As the outlook for the staffing industry looks extremely positive, agencies are to expect additional growth within the next few years. With new opportunities ahead, the focus shifts towards flexibility and adaptability, especially for smaller staffing firms. To ensure mobility within the industry, invoice factoring is an excellent option to grow, allowing staffing companies to be better financially prepared to scale.
When new clients are added and staffing is required, companies experience periods of employee sourcing, creating a need for a strong and steady cash flow to cover payroll. This process brings additional expenses in anticipation of higher revenue levels. As the saying goes, “it takes money to make money!”
The Financial Challenges of Call Centers
Many staffing agencies, especially smaller ones, don’t have the time to wait the period that banks take to provide loans. Nor do all of them qualify. Between the costs and rigid terms on bank loan products, these options may not properly meet the short-term needs of agencies.
Invoice Factoring for Call Centers
For many staffing agencies, invoice factoring may be one of the very few financing alternatives available. It provides the quickest solution for agencies with cash flow issues. Another benefit is that factoring companies (or “factors”) are mostly concerned with your customers’ credit, and no credit qualification is required from you for this process. Invoice financing is excellent for those looking to avoid loan terms or payment obligations. Also, since factoring is not a loan, your company will not incur debt or additional payment obligations.
Invoice Factoring for Call Centers: The Ideal Solution
With factoring, an agency can obtain a speedy cash advance on money owed from customers. Once an AR factoring account is set up, the business can submit invoices to a factor, and get funded same or next day. The factor then receives payment of the invoice from customers.
Factors typically pay businesses up to 80% of the invoice value as a cash advance. Agencies can expect to receive these funds within 2-3 days for the first funding, and the same or next day after invoices are submitted for future fundings. When the invoice is paid by the customer under original payment terms, the factoring company forwards the reserve balance (i.e. 20%) by direct deposit to the business, less a fee of 1 to 3% per month.
Staffing agencies looking to incorporate invoice financing into its billing process can experience tremendous growth. Smoothing out cash flow will allows a shift in focus to other priority areas of your business.