Staffing Factors Page 1

How Staffing Agencies Make Money

And

Address Cash Flow Issues

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Staffing agencies put millions of people to work each and every day and they

benefit both employer and the people that look for work through them. For

employers, working with a staffing agency can take much of the hard work

involved in head hunting. At the same time, employment agencies help people find

different types of jobs from a wide variety of career fields, and in many instances,

provide career opportunities otherwise unknown or inaccessible to individual

jobseekers. Staffing agencies provide their clients with skilled employees to work

on temporary or on a contract basis. But there are instances when they offer “temp

to perm” positions as well. Aside from helping

people find work, they also give access to

various trainings, which allow jobseekers to

build their resumes, making them more

marketable in the sector they wish to find

gainful employment in.

How staffing companies make money

Staffing services are a lucrative and growing business. These agencies make

money by charging hiring companies for providing skilled and qualified workers

for a certain amount of time. In some cases, temp agencies may earn a commission

if the employer decides to hire the worker full-time.

Most staffing agencies directly pay the staff they have placed in their client’s

company, typically on a weekly basis, and send an invoice to the hiring company

which will in turn cover payroll costs as well as other agreed upon fees. Many

hiring companies make arrangements with staffing agencies so that they can remit

payments on their invoices anywhere from 30 to 90 days after the job order was

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filled. This setup allows staffing agencies to secure the business of the hiring

company; however, it can put a strain on their cash flow as well.

How staffing companies address cash flow issues

To deal with cash flow constraints, many staffing agencies take advantage of

factoring services. Factoring is a financial transaction

whereby a business, in this case a staffing agency, sells

its invoices in order to get funds. The staffing factoring

companies will then collect receivables from the

customer, which in this case, is the hiring company or

employer.

Bank loans versus factoring

Factoring is often preferred over taking out loans. This is because, unlike banks,

staffing factors focus first on the credit worthiness of the hiring company that is

obligated to pay the invoices. This means, it will not be considered as your debt,

which makes it possible for you to take out other financing agreements to cover

your other needs. Bank lending is cheaper than factoring, but the latter is often

more readily accessible. Click here to learn more about factoring staffing agencies.