Payroll Funding – Deal of the Month
As an additional segment to our website, we will be selecting one new client each month to highlight in a dedicated blog post. This month’s winner is a temporary staffing agency based in Houston, TX. The client was averaging about $50,000 per month in new receivables, but was in severe need of Payroll Funding in order to help cover existing overhead and expand its operations.
Payroll Funding Helps Cover Existing Overhead
This client, like many others, had great customers with strong credit. Although the quality of its customers was top notch, most simply did not pay their invoices for an average of 30-45 days after the work was completed. This staffing company specializes in providing bartenders and wait staff to meeting venues that host large corporate events. These service professionals typically expect to be paid within a couple of days following an assignment. However, when the staffing agency’s customers did not pay for at least one month following an assignment, this led to a working capital dilemma…money was going out faster than it was coming in. Orion Business Capital was able to help secure an invoice factoring line of credit for the staffing agency which now allows the client to generate working capital as soon as each job is completed. This has brought the owner into a position where he is no longer forced to dip into his own savings to pay employees up front while he waits weeks for his customers to pay their invoices.
Expanding Operations with the Use of Payroll Funding
Our client was also in a great position to accept larger job requests from other venues, but he knew that he would not be able to cover the increase in employee wages out of his own pocket. As a result, he had already declined one job that would have grossed nearly $75,000 because he simply did not have the working capital needed to cover his operating expenses. The owner knew that, in order to successfully grow his business, it is in his best interest to sell his receivables to a factoring company until he is able to qualify for a significant line of credit through his bank. Now that the owner of the staffing agency can receive payment up front for his receivables, he is able to bid on larger jobs and focus on growing his business without worrying about covering increased employee wages and other overhead that typically accompany the growth of any company.
Can We Help?
If anything in this situation sounds familiar to you or if you’re currently facing working capital restraints yourself, feel free to contact us or review our other Invoice Factoring pages to learn more regardless of your industry. We will be happy to have a discussion of your current financial situation to help determine whether factoring, or perhaps another form of financing, is right for your business.