Industries: Staffing Sector
Location: Lynchburg, VA
How Much? $100,000
It may sound counterintuitive, but the staffing and employment agency sector has experienced considerable growth in recent years as a result of the flat economy. Companies have shown a reluctance to hire full-time employees and instead have opted to hire temporary workers as well as independent contractors. This wait-and-see approach has caused some in staffing to grow at faster rates than they are able to effectively manage. Though it can be the envy of struggling businesses, companies that grow too fast can be flush with their own problems, such as poor cash flow, inferior customer service, and the inability to cover payroll. Advance payroll funding, which can cost hundreds of thousands of dollars depending on the employment positions being filled, can be a major issue for staffing companies.
Security Agency Factoring Bolsters Company’s Payroll
One security guard staffing company in Lynchburg, Virginia found themselves in such a situation where they were having a hard time meeting their payroll funding responsibilities. Because corporate clients typically will pay staffing companies after employment agreements have been signed and fulfilled, the actual payroll financing must often be paid upfront by another source such as staff agency factoring or temp agency factoring.
In other words, the staffing company cannot expect the client to cover the costs of employees’ first paychecks because the client generally doesn’t pay their invoices until 30 or even 60 days out whereas employees’ paychecks must be covered within 2 weeks. Staffing companies that can’t cover these payroll funding costs aren’t likely to survive.
Advance Payroll Funding Crucial to Success of Staffing Agency
Facing this difficult issue, the security guard staffing company sought $100,000 in staffing financing to cover these expensive payroll costs. Without this fast money, the company was running the risk of not being able to pay the security staff it had just hired. This would have upset the employees as well as the corporate client that had hired the agency.
Staffing factoring, specifically security agency factoring, has proven to be a reliable way for staffing agencies to get regular cash to cover their payroll. When the client pays its bills within the month, the temp agency factoring company gets paid and everyone’s happy.