Payroll Factoring for Staffing Companies

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Reliable Payroll Funding Solutions for Your Company

Staffing agencies have a business model that is slightly different from most companies. A staffing agency has to market its services, pay for advertisements to find clients, and then have enough cash to cover payroll. A staffing agency sometimes has to wait weeks or months to see a payment for their client, as the employee has to work and submit a timecard before the client will receive a bill. This is where payroll factoring can help.

Payroll factoring is a way for staffing companies to get their invoices converted into immediate capital. Sometimes known as staffing factoring, this option allows companies to get an advance on their invoice values immediately.

At Porter Capital, we offer some of the most competitive advance rates at around 85% to 95% of your invoice. We’re capable of offering invoice factoring up to $25 million per month with low requirements and an incredibly fast and easy application process.

If you’re looking to make payroll and sitting on a stack of unpaid invoices, we can help. With a fast turnaround and a number of financing options available, Porter Capital can help turn your pending invoices into rapid cash flow sooner rather than later.

What Is Staffing Factoring?

Staffing factoring is an opportunity to turn outstanding invoices into cash when you need it. By factoring your accounts receivable, you are essentially selling your invoices at a discount to your factoring partner — in exchange, you can have more direct control over when you get paid and how you apply that on-demand capital. Your customer then pays the invoice to the factoring company instead of your business.

We work with staffing agencies across a number of industries all over the United States to provide payroll factoring services. Our quick application process and highly competitive rates make us an excellent factoring partner for companies interested in a more flexible financing option than traditional business loans. Get your employees paid on time, even if customers are dragging their feet.

Types of Companies That Use Payroll Financing Services

Invoice factoring can be a unique and reliable solution for staffing companies. In a people-centered industry like staffing, your clients may not fulfill invoices for up to three months. During this time, you may need funding for at least six rounds of staff payroll. With staff invoice factoring services, you can make sure your clients are happy and your employees are paid for their time.

Staffing companies of any kind are excellent candidates for invoice factoring services. At Porter Capital, we’ve provided payroll funding for small businesses and large enterprises throughout the staffing industry. Whether you’re just getting started or operate a well-established staffing agency, we are happy to help you find solutions for long-term factoring.

Some of our regular clients and industries include:

  • General Staffing Agencies: General staffing agencies serve a wide range of clients, each with unique placement demands. When you’re balancing countless invoices and hundreds of internal team members, you need reliable cash flow. Our business payroll funding services allow these agencies to seamlessly transfer funds without disrupting client relationships.
  • IT Staffing Agencies: Staffing for Information Technology positions requires various ongoing services with your client. It may take a while for your invoices to clear throughout the staffing process, so we provide payroll funding for staffing companies in the IT industry.
  • Nurse Staffing Agencies: Staffing agencies for nurses and other health care professionals are responsible for placing many skilled employees. Instead of waiting months for the client to pay your invoices, choose our financing services for health care staffing companies.

How Our Payroll Factoring Process Works

As an established payroll funding company, we’ve assisted hundreds of staffing agencies with invoice factoring. Our financial experts work with your agency to determine the best service we can provide for your payroll needs. Even if you don’t qualify for traditional funding solutions, we can help you advance your payment with our staffing company financing services.

The Porter Capital team works with many staffing agencies to create appropriate payroll financing services. Here’s our process for Staffing Factoring:

  1. Invoice your customer: Creating a valid invoice for your services is a crucial first step of factoring.
  2. Assign the invoice to your factoring partner: As your factoring partner, we purchase the invoice from your agency so we become the accounts payable for your client.
  3. The factor pays you an advance: While you enjoy your cash advance on the invoice, we wait to get paid back by your client.
  4. Your client pays the invoice directly to your factor: For your client, the only aspect of the process that’s changed is where they direct their payment. Most clients in the industry are familiar with invoice factoring and won’t bat an eye at the difference.
  5. The factor takes their fee and forwards you the balance: As your factoring partner, we request a small fee and send you any remaining balance from the invoice once it’s cleared!

Qualifying for Payroll Factoring

The best way to know if you’re qualified for staffing factoring is by giving us a call to take a look at your financial situation. On average, a staffing company’s typical qualification includes a minimum of $25,000 per month of revenue or invoices and a business history of two or more years.

