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When considering funding options for staffing business, there are several options that may be available when dealing with factoring or payroll funding source. Consider two options :. Factoring and Financing Payroll with back office support
Staffing business owners usually find out quickly when starting their business it is very CASH intensive businesses. The idea of staffing is simple: you market your services to prospective customers, signing a contract to put employees or contractors with the customers, find appropriate candidates for jobs, sending people for the jobs, the bill for your services. The only problem is that you hire workers and pay their salaries generally on a weekly basis, yet customers can take from 3 weeks to 3 months to pay the bills. This creates a flow of cash almost immediately! The concept is simple, but in reality, it takes a positive cash flow to pick up customers, pay employees, and wait to get paid for your services.
One of the easiest and most effective solution available staffing companies to find appropriate financing source for your business. It is usually fairly painless process to get approved for funding, and it will allow staffing owners to take on increasingly new customers without having to worry about paying for employees before getting paid on your account. You deposit accounts in the factoring company, and paid the discount rate (typically 80-90%) immediately for those bills. When invoices are paid, factor attracts a small percentage fee, and returns the rest staffing company. This program is called factoring or invoice factoring, and the service is provided free of back office services. In other words, billing, invoicing, payroll tax filing and payment, W2 submit speech etc. are created and maintained by the staffing company and factoring company only provides grants to accounts.
Some factoring companies go a step further and take management responsibility away staffing owner and provide back office services along with funding invoices. These include funding 100% of payroll & payroll taxes, process weekly payroll, process weekly Billings, create original invoices and send the bills to staffing their clients’ behalf, preparing and submitting payroll tax needs, create payroll checks, payroll journals, checking files, preview the invoice, Receivables Aging, gross profit reports and preparation of year-end W-2. Fees for this type of financing can be a bit higher than for the elements, though many owners staffing would like to lighten the administrative tasks to focus on income producing, such as signing up new customers and send out more Temps to its customers.
Whether the program can be an effective solution for staffing owners, it depends really on your tolerance for administrative costs.
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