What is accounts receivable finance, and how can it benefit my business?

Accounts receivable finance, also called payroll factoring, is a type of staffing agency finance in which you sell your accounts receivable invoices to a factoring company for immediate cash. Your clients then pay the factor directly.

The benefits of this type of financing are tremendous in an industry in which employees and vendors are often paid weekly, but customers can take 30, 45 or even 60 days to pay, creating a cash flow gap.

Advantages of accounts receivable finance include:

 

  • Quick and easy application and approval. Factoring typically does not include the lengthy business or financial reviews of traditional financing.
  • High advance rates. Payroll factors advance 90 percent or more of an invoice’s total.
  • Flexibility. Factors, who know and understand the staffing industry, are more likely to consider special requests, such as an overadvance, than a typical bank.
  • Immediacy. Most factors wire funds so they can be delivered quickly when you need them.
  • Full service. Many payroll factors will also take care of back-office functions, such as paying your employees, filing and paying your payroll taxes, invoicing your customers, and collecting and following up on delinquent accounts.

 

For information on TemPay and its accounts receivable finance services, visit www.tempay.com or call (866) 6-TemPay.