Staffing factoring is much like other factoring services, where there is mutual risk and benefit for both parties. In exchange for access to better cash flow and expanded capital on demand, companies essentially sell their invoices to a factoring partner at a competitive rate. Depending on whether you’re using a recourse or non-recourse agreement, your company may be liable for invoices that clients never pay.

On our end, we can negotiate a multitude of different variables between recourse and non-recourse! We take a risk and buy your outstanding invoices in exchange for a small percentage of the invoice and factoring fees. More than anything, we provide access to your funds when you need them, not when a client finally gets around to paying!

Choose Porter as Your Payroll Factoring Provider

Porter Capital provides access to competitive fees, some of the best staffing factoring rates in the industry, and a quick approval process for funding. If you’re interested in working with us to provide instant capital for your staffing business, we’re happy to discuss a business funding strategy!

  • Quick Access to Invoice Factoring
  • Competitive Rates
  • Flexible Financing Solutions
  • Improved Cash Flow
  • Incredible Customer Service
  • No Concentration Limits
  • Minimum Documentation Required
  • Will Fund Past-Due (Outstanding) Invoices
  • Trusted Business-to-Business (B2B) Factoring Company

Porter Capital offers premier financing solutions to help you get the funding you need to support your business. With our payroll funding for staffing companies, you can increase cash flow throughout your slower hiring seasons. Invoice factoring allows service-based businesses like staffing agencies to maintain a positive balance and pay their employees without waiting.

Faster cash flow, stable growth, and room to expand your business are all on the table. Are you ready to get started? Contact Porter Capital to learn more about our factoring for staffing companies!

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Frequently Asked Questions

Payroll funding is the act of selling your invoices to a payroll finance company to receive immediate access to cash. This financing helps staffing agencies meet payroll needs without waiting to collect from customers.

The factoring company buys the unpaid invoice from your customer to advance the cash to your bank account the same day. Once your customer pays the funding company at the end of the payment term, you receive the rest of the invoice amount, minus a small fee. This quick access to capital helps sustain business growth.

As a staffing company, making payroll is one of the most important jobs. Without payroll processing, you can lose employees and risk going out of business. Having access to your working capital is extremely important as a staffing agency business owner.

When you have a source of funding, you can pay your employees immediately, instead of waiting to collect on invoices. While there are other financing options like banks, many small businesses do not qualify as they do not have good enough credit or assets to borrow against collateral. This is why invoice financing is the payroll funding solution your staffing agency needs.

Payroll factoring typically is a process businesses choose to turn their outstanding invoices into immediate cash to make payrolls in the pay period. Factoring companies like Porter Capital excel at providing easy financing solutions to businesses. Businesses can receive easy funds without having to take on additional debt by using bank loans to fulfill their financial obligations. The best part of opting for payroll invoice factoring is that it uses outstanding invoices, as collateral businesses need to keep their cash flow moving. Porter Capital, for example, does not put businesses through hectic procedures of credit checks. The factoring company is only interested in the customer’s creditworthiness.

In a nutshell, payroll invoice factoring is a relatively easier financing option for businesses struggling to pay their employees on time. It helps companies keep their cash flow afloat and retain employees. In addition, it strengthens the relationship of businesses with their employees.

  1. Reliable Cash Flow: Payroll factoring offers advances on your billed or unbilled accounts receivables.
  2. Competitive: With factoring, staffing companies can get up to 97% of the total invoice value to grow their business.
  3. Flexible: Factoring is more flexible than traditional financing. Look for a provider that offers both recourse and non-recourse options.
  4. Value of Time: It is a good option to even cash flow and can offer eligibility on invoices up to 120 days
  5. Working Capital: Look for a lender that offers term loans up to $500,000
  6. Powerful: Be sure to choose an established provider that can offer lines of credit of up to $15 million
  7. Freedom: It’s important to choose a partner that won’t lock you into any restrictive financial covenants that could hamper your growth in the long term
  8. Longevity: Look for a lender that has an established track record. Porter Capital has been in business for more than 25 years
  9. Leverage: Take the long view with your business. Factoring can fund additional growth by leveraging the A/R of target companies to fund acquisitions
  10. Price: We know that price is important, so Porter Capital offers the most competitive rates in the industry.

You’re able to acquire more clients for your staffing agency when you work with an invoice financing company. Outstanding invoices won’t get in the way of your growth as you will have access to cash flow, and you can invest more in marketing efforts to attract more clients.

