Learn The Benefits of Payroll Factoring
Staffing agencies often face overwhelming situations when it comes to payroll funding. The invoices of these companies usually don’t get paid in time because they serve different kinds of industries. These agencies handle a wide range of clients and all of them pay in different ways.
This means they may not have sufficient funds with them when required and could even put them out of business if they don’t get timely help.
Taking the help of a payroll factoring company could keep your staffing agency in the business. When you outsource what you have to receive to these companies you wouldn't have to worry about when all the invoices will get paid.
For example, a nurse staffing factoring plan can take care of the money requirements of the nurse staffing agency temporarily.
Who Requires The Payroll Factoring Services?
How Does Payroll Factoring Work?
Funding your unpaid invoices in time is the overall function of a payroll factoring company. The following steps are involved in its process:
Step 1: Send An Invoice To Your Client/Customer
The first step is to send an invoice to your client. To qualify for payroll factoring the net period on the invoice must be 90 days or less.
Step 2: The Invoice Has To Be Assigned To The Factoring Company
The invoice is sent to a factoring company. You can either opt for spot factoring (choose the invoices you want to factor) or contract factoring (all the eligible invoices are to be factored).
Step 3: The Staffing Agency Gets An Advance Payment
The factoring agency pays up to 90% of the total amount in the invoice. This depends on the agreement these companies have entered in to.
Step 4: The Invoice Is Paid Directly To The Factoring Agency By The Client
Your client pays the invoice amount directly to the factoring company. A predetermined amount is reduced from the payment received and the factor forwards the balance amount to the staffing company’s account.
Benefits of Payroll Factoring Services
Below are some of the benefits of payroll factoring services:
Quick And Timely Payments
Once the invoice is assigned the staffing agency gets the fund within 24 hours.
Cash Flow Can Be Assured
Staffing agencies are unable to predict when their clients would pay them. Payroll factoring enables the staffing agency to understand beforehand the exact amount they would be receiving and when they would get it.
Better Pay For Staffing Agency Employees
Payroll factoring maintains a steady cash flow and the employees get paid better. The payroll factoring company makes sure that the staffing agency has the money in their account as and when required.
The creditworthiness of a prospective client can also be determined with the help of your payroll factoring company while they keep an eye on all your current clients. The staffing company gets enough time and resources to focus on the growth of their business.