As the US economy continues on its upward path, the demand for temporary staffing is growing even more rapidly.
The staffing industry is projected to grow by 3% in 2017, according to a recent forecast by Staffing Industry Analysts, a global advisor on temporary and contingent work. Indeed, temporary staffing has grown as a percentage of overall employment in the US. Temporary staffing is predicted to grow 3% in 2018 to $126.8 billion with the overall staffing market likely to achieve 4% growth to reach $146.6 billion.
Even more dramatic is the share of new jobs added to the economy over the past year that came from the temp staffing industry. During the first nine months of 2014, this ratio was in the 8% to 10% range, the Staffing Industry Analysts report stated.
These trends indicate continued growth in revenues and profitability for staffing firms. At the same time, growth also means continuing and ongoing strains on staffing companies’ cash flow. The reason: Client companies often take their time in paying their invoices – often 30 to 60 days — while the staffing firm needs cash to meet their current operating expenses, payroll commitments to the staffers they hire, and for investment in sales and marketing for business growth.
Solution for Cash Flow Squeeze
There’s a solution to staffing firms’ cash flow requirements – non-recourse accounts receivable financing and payroll funding. In all cases, the staffing firm receives immediate cash from a financing firm to take care of its current requirements.
The staffing firm can use factoring or accounts receivable financing, to obtain immediate cash. In this case, a factoring company purchases the firm’s receivables, providing a percentage of the value of the receivables – up to 92%, depending on the quality of the receivables. When the invoice amounts are paid, the factor remits the difference, less a small percentage fee for providing its service, which often includes collections.
Payroll funding is a form of accounts receivable factoring. Typically, staffing companies pay their employees on a weekly basis, but the staffing firm may not be paid by their client companies for several weeks. Payroll funding eliminates this time gap between payroll outlays and invoice receipts. At the time the invoice or employee timesheets are submitted, the payroll funding company purchases the invoice from the staffing company. The funding company collects on the invoices when payment is made by the client company.
Look Into Non-Recourse Accounts Receivable Financing
If you run a staffing firm that is experiencing a cash flow squeeze – and what firm isn’t? – then you should consider the use of accounts receivable financing and payroll funding.
BusinessCash has been a provider of funding services to the staffing industry for nearly two decades, with hundreds of satisfied staffing industry customers across the country. Our team includes highly experienced receivables financing specialists – and can provide you with the financing you need in short order.