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Return To Factoring Article Archive   Payroll Funding Vs Factoring For Staffing Companies By Dale Busbee When considering a financing option for your staffing company, there are several options that may be available when dealing with a factoring or payroll funding source. Let\'s explore 2 options: Factoring and Payroll Funding with Back Office Support. Staffing company owners generally find out quickly when starting their company that it is a very CASH intensive business. The concept of staffing is simple: you market your services to potential clients, sign a contract to place your employees or contractors with those clients, identify suitable candidates for jobs, send your people for those jobs, then bill for your services. The only problem is that you hire the employees and pay their salaries generally on a weekly basis, yet your clients can take from 3 weeks to 3 months to pay your invoices. This creates a cash flow deficit almost immediately! The concept is simple, yet in reality, it takes positive cash flow to pick up the clients, pay your employees, and wait to get paid for your services. One of the easiest and most effective solutions available to staffing companies is to locate a suitable funding source for your business. It is generally a pretty painless process to get approved for funding, and it will allow staffing owners to take on qualified new clients without the worry of paying for your employees before getting paid on your invoices. You submit your invoices to the factoring company, and are paid a discounted percentage (usually 80 - 90%) immediately for those invoices. Once the invoices are paid, the factor deducts a small percentage as a fee, and returns the rest to the staffing company. This program is referred to as factoring or invoice factoring, and the service is provided without back office services. In other words, invoicing, billing, payroll tax filing and payment, W2 submittals, etc. are created and maintained by the staffing company, and the factoring company only provides funding for invoices. Some factoring companies go a step further and take the administrative responsibility off the staffing owner and provide back office services along with funding invoices. These services include funding 100% of payroll & payroll taxes, processing weekly payroll, processing weekly billings, creating original invoices and submitting those invoices to the staffing clients on their behalf, preparation and submittal of payroll taxes as required, creating payroll checks, payroll journals, check registers, invoice previews, accounts receivables agings, gross profit reports, and preparation of year-end W-2\'s. The fees for this type of funding can be a bit higher than for factoring, however many staffing owners would like to relieve themselves of administrative duties to concentrate on revenue producing activities such as signing up new clients and sending out more temps to their clients. Either program can be an effective solution for staffing owners, it really depends on your tolerance for administrative activities. If you would like to discuss your situation, please contact Dale Busbee, Business Development Executive, Sterling Resource Funding Corp via email at dbusbee@sterlingresourcefunding.com keywords: factoring | payroll | funding | invoice | staffing | consulting Business Capital Line

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