IT temporary staffing is projected to grow another 7% in 2015 and reach $27.8 billion. This means big business for tech companies and it also means they need to be prepared with the proper working capital in order to take advantage of the continued growth.
Big staffing companies clients often take 30-60 days to pay invoices putting pressure on a staffing companies cash flow, capital for payroll and limiting growth opportunities overall.
Accounts receivable financing with credit protection is an effective funding method for IT staffing companies to boost their working capital. The staffing company simple sells their outstanding invoices to a factoring company. The factor advances up to 92% of the invoice amount, collects the outstanding invoice amount from the staffing companies client(s) and upon payment provides the IT staffing agency with the balance minus a small fee.
Accounts receivable financing is excellent for companies that have tax liens, client concentration, personal credit issues, start-ups and other challenging funding situations. The reason is the factoring company focuses on the credit of the staffing companies client. If the staffing company works with solid clients they are in an excellent position to take advantage of factoring.