Payroll funded ahead of the cycle through advances against client invoices.
Staffing firms, temp, contract IT, healthcare placement, light industrial, invoice clients on net-30 to net-60 terms but settle with their workforce weekly or bi-weekly. The gap between payroll and AR is the primary constraint on growth. Factoring addresses it.
Payroll operates on a weekly cycle. Contract and W-2 staff are compensated on the agency's payroll schedule, typically weekly. Payroll obligations are fixed regardless of when client invoices are collected.
Client payment terms run 30 to 60 days. Enterprise and government clients set payment terms at 30, 45, or 60 days. The agency carries 4 to 8 weeks of float between payroll disbursement and invoice collection on each active assignment.
New contracts increase working capital requirements before revenue arrives. A new 50-person contract adds 50 weekly payroll obligations before the first invoice on that contract is collected. Each new assignment extends the float proportionally.
Staffing agencies placing $200K to $20M+ annually in contract or temp labor across IT, healthcare, light industrial, administrative or skilled trades.
- ·AR aging report
- ·Sample client invoices and contracts
- ·Payroll register (most recent 2 cycles)
- ·Workers' comp certificate of insurance
- 01
Advance against approved client invoices once they're approved, so payroll is funded ahead of the next cycle.
- 02
Payroll-funding option that wires directly to the agency's payroll provider on the run date.
- 03
Recourse structures, with the desk tracking client payment.