Ebb and flow is nature of the staffing industry. When demand for services goes up, agencies need cash flow to fund temp agency payroll and fill positions quickly. When it drops, they also need working capital to be available to shore up operations when demand rebounds.
Whether you’re starting your own staffing agency or looking to expand your existing agency, you can’t afford to have a gap in cash flow. If you do, you might want to consider alternative financing options to fund your temp agency payroll.
Do you need help maintaining adequate cash flow to meet your temp agency payroll and keep up with client demand? While there are a number of financing options, here are three popular sources of temp agency payroll funding that we have found to be effective.
Open a line of credit
If your staffing agency has good credit and a track record of success, you likely have the collateral to secure a line of credit from a bank to fund your temp agency payroll. Ask other businesses in your community for recommendations of lenders or look online to see which lenders work with staffing agencies on their financing options for temp agency payroll. Opening a line of credit can provide you the flexibility you need to support your temp agency payroll as demand for services shifts up or down.
Starting your own staffing agency? Having a strong line of credit starting out can help you build a competitive talent pool by ensuring that our staff is always paid on time, even if you’re waiting on funds from a client.
Hire a factoring partner
Finance factoring is a short-term lending option for businesses with a lot of variation in their cash flow. There are companies that specialize in finance factoring or payroll factoring services that can provide short-term loans to support your temp agency payroll based on anticipated earnings and invoices. You receive money as soon as you have a contract, so employees don’t wait months to be paid. In addition, many factoring lenders will monitor the creditworthiness of your customers and notify you about suspicious activity, helping you escape financial losses.
Work with nontraditional lenders
Traditional lending groups might be hesitant to work with your staffing agency if you don’t have a lot of experience. If you’re new to the industry, your best sources of temp agency payroll financing could be banks and lenders that accept nontraditional collateral. Ask around to find reliable lenders who will accept collateral such as accounts receivables in place of credit in order to finance your temp agency payroll while you’re getting started as a business.
If you’re curious about these financing strategies for your new or established temp agency, we’d love to have a discussion with you. TemPay has over a quarter-century of experience in the industry and we can steer you in the right direction. Please contact us here to have a conversation, learn more about us as a funding source for agencies, or get started right away by applying for credit with TemPay for your temp agency payroll needs today.