As a staffing owner, you realize cash flow is the lifeblood of your business. Whether you’re a start-up or a business looking to expand, access to flexible funding can help you succeed and grow. Let’s take a look at how financial flexibility can help your business.
Make The Upside World Right Side Up.
What makes payroll even more problematic for staffing agencies (particularly temporary staffing firms) than “normal” businesses is that the model is upside down in the staffing world. That is to say, you need to pay temp staff before you get paid by your clients, which means you’re working in the red.
In order to navigate this cash flow challenge, you should consider lining up payroll funding from a reputable vendor as a viable solution. You’ll have money to pay your workers, you’ll lessen your credit terms headaches, and you can expand or invest as needed.
Smooth Out the Cycles.
Everyone knows staffing is a business of cycles. This can be influenced by regional markets, the overall economy, the niche you’re in, competition, and many other variables.
The nature of the business, and the fact that staffing is built around human capital instead of physical capital, is not going to change. In the past, staffing firms had trouble with banks because of their business model and this lack of physical wherewithal. Fortunately, there are many financing and payroll vendors now who specialize in the needs of staffing businesses.
Get – and Keep – Everyone on Track.
Starting and managing a staffing firm is complicated and distracting. If you’re trying to handle accounting and billing alone, it can be extremely difficult to keep track of all your bills, time card backup, adjustments and invoices. And if your invoices fall into disarray, your billing becomes erratic. For efficiency and peace of mind, you should consider outsourcing your accounting needs.
What Should You Be Looking For?
If you’re looking for a financing partner, it’s what you can share and what they can provide that make for a successful mix.
We know we’ve been talking about the uncertain nature of staffing, but it would be very helpful for you to share potential growth information with the vendors you’re interested in. Try to estimate the level of financing you’re going to need months or a year in advance. Whenever possible, include possible needs such as expansion or acquisitions.
Secondly, and this is important as well, when you find your finance partner, discuss your hopes and plans, and develop a relationship before a time in the next growth cycle when you’re going to need additional financing.
Are you looking to build flexibility into your financials?
At Madison, for 25 years we’ve prided ourselves on partnering with staffing firms of all sizes to help them grow. We offer full-service payroll funding, or, for firms that have back office systems in place, we offer a stand-alone funding option. Contact us today to see what’s the best solution for your business. We’re here with advice and suggestions.