Funding for Staffing Agencies

Staffing agencies face unique cash flow challenges. Here's how to solve them:

The Staffing Challenge:

• ●Pay employees weekly
• ●Get paid by clients in 30-60 days
• ●Gap can be 30-60 days of payroll
• ●Growth makes the gap worse

Best Funding Options:

1. Payroll Funding / Invoice Factoring Industry standard for staffing:

• ●Factor invoices immediately
• ●Get 85-95% of invoice value
• ●Pay employees on time
• ●Scale with your placements

2. Line of Credit For established agencies:

• ●Revolving access
• ●Lower cost than factoring
• ●Requires strong financials
• ●Good credit needed

3. Asset-Based Lending For larger agencies:

• ●Based on receivables value
• ●Higher advance rates than factoring
• ●More complex structure
• ●Lower cost at scale

Staffing Factoring Specifics:

Advance Rates:

• ●Temporary staffing: 85-92%
• ●Permanent placement: 70-80%
• ●Higher for established customers

Typical Fees:

• ●2-4% per invoice
• ●Volume discounts available
• ●May have minimums

What Factors Look For:

• ●Creditworthy clients
• ●Assignment confirmations
• ●Timekeeping systems
• ●Clear contracts

Growth Strategies:

1. ●Start with factoring to manage cash
2. ●Build reserves from profits
3. ●Add line of credit as financials strengthen
4. ●Eventually reduce factoring reliance