When you work with an invoice financing company, you’re acquiring new debt, and no loan needs to be paid off. You’re simply getting access to your working capital so you can stay on top of payroll and grow your business.

Protect Personal Funds

This is no doubt one of the potential benefits of choosing invoice factoring. It protects the personal funds of business owners, especially when they make payrolls. Using personal funds including saving accounts, retirement accounts, and family accounts is very common for business owners for making payrolls. Many business owners make this mistake to avoid the IRS problem, bankruptcy, and lawsuits that they may face if they fail to pay employees on time. Luckily, invoice factoring is a flexible financing solution that can help entrepreneurs prevent these situations. With this ultimate solution, entrepreneurs do not need to resort to drastic measures.

Prevents Layoffs

There is no denying that layoffs are one of those things that all employers want to avoid, particularly when their business is in a growing phase, and they are availing new opportunities. Factoring invoices to a reliable firm like Porter Capital enables employers to retain their potential employees, especially when they need them. By making timely payroll, employers can make payments on time and keep up with the situation.
Decreases Expenses
Employers can accept up to 50% hit on heavy receivables to cover the amount of payroll. For the businesses that work with factoring companies; this cost of immediate cash would be incredibly less. Porter Capital, in this regard, charges only a small percentage of invoices of customers who agree to pay the immediate payment.

Reduces the Need for Additional Debts

Traditional business loans make another easy option for employers and business owners. However, these loans need to be paid within a certain time limit, and that too with interest. To make matter worse, many startups and small businesses do not have enough credit history when it comes to qualifying for loans. Unlike traditional loans, invoice factoring does not require sufficient capital and credit history. It only involves selling invoices. That is to say, there are no additional debts, drawn-out approvals, or interest payments as long as business owners factor their invoices.

Takes Care of Employees

It is not about only avoiding state or federal tax liabilities or avoiding lawsuits and IRS penalties. It is also not about just keeping your company or cash flow afloat. Whether you want to manage payrolls for a huge corporation or a small business, it is important to pay employees and workers on time. It is one of the vital strategies to retain potential employees. Invoice factoring is undeniably an excellent solution to keep your company’s cash flow running. It has become an integral part of businesses, which rely on seasonal cash flow and need a reliable source of finance to pay their employees. Invoice factoring is the right solution that enables businesses to bridge the gap between making checks for employees and collecting payments.

Using payroll funding could be a financial solution for your business if:

  • The business is a staffing agency
  • Your customers pay in 30 to 90 days
  • You need access to cash to grow your business
  • There is a struggle to make payroll
  • You struggle to secure funding from traditional sources

If you’re a staffing agency experiencing revenue growth, delayed payments from customers, or are experiencing cash flow shortages due to unforeseen situations; payroll funding could be the solution for you.

People often confuse payroll loans (also known as MCAs) with payroll factoring because they sound similar. However, some key differences make these two financing solutions poles apart from each other. Knowing these differences may have a long-term impact on the business. Payroll loans are typically short-term loans and cash advances. They are generally taken for a small amount of cash. A business owner can borrow money from lending services. The cash comes with the total amount of loan and interest fees. Borrowers are bound to repay the loan amount on a specific date.
 
Payroll factoring (aka invoice factoring), on the other hand, is not a business loan. In factoring relationships, businesses sell their current account receivables or invoices to a factoring company to get 95 percent of the invoice amount to pay their employees. The key benefits of payroll factoring include back-office support that saves money and time, zero up-front charges, no need for additional company debts, and easy credit recovery for startups.

When working with an invoice financing company, the approval process is a lot quicker than with a traditional lender. A company like Porter Capital can approve you in as little as one business day, and you can start funding your invoices immediately, so you don’t need to cut into your agency’s resources to meet payroll.

  1. Provide Services: The staffing company operates and provides services as usual based on the agreed-upon payment terms. Payroll can only be funded after hours have been worked to use payroll funding.
  2. Billing Customers: The staffing agency invoices the customer like normal, but changes the “remit to” instructions. Once the staffing company has signed on with a financing company, the payment instructions change to pay the payroll funding company instead.
  3. Sell the invoices: The staffing agency submits invoices to the payroll funding company. The staffing company receives the face value (usually around 90%) of the invoice the same day.
  4. Collecting Payment: Once the payroll funding company has collected payment from the customer, the remaining invoice amount (minus a small fee) is released to the staffing agency.