When your staffing firm has a cash flow issue, it may seem like an easy fix to reach for the plastic.
However, there are downsides to using small business credit cards.
- Credit cards require a great deal of personal management to stay abreast of changing terms, interest rates and even perks.
- Your business credit card can affect your personal credit score.
- Credit cards often have high annual fees.
- Some cards require you to pay your full balance each month to receive rewards.
- If you go over your limit or have a missed or late payment, you face high fees.
Payroll factoring, on the other hand, is a more flexible option. It does not require lengthy credit or financial reviews, and the application process is quick and easy.
With payroll factoring, you sell your accounts receivable invoices to the factor in exchange for immediate cash. Your clients then pay the factor directly.
Payroll factors are likely to overadvance because they understand the staffing industry, while with a business credit card, if you go over your limit, you’ll be penalized with high fees.
In addition, payroll factoring includes one low rate, expressed in your contract, that doesn’t change without your agreement.
For more information on payroll factoring and how it can benefit your staffing firm, visit www.tempay.com.
There are many free resources available that can benefit your staffing firm, if you know where to look.
Here are five online tools for managing everything from your social media accounts to job postings.
1. HootSuite – Managing multiple social media accounts can be difficult. HootSuite is an easy-to-use interface that allows you to view all of your social media accounts at once and publish content to one or more sites. You can also schedule posts in advance and view analytics.
2. Skype – This video conferencing tools allows you to communicate with employees and clients and is a great way to conduct online interviews, especially if you engage in virtual staffing. It also features instant messaging and file-sharing capabilities for easy intra-office communication.
3. WordPress – WordPress started as a blogging portal but can also be used to create websites. The simple platform allows you to upload media, manage comments, schedule publication and even enter search engine-optimized keywords.
4. Google AdWords – With this site, you can type a keyword or URL and receive related keywords and performance data. You can then download keyword ideas to an Excel file for easy reference when creating blogs, website content and social media.
5. ZipRecruiter – ZipRecruiter allows you to post job openings to more than 40 job boards at once. You can also search about 3 million resumes and ask fill-in, multiple choice or yes/no questions to identify qualified candidates.
Succession is one of the most important decisions you will make for your staffing business. There is no better time to start planning than the present – the sooner you have a strategy in place, the smoother the transition will be.
Unsure where to start? Follow our tips to ensure succession success.
1. Have a business plan and update it regularly. This document provides an outlook three to five years ahead and a framework for your company goals. It is not just for new businesses or those seeking funding; a business plan shows buyers you are organized and dedicated and keeps stakeholders up to date on your plans. Visit www.sba.gov for help creating a business plan.
2. Decide on your role. How long would you like to remain involved in the company? Will you stay on for a time in an advisory capacity or be available for advice? Determining retirement plans such as recreation, travel or other work opportunities first can help you determine how involved you would like to be in the company.
3. Seek advice. You don’t have to go it alone. Consult with stakeholders and key management members, or hire an outside consultant to help guide you through the process. In addition, talk to your peers in the staffing industry to see how they’ve handled succession.
4. Determine the nature of your transition. If you’re considering family succession, ensure that your successor has both knowledge of the staffing industry and a desire to take over. You could also sell to your management team, create an employee stock ownership program or seek an external buyer.
5. Identify key positions and start grooming people for these roles as early as possible. Selecting these employees early and providing the appropriate training ensures an effortless transition. And you don’t need to look only internally; conducting an external search is also an excellent way to choose a successor.
6. Conduct an audit. This can begin internally but should include an external look, as well. Address concerns such as systems updates or redundant processes prior to putting your business up for sale to attract the most serious buyers and best price – and ensure your firm’s continued success.
Too many people overthink marketing. The most effective strategies are not necessarily those that are flashy but those that provide the most value.
Beware of these top marketing mistakes staffing firms make – and simple ways to fix them.
1. Failing to invest time in social media. Having a social media presence is more than creating a Facebook account or posting a tweet every now and then. Customers expect you to interact with them, so designate someone to manage your accounts and respond to customer comments and feedback in a timely manner. Encourage interaction by asking engaging questions and monitoring responses. Social media sites are some of the first links that potential clients will browse when searching a business, and they are more likely to choose a company they view as friendly and responsive on social media over one with no updates or interaction.
