How does payroll factoring compare to an accounts receivable line of credit?

While both payroll factoring and accounts receivable lines of credit deal with accounts receivable, they are, in fact, two different types of staffing agency finance.


• With factoring, staffing agencies sell their accounts receivable invoices for a fee to obtain immediate cash, and their clients then pay the factor.


• An accounts receivable line of credit, on the other hand, is a loan typically received from a traditional lender in which your accounts receivable are used as collateral. While you have access to cash when you need it, the loan must be repaid. In addition, lenders require good credit and often provide funding only after a lengthy business and financial review.


While payroll factors can advance 90 percent or more of your invoice totals, traditional banks often only give you a portion of the money requested, forcing you to find another source for additional funding or decrease your budget. And if you use the total amount of the line of credit and need more money, the bank may decline to provide it, whereas payroll factors, who understand the staffing industry, are much more likely to overadvance.


For information on TemPay and payroll factoring, visit or call (866) 683-6729.