Traits Shared Among the Best Staffing Factoring Companies
Whether you’re just starting your staffing agency, or you’ve been in business for years, it’s always important to work with a financial partner who truly understands your unique needs. According to a recent AOL Jobs Article by Kristen Felicetti,
“…temporary jobs are expected to grow 13 percent over the next five years…” and “…46 percent of employers plan to hire temporary or contract workers in 2015.”
In order to take advantage of the growth in this industry, it may be necessary to factor your accounts receivable in order to stay on top of payroll and other operating expenses.
If you are still trying to determine whether invoice factoring is right for your staffing agency, feel free to review our Staffing Factoring page and our recent post about Payroll Factoring Benefits. However, if you know factoring is the right choice for your current needs, there are some important traits to consider when trying to find the best staffing factoring companies. Below are some of those items that we consider to be on the top of the “list”.
Experience with Staffing Factoring
Not all funding sources are created equal. It’s important to partner with a working capital specialist who is not only comfortable with factoring staffing receivables, but also one that understands the ins and outs of your industry. It just wouldn’t make sense to approach a freight factoring specialist with your staffing invoices when there are other lenders who focus more specifically on the temporary employment sector. These staffing specialists should be comfortable offering competitive rates and terms based on their knowledge and experience.
Within this niche, there are several sub-sectors such as temp staffing within the medical, construction, IT, and general business/admin fields to name a few. Your factoring partner should have considerable experience working within your area(s) of focus. This should ultimately lead to a higher level of comfort between your organization and the factoring company and assist in preventing any unnecessary funding delays.
Competitive Advance Rates and Factoring Fees
While advance rates in the 80-90% range are common among most industries, staffing factoring advances can approach 95% in the “right” cases. It’s important to work with a partner that is comfortable with the staffing niche in order to achieve these higher advance rates. Furthermore, this specialization will increase the likelihood of obtaining the lowest fees as well as the most competitive terms.
On the topic of fees, it is also important to always be aware of all fees that the factor could potentially charge. While it is common to have an additional charge depending on how you receive your funds (wire or ACH/direct deposit) all fees should be outlined right from the start. When speaking with potential factors, always ask for a thorough proposal that outlines all possible charges you could incur during the course of your working relationship.
Flexible Terms
The last thing anyone wants is to enter into a long-term, contractual relationship with a lender only to find that the financial organization cannot meet their needs. When it comes to selecting a payroll factoring company for your staffing agency, it is important to know that these long-term contracts are not always a requirement. However, if there are extenuating circumstances involved, the lender may ask for some sort of time commitment from you in order to proceed. Just remember that these terms are typically negotiable.
Another important item to consider is whether the lender will require you to factor all of your customers, or if they will allow you to select who to factor. This kind of flexibility is imperative for your business as it may not be necessary to fund all of your invoices or customers. Your ability to select which customers/invoices to factor can translate to tremendous financial savings over time. There is simply no sense in paying fees on invoices that you do not need fund right away.
Conclusions
While this is by no means a comprehensive list of items to keep in mind when searching for the best staffing factoring companies, hopefully these suggestions will provide a good starting point. When it comes to the financial health of your business, you can never be too careful or ask too many questions. If you would like some honest guidance, feel free to Contact Us and we will be happy to answer all of your questions and help you select the best partner for your business needs. Even if we’re not able to help you, we will surely know someone out there who can.