When contemplating a financing option for your staffing company, there are a lot options that may be available when coping with a factoring or payroll funding source. Discussing explore 2 options: Financing and Payroll Funding with Back Office Support. payroll funding
Staffing requirements company owners generally find out quickly when starting their company that it is a very MONEY intensive business. The strategy of staffing is simple: you market your services to potential clients, indication an agreement to place your employees or installers with those clients, identify suitable individuals for careers, send your people for those jobs, then costs for your services. The only problem is that you hire the employees and pay their incomes generally on an each week basis, yet your clients can take from 3 weeks to three several weeks to pay your accounts. This creates a cashflow debt almost immediately! The idea is simple, yet in reality, it will require positive cash flow to pick up the clients, pay your employees, and wait to get money for your services.
One of many least complicated and most effective alternatives available to staffing companies is to locate a suitable funding source for your business. It can be generally a pretty painless process to get approved for funding, and it will allow staffing owners to take on qualified new business without the worry of purchasing your employees before getting paid on your invoices. You submit your invoices to the loans company, and are paid a reduced percentage (usually 80 – 90%) immediately for those invoices. When the invoices are paid, the factor deducts a tiny percentage as fees, and returns the rest to the staffing company. This method is referred to as invoice discounting or invoice factoring, and the service is provided without back office services. In other words, invoicing, billing, payroll tax getting and payment, W2 submittals, etc. are created and maintained by the staffing requirements company, and the invoice discounting company only provides money for invoices.
Some loans companies go a step further and take the administrative responsibility from the staffing requirementws owner and provide back again office services along with funding invoices. These services include funding 100% of payroll & payroll income taxes, processing weekly payroll, control weekly billings, creating original invoices and submitting those invoices to the staffing requirementws clients on their account, preparation and submittal of payroll taxes as required, creating payroll checks, salaries journals, check registers, account previews, accounts receivables agings, gross profit reports, and preparation of year-end W-2’s. The fees for this type of funding can be a lttle bit higher than for factoring, however many staffing owners would like to relieve themselves of administrative duties to pay attention to earnings producing activities such as placing your signature to up new clients and sending out more temperatures to their clients.
Both program can be a powerful solution for staffing owners, it will depend on your tolerance for administrative activities.