We find the best factoring companies for staffing agencies by comparing the programs of various factoring companies based on our team’s hands-on experience in an invoice factoring company. Because we have worked in factoring ourselves, we know what a temp factoring program or staffing payroll loan agreement should include—and what you don’t want to find there as a factoring client.
For example, factoring rates (e.g., factoring fees and advances) only tell part of the story. In fact, going with a higher fee could be in the best interest of your business if it means you’re working with an invoice factoring company that puts your business’ interests at the center of things. Conversely, working with a bad factoring company can ultimately hinder your ability to grow your company, even if they offer the lowest fee or highest upfront advances.
Here’s what we look for in a staffing factoring company
Factoring fees and advances: Because speeding up cash flow is generally the main goal of factoring receivables, fees and advances must be competitive. In addition to factoring rates, we take a close look at any terms and conditions that apply, such as how long your customer has to pay and compounding fees (e.g., a low fee for the first 10 days that balloons into a large fee if the customer remits payment after that time).
For example, when working out your factoring proposal, be sure to discuss the average time your customers take to pay. Make sure that won’t be an issue that increases the cost of factoring for your business, reducing the benefits of factoring invoices as a result. Find out more about the hidden costs of invoice factoring that could be detrimental to your business.
Speed of funding: The purpose of factoring is to expedite cash flow and the best factoring companies for staffing and temp agencies are able to provide same-day funding when you factor an invoice. The only exception to this would generally be if you submit your invoice after the deadline for bank wire transfers, in which case your account would be funded on the next business day.
Transparent pricing: When you factor receivables, your all-in cost of factoring should be represented in the factoring fee. In other words, the best staffing factoring companies don’t nickel and dime you with additional fees for schedule processing, account maintenance, notifications, and so on, as this also increases your costs and reduces the benefits of factoring invoices.
Client-friendly controls: Some staffing factoring companies have factoring minimums, requiring you to factor all your invoices, or all the invoices of specific customers, or a minimum dollar amount each month. However, this might not be in the best interests of your business. The best factoring companies allow staffing agencies to retain control and factor only when it’s right for their business.
Your agency might choose to factor all customer invoices on an ongoing basis in order to not only speed up cash flow but reduce (or even eliminate) the personnel, time, and money spent on accounts receivable activities. On the other hand, you might only want to factor the invoices of slow-paying customers or use spot factoring (aka selective factoring) to gain access to working capital just one-time or occasionally.
Another client-friendly characteristic we look for is the lack of long-term contracts. If it’s time for your recruitment, consulting, staffing, or temp agency to stop factoring, you should be able to do so without incurring crazy penalties such as a huge fee or a clause that requires you to keep factoring for another 3 to 6 months, or even longer.
Customer and client care: Similarly, instead of locking your business in with severe penalties for leaving, the best receivables financing companies earn your business for the long term by providing a high level of care to you as the client and in terms of how they interact with your customers throughout the staffing invoice factoring process.
To learn more, read up on how to choose a factoring company and what you need to compare when evaluating your options. Or apply for a factoring proposal online and let us do the work for you, so you can stay focused on running and growing your business.
Let us find the best factoring companies for staffing, temp, and recruitment agencies on your behalf
We know your time is valuable. In fact, since our team previously worked for a top staffing factoring company, we know that you want to factor, in part, so you can stay focused on growing your agency instead of chasing customer payments and waiting on receivables. Find the best factoring companies for staffing agencies, temp employment agencies, security guard companies, IT staffing businesses, and recruitment agencies by requesting a free, no-obligation quote: