Full-service versus money-only payroll factoring

Most factoring companies offer two payroll factoring options: money only and full service.

Money-only factoring is strict payroll funding without any additional services. With full-service factoring, the factor provides administrative support, including filing payroll taxes, sending invoices, paying temporary employees and making collections.

Both options have their merits, and your choice depends on your staffing firm’s unique needs. However, to help with your decision, here are the pros and cons of each option.

Full service

Pros

  • Your factor handles administrative details so you have more time to focus on your business.
  • You receive extensive reports of the administrative and financial activity of your staffing firm.
  • Your factor operates as a virtually invisible partner. Your firm’s name will still appear on all checks and invoices.

Cons

  • You are removed from the administrative and financial processes and may not be up to date on issues.
  • You pay for the service, taking money away from your business.
  • You don’t have as many touch points with clients, eliminating some rapport-building opportunities.

Money only

Pros

  • You receive the money your staffing firm needs to cover your cash flow essentials.
  • You save money by handling administrative functions in house.
  • You maintain control by processing your own paychecks, printing your own invoices and filing and paying your own payroll taxes.

Cons

  • You need to handle administrative support in house, taking time and resources away from other functions.
  • You must remain up to date on your own payroll taxes to file and pay them correctly.
  • You don’t have as many touch points with your factor, eliminating some rapport-building opportunities.

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