to:
- Secure payroll and pay operating expenses
- Hire more employees to accommodate a sudden staffing need
- Finance projects that promote growth for the business
Staffing factoring for maintenance companies fills the gaps in cash flows caused by slow-paying customers or long pay cycles of 30, 60, or 90-plus days. It is a simple, hassle-free method of getting paid faster without being in debt. Unlike traditional loans, you borrow money from a financial institution and pay interest. With maintenance staffing factoring, you’re getting the money you are owed immediately and don’t have to wait 30 or more days to get paid.
The factoring company ends up in charge of securing payment from your late-paying customer. They will claim a small percentage (the discount rate) of the invoice as their fee in exchange. If there’s any remaining balance after they deduct the advance payment and service fees, they will send it back to you.
Factoring companies can buy invoices piecemeal (spot factoring) as a temporary staffing factoring service. Alternatively, they can be a permanent partner and buy all unpaid invoices (whole ledger or full-turn factoring).
Maintenance staffing factoring has four simple steps:
- The business owner sends a copy of the invoice to the factoring company.
- The factoring company verifies the invoice and checks the slow-paying customer’s credit history.
- The factoring company pays the business owner an advance for the invoice.
- The customer pays the factoring company, which then deducts the advance and their fees from the total payment. They also pay any remaining balance to the business owner.
Staffing factoring for maintenance companies benefits business owners in a tight position because of cash flow issues. It provides an advance on accounts receivables that aren’t due for another month or so. If you urgently need a cash inflow but do not want to commit to the terms of a loan, maintenance staffing factoring would be your best option.
Staffing factoring is also helpful if your credit rating is currently low and you have difficulty getting approved for traditional loans. Your customers’ creditworthiness is more critical to factoring companies than your business’s credit rating.
Since maintenance staffing factoring can bring immediate cash flow into your business and won’t tie your future earnings into loan interest payments, you can use it to finance the costs of your rapidly growing business. You won’t have to pass up on new clients or turn down business opportunities because you have inadequate cash on hand.
Is staffing factoring for maintenance companies worthy of exploring? A look at the advantages of staffing factoring will show that it is.
- Obtain working capital regardless of your current credit rating.
- Offload the burden and stress of following up on slow-paying customers.
- Monetize your unpaid invoices immediately (no need to wait out an entire pay cycle before receiving payment for your services).
- Boost your cash flow without being in debt.
- Have the financial freedom to welcome new customers and scale up your staffing services whenever necessary.
The cost of maintenance staffing factoring depends on several things, like the number of invoices, the amounts involved, and the customer’s creditworthiness. What’s certain is that the factoring company will retain a small percentage of the invoice as their service fee. That percentage is the discount rate.
As mentioned above, you will receive an advance when you factor your invoices. The advance rate can be anywhere between 60 and 96 percent. Then, after your customer settles their invoice, you can get the remaining 40 to 36 percent – minus the discount rate.
To better demonstrate how much you can spend for maintenance staffing factoring, see this example:
- Invoice amount: $10,000
- Advance rate: 90% or $9,000
- Reserve: 10%, or $1,000
- Discount rate: 2.19%, or $219 every 30 days
- Type of arrangement: Non-recourse
Based on this factoring agreement, you will receive $9,000 within two to three days of getting approved. If it takes your customer four months to pay the invoice, you will have paid your factoring company $876 ($219 per month) by the time they settled. You will also get the remaining $124 from the reserve.
Notice that the agreement is non-recourse. It means that your factoring company will absorb any losses, and you don’t have to pay extra fees besides the reserve if your customer fails to pay.
Staffing factoring for maintenance companies is an excellent solution for cash flow problems. However, if you need something different, you can apply for a merchant cash advance (MCA) or other short-term loans. Business Factors offers asset-based loans, revenue-based loans, capital loans, and other factoring services. We are available 24/7, so message us or request a quote.
Business Factors is the best choice for maintenance staffing factoring because of these reasons:
- Fast financing (get your advance in as little as two business days).
- We’ve been providing factoring services for small and medium enterprises (SMEs) in the US and Canada since 1991.
- We offer a wide range of financial services, like purchase order financing and
- We can provide up to a 96 percent advance rate for staffing factoring.
- The application process for maintenance staffing factoring is very easy and takes no more than 30 minutes.
- You can check the status of your invoices with our online account management system.
- Our friendly staff is available 24/7, all year round.
Staffing factoring for maintenance companies throws a lifeline to business owners in a tight spot because of cash flow problems. A business can run out of available funds if there are very long gaps between their customers’ pay periods, not to mention some customers could delay paying their debts. So, if you’re short on funds for payroll and paying utility bills, but you have accounts receivables that can cover the cost, consider getting maintenance staffing factoring.
This financing solution will convert your unpaid invoices into cash that you can use immediately. With Business Factors, you no longer have to wait for 30 to 90 days to receive the payment for your services. Instead, you can get an advance of up to 96 percent of what you’re owed and have the money on hand in two to three business days.
Contact us today if you want to know more about maintenance staffing factoring or the other financing solutions available at Business Factors.