The basic problem faced with staffing agencies, is that they pay their temp staff on a weekly basis from their balance sheet, but don't receive payment from their contracts regularly - this short fall in cash flow must be addressed in some manner, and invoice factoring fits the bill perfectly. Factoring is a service that a very large percentage of the recruitment industry uses.
There is no need to wait 30-90 days to get paid. Often times a factor can advance funds to you the same day you invoice your customer and follow through on those invoices. They can verify acceptance, do credit approvals, collections and enhance your ability to operate your business without worrying about working capital, payroll, or past due obligations.
For a small charge, a factor can advance your staffing company up to 90% of your invoices right now. You get the balance when your clients complete payment. Here's how invoice factoring for temporary staffing agencies works in three simple, easy steps:
1. Your temp staffing agency provides goods or services to creditworthy customers and then invoices them with a copy sent to the factoring company.
2. They will fund your business with an immediate payment of up to 90% of the received amount.
3. Customers make payment directly to the factor according to the terms of the invoice, and they return the balance of the paid invoice to you minus a fee.
Here are more benefits to using a factor for funding your payroll:
- This is not a loan. A factoring company gets you money for your completed work, now. They don't ask for equity in your business; you retain full control.
- A factor can act as your in-house credit department at no cost to you.
- A factoring company is not a collection agency, but factors do have a teams of callers that put in friendly reminders to clients with past due accounts. Most factors are also fully capable of applying pressure when needed.
- Factor the invoices you want, when you want, with no long-term contracts. Factors let you factor as much or as little of an account as you wish. You factor only what is advantageous to you.
- Big companies can take longer to pay you. This can restrict your available cash and make it difficult to complete orders or perform larger jobs. Invoice factoring can give you the available cash to pay your suppliers quickly. As little as a 2% quick pay discount can cover the greater part of your factoring cost.
Artice Source: http://www.articlesphere.com
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