2. Failing to utilize your current clients. Your clients are your best resources for new business. Offering incentives such as discounts or bonuses for referrals can be a great way to gain new business, while having the clients do the legwork. Existing clients also present an excellent opportunity to upsell or cross-sell; they already utilize your talent, so you don’t need to sell them on its merit. As they grow and expand, they’ll need more employees. Keep tabs on their business to anticipate and meet these needs.
3. Failing to think about your mobile clients. More and more people are using smartphones and tablets to access the Internet – 50 percent of mobile phone users use mobile as their primary Internet source, according to Super Monitoring, which provides online monitoring services. If your website isn’t mobile friendly, you’re alienating a large portion of your current and potential customers. Keep your mobile design simple and easy to use so users can access the most important information quickly.
4. Creating “salesy” communications. Current and potential clients don’t want to hear you talk about how great your staffing firm is – in a world where people are constantly inundated with messages, they look for the most valuable content, which includes real-world tips and advice they can utilize. Providing valuable information that subtly links back to your site will garner more readers and funnel more potential customers to your site than a sales pitch.
Staffing firms have credit constraints due to a variety of reasons, including personal credit problems, start-up business costs, low margins or no working capital.
In those situations, they turn to a payroll factor to provide the necessary financing for weekly payroll and other expenses, such as workers’ compensation insurance, office equipment, additional office personnel and marketing.
Payroll factors such as TemPay finance staffing firms so they are able to operate and grow their business. Because of this, it is in your best interest to share information about your financial partner with your customers to assure them of your financial strength.
Disclosure also ensures that each customer remits payments to the correct address, maintaining consistent cash flow.
There are two ways to disclose your funding relationship with your payroll factor.
- UCC notification letter – The payroll factor mails this letter to each customer to inform it that you have partnered with the factor.
- Personal call – Contact each customer prior to mailing so they are not caught off guard by the letter.
Some clients may request a letter of financial strength. Your payroll factor should be more than happy to forward this letter so your customer can be assured you have access to unlimited funding.
Workers’ compensation can be the bane of a staffing firm’s existence. All staffing firms need workers’ comp insurance for their temporary employees, but it is expensive, and managing claims takes time away from your business.
In addition, workers’ comp is often more difficult to manage in staffing than it is in other industries, because while you provide the workforce, you do not provide the workspace, making it more difficult to implement and/or monitor safety practices.
Here are some ways to make managing workers’ comp less of a hassle.
- Most staffing firms purchase workers’ comp insurance through an insurance company; however, some states, such as Ohio, manage it at the state level. To determine your state’s rules and regulations, visit workerscompensation.com.
- Choose a workers’ comp provider that has experience in the staffing industry to ensure you have the right protections in place.
- To reduce work-related injuries, screen employees through drug testing, background checks and prior injury history. Talk to new employees about the importance of safety and ask them to report any unsafe practices.
- Make sure you have a comprehensive return-to-work program that includes immediate treatment and follow-up. This reduces your lost time and keeps injured employees productive during recovery. It also means the insurance company pays less in benefits, which can help you avoid premium increases.
- Evaluate your customers’ safety practices. Ensure employees are properly trained and provided with the right safety equipment and also that they’re doing the job they’re qualified to do. Look for patterns in claims — if one client reports a lot of employee fall injuries, talk to it about what it can do to reduce the risk.
- Correctly classify your employees. Classifications affect your bill rates because they depend on the riskiness of the tasks employees perform and environment they work in.
Your most valuable assets for revenue, referrals and feedback — your existing customers — are already at your staffing firm’s fingertips. You just need to know how to tap into them.
Attracting a new customer costs five times as much as retaining an existing one, according to data from Lee Resources International Inc., making it easy to see why you should focus less on obtaining new customers and more on maximizing the value of your current ones. Here’s how.
- Upsell and cross-sell. Your existing clients already purchase your staffing firm’s talent, so you don’t need to sell them on its merit. As a result, they present a great opportunity to sell more of your talent. Talk about the benefits your temporary employees bring and how more of the same can help them profit. In addition, if your clients open a new branch or division, or expand into a new industry, they’ll need more employees, and you can easily step in to provide them.
- Focus on retention. Keep clients engaged with regular communication, including phone calls, emails, direct mail and a monthly newsletter. Also consider a loyalty program that provides incentives, such as discounts, when clients give your staffing firm a certain amount of business or utilize you for a certain number of years. Respond to client concerns promptly and let them know what you did to address the issues.
