Choosing a payroll funding source is much like choosing a pair of shoes: You need to try each one on to determine whether it’s the right fit, because all are not created equal.
So how do you decide which firm is right for you?
- Seek advice from your peers. Ask others in the industry for staffing funding company referrals, and if you have a specific factor in mind, ask if another firm has used it and how the experience was. This allows you to narrow your prospect list and save valuable time.
- Ask the hard questions. Having stable cash flow is critical for your business, so make sure your potential factor has a stable source of cash. While you won’t be able to delve into the company’s finances, you can ask how you can be assured your company will be able to receive its funds.
- Determine what type of funding you want. Are you looking for a traditional banking solution, such as a loan or line of credit? Or have you considered factoring, in which staffing companies sell their accounts receivable for a fee to a third party to obtain cash? No matter which form of payroll funding for staffing companies you choose, there are pros and cons to each. For example, with traditional financing, you often retain control of your accounts receivable, while with factoring, the factor often gains control.
- Select a firm that specializes in the staffing industry. Factors that specialize in staffing firms will better understand how your business operates and what its unique needs are. This is critical in situations in which temporary employees are often paid weekly but clients don’t pay for 30, 45 or 60 days, creating a cash flow gap.
- Review your options annually. Even if you think you are currently receiving a great deal, it is wise to review your payroll funding for staffing companies options each year. Both banks and factors often offer aggressive rates to gain new business, and if you find a better deal than the one you currently have, you can let your factor know. Most often, it will beat the competing price to keep you as a client.
For information on how TemPay can provide payroll funding for staffing companies, contact www.tempay.com or (866) 683-6729.