One of the biggest challenges of running a staffing agency is managing its cash flow. You have employees that need to be paid weekly but customers that pay their invoices on net 30 to net 60 terms. For staffing companies that have a cash reserve, this is usually not a problem. They can cover expenses from their cash reserve until invoices are collected. If the staffing agency does not have a cash reserve, then there is a chance that it will run into cash flow problems. This situation can get worse if your staffing agency is growing, forcing you to either decline new customers or pay employees late.
The problem is simple – you have immediate expenses but slow revenues. One way to solve this problem is to use invoice financing.
What is invoice financing?
Invoice financing accelerates the revenues due to your company from customers. This provides you with predictable cash flow, providing the funds you need to meet payroll and other critical expenses. With invoice financing, your customer does not have to pay sooner. Rather, a financial intermediary advances funds to your company using your invoices as collateral. The transaction settles once invoices are paid by your customer.
How does invoice financing work for manufacturing companies?
Generally, invoice financing integrates easily into most staffing companies.It works as follows:
- After completing your work, you invoice your client
- You send a copy of the invoice to the finance company
- Your company gets an immediate 90% advance on the invoice
- Once your client pays for the invoice, you get a second advance of 10%, less the financing fee
Get an invoice financing quote
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Advantages of invoice financing
One of the biggest advantages of invoice financing is that it provides staffing agencies with predictable cash flow. Your staffing company gets immediate access to funds without having to wait up to 60 days to get paid by customers.
Another important advantage of invoice financing is that the funding line is directly tied to your sales and can grow with your business, provided that your sales are to credit worthy commercial clients. This makes it an ideal business financing solution for growing staffing companies.
Does your staffing agency company qualify?
Qualifying for invoice financing is easier than qualifying for other types of funding. The general requirements are:
- The company must be in operation. We are happy to work with start-ups as well.
- You must have commercial or government clients that have good commercial credit
- You must use the working capital to pay suppliers, employees or company expenses