Frequently staffing companies have an invoice factoring company assist in growing their business. With increased labor you might quickly get a headache from lack of cash flow as bigger contracts are signed and more staff is placed. But you may benefit by factoring those invoices to meet weekly payroll. It’s an acceptable method to get through a growth period. Typically, well run staffing firms have excellent profit margins so the nominal financing charges are not going to be a burden on the bottom line. Especially when you consider how many new employees you can place knowing that payroll is available when you need it.
On the other hand, permanent placement invoices are not as easy to finance. Again, with temporary staffing, once the hours are logged, the customer owes on the invoice – usually without challenge. Permanent placement contracts have language that allows the customer to reject the candidate over a set period of time, thereby offsetting the outstanding commission. A fundable invoice has to be due and owing without clauses that allow the customer not to pay under any circumstances. No amount of payment history from a particular customer can satisfy the factoring company who only sees legal agreements that offer a customer reasons not to pay an invoice.