What is the payroll float problem in staffing?
Staffing agencies pay workers weekly but invoice clients on net-30 to net-60 terms. This creates a gap — you are paying out cash before receiving payment. As you grow and place more workers, the gap widens. Working capital or factoring bridges this gap.
Is invoice factoring or working capital better for staffing?
Invoice factoring is specifically designed for the staffing payroll problem — you factor your client invoices and receive immediate cash to fund payroll. Working capital loans provide a lump sum that can cover payroll but requires regular repayment. Most established staffing companies prefer factoring for its flexibility.
Can a new staffing agency get funded?
Agencies under 6 months old can qualify for invoice factoring based on their client quality — not their own history. If you have valid invoices from creditworthy clients, factoring may be available from day one.
What types of staffing agencies qualify?
Light industrial, clerical, IT, healthcare, executive search, direct hire, and managed service providers all qualify. Both temporary placement and direct-hire agencies are accepted.
How does factoring work for staffing specifically?
You invoice your client for worker hours. Submit the invoice to the factoring company. Receive 80–95% of the invoice value within 24 hours. Use the cash to fund next week's payroll. When your client pays (in 30–60 days), the factoring company releases the remaining reserve minus their fee.
Does my client base affect my factoring approval?
Yes — positively. Factoring approval is primarily based on your clients' creditworthiness, not yours. If your clients are established businesses with a history of paying invoices, you are a strong candidate regardless of your own credit profile.
Can I factor invoices from healthcare staffing?
Yes. Healthcare staffing invoices, including nurse and allied health placements, are factorable. Government and hospital clients are especially strong factoring candidates.
What happens if a client doesn't pay their invoice?
In recourse factoring (most common), you are responsible for repurchasing the invoice if your client defaults. In non-recourse factoring, the factoring company absorbs qualified non-payments. Non-recourse carries a higher fee.
Can staffing companies with personal credit issues get funded?
Yes. Since factoring is based on client creditworthiness, staffing agency owners with personal credit challenges often qualify when traditional loans are unavailable.
How fast can I get my first payroll funded?
After initial setup (1–3 business days), ongoing factoring can fund within 24 hours of invoice submission. For the first week, call us directly at (888) 896-5559 to discuss an expedited timeline.