Access to capital is critical for any business, but this is especially true for temporary staffing firms. You put people to work, you pay your temps and taxes…and you wait 30 to 120 days to get paid.
Having the working capital you need to cover that gap keeps you in business. Having the working capital you need to add more temps and add more customers grows your business. So we don’t think it’s an understatement to say that staffing agency working capital is critical to the success of a staffing entrepreneur!
Payroll funding is a specialty finance option tailored specifically for staffing firms looking for working capital, and while the actual cash itself is the primary benefit (obviously!) there are several other benefits to utilizing payroll funding:
One of the biggest benefits of payroll funding is flexibility. In staffing, your working capital needs can increase or decrease dramatically. When working with a bank or utilizing your own money, it can be very difficult to find that flexibility. However, payroll funding is structured to be flexible based on your volume and needs, eliminating the worry of having enough money for payroll.
2. Eliminating Credit Card Debt
We find that many staffing firm owners supplement working capital needs with their own personal credit cards or cash. Utilizing credit cards to cover the gap between paying your temps and getting paid by your customers is stressful. It can also be costly if you end up paying interest on that credit card debt because of a late paying customer. Utilizing payroll funding eliminates credit card debt and stress.
3. More Time
Who doesn’t wish they had more hours in a day? Believe it or not, it’s possible. Time is a tradeoff. It’s a pretty simple swap when it comes to payroll funding. You spend less time on credit research, collections management and cash posting. That gives you more time to focus on sales and recruiting (which also has a much better impact on your bottom line!). And many providers of payroll funding also offer optional back office services which save you even more time.
Payroll funding in and of itself does not drive growth. But it does enable growth. It gives you working capital to take on new business. If you had a line of credit that maxed out at 1 million, that doesn’t give you the capacity to add another million in sales. Payroll funding does. And (see above) it also enables growth by freeing you from administrative tasks and allowing you to focus more time on revenue driving tasks.