As the owner of a staffing agency, there will be times when you need funding to cover payroll, invest in new projects, or grow your business. Given the increasing number of payroll funding companies out there, you may be overwhelmed trying to find the one that is right for you. Fortunately, we have some tips to make the decision process easier for you.
Follow these guidelines to determine which funding company is right for your staffing agency.
Most funding companies charge both a daily rate and advance rate for asset-based loans. The advance rate is charged on Day 1 and typically covers 30 to 50 days. After that, interest is charged on a daily basis. This means you pay a flat fee based on the initial invoice balance, plus a daily rate after 30 days until the invoice is paid in full. As a result, you almost always pay a higher amount with this arrangement than you would if you paid a flat fee. Plus, your customer controls your fee based on how long it takes them to pay your invoice in full. This makes budgeting and predicting cash flow significantly difficult and expensive.
A better option to go with is the tier-based funding offered by Madison Resources. You gain access to multiple levels of pricing that decrease as your staffing agency grows. We offer a flat fee – advance rate only – for all invoices paid within 90 days. And, as you grow your business volume, your fees automatically drop to the lower fee structure. You gain more control over your cost and greater value from our tier-based model than you would from another funding company or a bank. You also benefit from greater predictability to create budgets and plan costs. This means you can afford to go after larger accounts that involve longer payment terms.
Do Your Diligence
Find a funding company that caters to your industry and understands your business. Learn the details about the available services. Find out how much of your payroll the company will fund, whether the fees increase as the invoices age, and when you gain access to your profits. Clarify what the fine print means before you sign a contract.
When you choose Madison Resources, you gain access to 100% payroll funding and our suite of back-office services. Payroll processing, payroll tax filing, billing, and credit and collections are wrapped up in one integrated solution. Or, if you have your back-office operations in place, you can choose our funding-only option. You gain access to the capital you need to improve your cash flow in as little as 24 hours.