How does payroll factoring compare to a small business loan?

Posted on by

Payroll factoring and traditional business loans are two different types of funding.

In payroll factoring, staffing agencies sell their accounts receivable invoices for a fee to obtain immediate cash. Your clients then pay the factor.

On the other hand, traditional bank loans often provide funding only after a lengthy business and financial review and require good credit and some form of collateral, which will be seized in the event that your business fails and you cannot pay back the loan.

And while payroll factors will advance 90 percent or more of your invoices’ totals, traditional banks often lend only a portion of the money you requested, forcing you to find another source for additional funding or to decrease your budget. And, if you use all of your loan amount and need more money, the bank may not give it to you, whereas payroll factors, who understand the staffing industry, are much more likely to overadvance.

Interest rates and fees for traditional loans are also typically higher than those of payroll factoring. This can slow the growth of your business, because not only do you have to pay the loan amount back, you also have to pay interest. In addition, if you receive a loan, you are paying interest on the entire amount, even if you don’t use it all.

For information on TemPay and payroll factoring, visit www.tempay.com or call (866) 683-6729.

How TemPay can help with your company’s payroll factoring

Posted on by

Payroll factors such as TemPay provide a service in which staffing agencies sell their accounts receivable invoices for a fee to obtain immediate cash. Your clients then pay the factor.

This type of staffing agency finance allows you to manage your agency’s cash flow in an industry where employees and vendors are often paid weekly while customers take 30, 45 or even 60 days to pay.

Payroll factoring is typically offered in two ways:

  • Money only. This funding solution does not provide administrative support.
  • Full service. With this option, the factor not only provides you with payroll funding but also handles your staffing agency’s payroll, invoices, taxes and collections.

Both forms provides numerous benefits, as they allow you to quickly receive the working capital you need to operate and grow your business without the hassles of the lengthy business or financial reviews of traditional financing.

Payroll factoring is also typically a more flexible form of staffing agency finance than bank funding, and factors are more likely to consider special requests, such as an overadvance.

TemPay provides both money-only and full-service payroll factoring.

We advance 90 percent or more of your invoice total, among the highest advance rates in the industry. We also offer TemPay Complete Solutions Software®, customized comprehensive software to help staffing firms perform all major front- and back-office functions and tasks.

For information on TemPay and its payroll factoring services, visit www.tempay.com or call (866) 683-6729.

How payroll factoring produces working capital

Posted on by

Payroll factoring is a type of staffing agency finance in which staffing agencies sell their accounts receivable invoices for a fee to obtain immediate cash in the amount of the invoice. Your clients then pay the factor directly.

This arrangement provides your staffing firm with instantaneous working capital you can use to operate and grow your business instead of waiting the traditional 30, 45 or even 60 days for payment.

Payroll factoring provides the necessary cash flow in an industry in which you often need to pay your employees and vendors weekly while waiting for client payment on a much longer timeline.

This working capital can be used for expenses such as office lease payments, expansion, inventory, employee wages and more. It is a steady flow of income helping bridge the gap between revenue and expenses.

Payroll factoring is typically a more flexible form of staffing agency finance than bank funding, which often takes much more time and money and carries a higher risk.

Therefore, if you need additional working capital one month, say, to cover your workers’ compensation payments or open a new location, a factor is more likely to grant your request than a traditional bank.

For information on how TemPay can provide payroll factoring services that provide you with working capital, contact www.tempay.com or (866) 683-6729.

Temporary staffing employment screening: How often, when, why and how?

Posted on by

Screening your temporary staffing employees is critical — you want to make sure the workforce you’re sending out is appropriate for the job and protect yourself against any potential liabilities.

“We screen employees on a daily basis,” says the vice president of sales and operations at a large Cleveland-based staffing firm that specializes in the industrial, office support, skilled trades and professional industries. “We do a background check on every candidate who comes through our door. Then, if we decide to take it a step further and place that person, we conduct our drug screening and past employment verification.”

Background checks

When conducting a background check, it is advisable to complete a preliminary check yourself simply by Googling the applicant’s name and searching local court websites. However, a self-administered search only skims the surface of information. To ensure complete and accurate data, using a third party is critical.

Keep in mind that one transgression may not signal a problem; however, if your staffing service sees multiple offenses, such as several speeding tickets within a tight timeframe, it could signal reckless or careless behavior.

Background checks should be treated on a case-by-case basis. Often, what you’re looking for depends on a client’s needs and requirements. And if you do find something on a background check, it’s always a good idea to bring the employee in to discuss it — it could be there is more to the story. 

Past employment verification

In addition to a background check, you’ll want to conduct past-employment verification, which can be done in house with a few phone calls.

Anybody can lie on an application. A past-employment check verifies the information is correct. If there is no record of the person working there, that could signal a dishonest employee.

Drug screenings

Drug screenings are also critical, especially from a workers’ compensation and safety standpoint. Typical drug tests look for amphetamines, opiates, marijuana, cocaine and more. The presence of one or more of these drugs could signal a substance abuse problem and increase chances of an accident.

Keep it up

Conduct employment screenings prior to placement, and also make sure your staffing service covers its bases by conducting additional drug screenings and background checks before each placement.

6 tips for choosing a legitimate background check firm

Posted on by

Your staffing service provides a valuable commodity: people. And just like any other business, you need to ensure your commodity meets certain standards before it heads out your door to your customer.

Performing a background check on your temporary employees gives you peace of mind knowing you’re sending out an employee who is a perfect fit for the job. It also reduces your company’s risk, so if there is a problem with an employee, you can show you completed your due diligence.

While the Internet allows you to perform a general background check by typing a person’s name into a search engine and browsing the results, a third-party background check firm conducts a much more thorough check than you can do on your own.

