What is Flexible Funding and Why Does Your Staffing Agency Need It?Posted by Factor Funding Co. on March 3, 2016
Think about the current landscape in the staffing industry. Larger companies are starting to take a bigger share. This is making it more difficult for smaller, local agencies to compete. The only way for smaller agencies to stay afloat and continue to grow are cash reserves. And that is where flexible funding can come into play.
What is Flexible Funding?
There are times when a staffing agency needs an infusion of cash to hire more staff to serve more clients. Now traditional bank loans are one option to consider. They offer you a single infusion of cash that you have to pay back over a number of years. And the only way to qualify is if you have sufficient cash flows and a solid credit rating. If you already had all that, your agency wouldn't need that cash infusion.
Flexible funding works differently. It allows you to get the cash you need, when you need it and pay it off quickly. This affords you the chance to get the funding you need without taking on a large debt that has to be paid back over several years.
Factoring is one of the best options when it comes to flexible funding. It allows you to free up cash that is trapped in your current A/R portfolio. You have the cash you need, when you need it. Then, when your clients pay their open invoices, the factor gets the money back and you only end up paying a small fee.
Why Is Flexible Funding So Important for Staffing Agencies?
It allows you to use cash that belongs to your business. When you issue an invoice to a client, you have already provided staffing services to that business. The funds that invoice represents is already owed to you by the client. The factor is not loaning you money. The factor is advancing cash that is already owed to your business.
It frees up your agency's valuable time. How much time does your staff spend collecting debts from clients? Most smaller agencies do not have a dedicated collection department. They rely on everyone to do collections. When you use factoring, the factor will take over most of those collection duties, freeing up your time.
It does not involve months of approval time. When you have a big client waiting for new staff members, you don't have time to go to the bank and wait for months to get a loan. You need to hire staff today and be able to pay them next week. Getting approved for factoring only takes a few days. And once you are approved, you can factor your first set of invoices and receive cash within 48 hours.
It helps improve your business' standing and stability. Factors will only approve invoices from creditworthy customers. They can help you do credit checks on new clients for you. This will help improve the caliber of clients you are working with. The steady infusion of cash also helps you pay bills on time, improving your agency's credit rating. As your business stabilizes, you will begin attracting newer and better clients as well as more qualified staff.
It allows you to control how much you factor and when. Most factors do require a commitment to factor invoices for a certain amount of time. However, in some contracts, you can control which invoices are factored. Some months you may not need a big inflow of cash. Other months you may need a lot. It provides you with the flexibility you need to compete.
If you are ready to discover the benefits of flexible funding, you need to talk with a factoring agency. Their representatives can walk you though the options you have available and get you started with factoring today. Let your business grow and thrive with the help of flexible funding.