4 Tips for When Your Staffing Company is Cash PoorPosted by Factor Funding Co. on February 9, 2016
Smaller staffing companies face occasional cash flow crunches. Too many things come due at the same time and it becomes a juggling act to make sure everything gets paid on time. If your staffing company has faced the occasional cash crunch, you can use these four tips to help keep the cash flowing in the future.
Find the simple inefficiencies that cost you plenty
Are you still processing manual time sheets? Are your sales people missing critical callbacks from potential clients? Do you find that your employees are doing a lot of manual data entry to replicate data from one system to another?
These are all potential inefficiencies that can be costing you a lot of money. Every hour spent processing manual entries is expensive and increases the chances of errors, which only costs you more money. Finding these points of inefficiency makes it possible for you to take corrective action to prevent them from happening in the future. This can help keep your cash flows freed up.
Invest in the right software to streamline your staffing management
Well-designed staffing software can improve your office's efficiency. Today's best software allows you to manage many aspects of your company's business in one system instead of multiple. This helps improve efficiency and reduces the chance of error.
By managing most of your operations through a single, well-designed piece of software, you will streamline your entire operation, finding savings in places you never thought possible. And that will improve your cash flows also.
Set metrics and act based on performance
How can you tell which employee is a top performer and which one who needs to go back to training? The most effective answer is metrics. These are measurements by which someone's performance can be determined.
The appropriate metrics for each job may vary a bit. Someone who works on a manufacturing line might be measured on accuracy on the items produced. Someone who works in sales might be measured on the number of sales calls made. For a staffing employee, it may be absenteeism or the amount of revenue he or she brings.
Reward your best performers and offer training to those that don't quite measure up. You may find there are a few that are just too far below basic standards. For those individuals, it might be time to find other employment opportunities.
Consider factoring to free up your trapped cash
One of the challenges of running a staffing agency is the time between when your employee completes work for a client and the time that client pays for the work. During that time, you need to meet payroll, pay taxes, and keep the doors open. Most agencies have thousands of dollars trapped inside their open invoices.
Factoring is one option for getting that trapped cash free. The factor can give you up to 90 percent of the value of an open invoice from a creditworthy client. When that client pays the bill, the factor sends your agency the remainder due, minus the factoring fee.
Qualifying for factoring is not that difficult, as long as your customers are creditworthy. The factor is not going to forward cash against an invoice that has a higher risk of going unpaid. The factor will check the credit of each of your customers and only accept invoices from those customers that meet their requirements.
Don't let the threat of being cash poor keep you from making the decisions that will help your agency grow. These tips will help you get your cash flowing again and keep it flowing into the future. What is keeping your cash from flowing and how can you remove or get around the barrier?