Many of these companies are legitimate, but there are some that do not provide the value that others do. Here are six tips to help your staffing firm choose a reputable background check firm.

  • Research the firm. Most businesses have a website and are listed in online or telephone directories. Look at the business’s phone number and address and search for it online — it should show up consistently and with the same owners listed.
  • Ask your peers about the business. See if others in the staffing industry have heard of or dealt with the firm. If no one has heard of it, chances are it’s not a legitimate firm. However, even well-known firms can offer poor service, so ask for details on what they’ve heard or about their own experiences.
  • Ensure the firm provides a comprehensive background check. This should include Social Security number validation, identity confirmation and criminal and county court records. Most companies review the past seven years, but you can request a longer review.
  • Avoid checks advertised as “instant.” There is no national database for criminal records, and these firms search online database that are not always accurate or up to date.
  • Make sure you talk to a real person. You want a background check provider that is a business partner, not just a data generator. A legitimate firm will have a knowledgeable employee explain its findings and answer any questions you may have.
  • Check the company’s associations. If it features a logo that says “Better Business Bureau Accredited Business,” clicking the logo should take you to the firm’s BBB report. In addition, legitimate firms are often members of the National Association of Professional Background Screeners. If the firm has worked with staffing firms before, it is an added bonus.

 

What Industries Benefit From Payroll Factoring?

Posted on by

Staffing firms of all sizes and in all stages of their life cycle can receive payroll factoring, whether you are starting your own staffing agency or are established in the field and regardless of your number of clients.

Funding is available for firms in any industry, including:

  • Light industrial
  • Administrative
  • Information technology
  • Construction
  • Health care
  • Legal
  • Clerical

For example, 360° Staffing specializes in light industrial, office support and hospitality with 24-hour service and thousands of employees around the globe.

Payroll factoring has enabled CEO Carlos Sanchez to focus on growing the business, while TemPay takes care of back-office functions such as filing and paying his payroll taxes, invoicing his customers and collecting from delinquent accounts.

Many firms also provide factoring to companies outside the staffing industry, as well.

For information on TemPay and our payroll factoring services, contact www.tempay.com or (866) 683-6729.

What is an Accounts Receivable Factoring Company?

Posted on by

When searching for staffing agency finance, you have probably run across accounts receivable factoring, a type of funding in which you sell your accounts receivable to the factoring company for a cash advance. Your clients then pay the factor directly.

 

Firms of all sizes and in all stages of their life cycle can receive accounts receivable factoring, whether you are just starting a temp agency or established in the field, and whether you have five clients or 50.

 

Funding is available for firms in any staffing industry, whether it is light industrial, administrative, IT, construction, health care, legal or clerical. Many firms also provide factoring to companies outside the staffing industry, as well.

 

Factoring aids your staffing firm by providing quick and easy cash to fund your business in an industry in which companies often suffer from cash flow gaps.

 

There are typically eight easy steps to receive accounts receivable factoring.

  1. Contact your factor’s sales department.
  2. Your sales representative will collect information about your staffing business.
  3. Complete a credit application form and provide client information.
  4. Your factor performs a credit check on you and your business.
  5. Your factor approves your credit.
  6. Your factor meets with you to discuss rates, terms and conditions.
  7. Your factor collects additional information as needed.
  8. Your factor provides you with a draft contract that includes terms, conditions and rates.

 

For information on TemPay and our payroll factoring services, contact www.tempay.com or (866) 683-6729.

TemPay Answers Your Top Client Questions

Posted on by

At TemPay, we receive questions about our payroll factoring services all the time. Here, we answer your top client questions.

What type of businesses do you factor?

TemPay’s main clientele is temporary staffing firms in any industry, including light industrial, administrative, information technology, construction, health care, legal, clerical and many others.

We also provide factoring services to businesses that regularly invoice creditworthy commercial customers.

We’ve factored companies in the staffing, IT, software, advertising, security services, auto, manufacturing and transportation industries. 

What size clients does TemPay service?

Firms of all sizes and in all stages can receive payroll funding, whether you are just starting a temp agency or established in the field, whether you have five clients or 50.

Are there any restrictions on a client’s location?

No. TemPay serves clients throughout the United States.

Are there restrictions on the location of a client’s customers?

No. Your clients can be anywhere in the United States.

Understanding Recourse and Nonrecourse Factoring Services

Posted on by

Most staffing agencies choose payroll factoring as their type of staffing agency finance. With factoring, staffing firms sell their accounts receivable invoices for a fee to the factor and gain cash up front to pay their employees and other parties.

There are two different types of factoring.

  • Recourse – With recourse, the staffing firm assumes the risk and losses for unpaid invoices. As a result, the staffing firm must buy back invoices that their customers don’t pay in a fixed amount of time.
  • Nonrecourse – With nonrecourse, the factor assumes the risk of bad debt and is out the money that it is unable to collect. This is safer for the staffing agency but riskier for the factor. This method is often used in 80/20 rule situations, in which 80 percent of your business comes from 20 percent of your clients, and if they failed to pay, your business would suffer greatly.

TemPay provides the former, recourse funding. Most factors provide this type of funding because it carries less risk. If a factor does offer nonrecourse funding, it typically comes with a significant fee.

For information on TemPay and its payroll factoring services, contact www.tempay.com or (866) 683-6729.

Welcome Back, Brian!

Posted on by

Brian Keuper has returned to TemPay following a year of working in-house for TemPay’s largest client.

Brian is senior vice president of credit relations, responsible for the credit and collections department and maintaining client relationships. He has more than 30 years’ experience in credit risk management.

TemPay is very pleased to have Brian rejoin the company.