- Create a referral process. Word of mouth is the best advertising you can get. Consider implementing a formal process that provides discounts to clients who refer a potential customer, to be paid once the customer is on board for a certain amount of time. These referrals are extremely beneficial, as they often include similar businesses to those you already service and are easy to onboard, as your client’s introduction serves as a testament to your expertise.
- Brainstorm new ways to serve existing customers. Direct your capital toward new services that benefit your most valuable clients. Do you service a few valuable administrative clients? Consider virtual staffing, which provides virtual assistants to handle tasks such as scheduling, research, email management, data entry and more. The better the service you provide, the longer your clients will stay with you and the more they’ll rely on your firm for their needs.
- Ask for feedback. Create an evaluation process in which clients can submit comments or ideas. This can include a form on your website, a periodic email questionnaire or a personal phone call. Ask both what you are doing well and what you can improve upon. Their insight can help you better serve both them and potential new clients.
The temporary employment industry is set to have another successful year, as Staffing Industry Analysts predicts it will grow at a rate of 6 percent in 2014.
Temporary staffing continues to become a more permanent fixture for businesses, and the IT sector and overall workforce continue to grow. While many firms are struggling with the implications of the Affordable Care Act, overall, 2014 is looking out to be an exceptional year for temporary staffing.
Keep an eye on these trends.
- Temporary staffing will become more permanent. Although the United States is out of the recession, businesses are still hesitant to hire because of uncertainties such as how the Affordable Care Act will affect their business, and the potential for another government shutdown. They are using temporary employees to fill workforce gaps that don’t necessarily merit a full-time position with benefits or test candidates before offering a full-time position.
- IT staffing will continue growth. IT staffing is expected to grow 7 percent in 2014, according to Staffing Industry Analysts. The success of the niche comes as many businesses continue to invest in new technology to remain competitive. IT staffing is in demand in sectors such as health care, manufacturing, energy and finance.
- Pool of temporary workers will grow. Millennials who prefer more flexible work are using temporary staffing positions to gain experience at different companies and in different departments. In addition, boomers and traditionalists are staying in the workforce longer to combat recession losses and provide for longer lifespans.
- Companies will look in-country for help. Frustrated with difficulties in communication with overseas workers, more businesses desire to hire outsourced American workers rather than foreigners to help with gaps in staffing. Your staffing service can step up to the plate to replace these workers.
- Businesses will search for workers with multiple skills. After learning how to do more with less during the recession, companies are now looking for employees who can perform multiple functions, resulting in decreased labor costs. Ensure your workers are well rounded and can perform multiple tasks for maximum hiring potential.
- The Affordable Care Act will challenge staffing firms. Employers with more than 50 full-time-equivalent employees must provide health insurance or pay a penalty, and there is no distinction between temporary and permanent employees. This will affect an already cash-flow-problematic industry because the cost to insure temporary employees is typically high.
At TemPay, we make the customer payment process both simple and safe. There are many convenient payment options available for your staffing customers to pay their invoices.
- Automated Clearing House/electronic funds transfer payments is a direct deposit method of remitting payment directly to TemPay’s bank account. It is inexpensive, with the cost varying from no cost to $1, depending on the policies of your customer’s bank. Payment is processed and applied typically within 24 to 48 hours from the time ACH/EFT is transmitted.
- Company check with remittance advice is the most popular way of remitting invoice payment, but it is also the slowest, as your customer writes a check and sends it to TemPay’s lockbox. This extends the customer’s cash flow because a company check mailed to our lockbox typically takes four to seven business days to clear the customer’s bank account.
- Credit card authorization form. TemPay accepts most major credit cards. However, there is a 2.99 percent transaction fee on the amount charged. This is also a slow method of payment because we need to wait for the credit card company to process funds and deposit them into our bank account. Once we are notified that money has been deposited, it is applied against the customer’s invoices. This process takes five to seven days.
- eCheck payment is one of the quickest methods. Your customer completes an eCheck authorization form and sends it to firstname.lastname@example.org for processing. A check is then generated and applied to the invoice the same day.
- Wire transfer is another quick method of payment, as it is typically applied the same day that money is wired from your customer’s bank account to TemPay. The cost of this payment method ranges from no cost to $30, depending on the policies of your customer’s bank.