Invoice factoring is a financial service that converts unpaid customer invoices into immediate working capital—typically within 24–48 hours—by advancing 80–90% of the invoice value upfront.
Instead of waiting weeks or months for clients to pay, staffing firms get fast cash to cover payroll, vendor costs, and operations.
Invoice factoring has become one of the most widely used cash flow solutions in the staffing industry because it solves the biggest operational challenge: weekly payroll vs. slow-paying clients.
Why Staffing Companies Use Invoice Factoring
Staffing agencies, especially in healthcare, commercial, IT, and light industrial niches, invoice on net-30, net-45, or net-60 terms. But clinicians, temp workers, and contractors must be paid weekly.
This mismatch creates predictable cash strain.
Invoice factoring fills that gap.
Key Characteristics of Invoice Factoring
- Immediate Cash Advances — Most factors advance 80–90% of invoice value.
- No Debt Added — Factoring is not a loan; it’s the sale of an asset (accounts receivable).
- Credit Based on Your Clients — Approval depends on the creditworthiness of the companies you bill.
- Fast, Repeatable Funding — Invoice-to-cash cycle becomes 24–48 hours instead of 45–60+ days.
- Scales Automatically — The more you invoice, the more funding is available.
How Invoice Factoring Works (Step-by-Step)
Step 1: You Deliver Staffing Services
Your agency places nurses, CNAs, temps, or contractors at client facilities or worksites.
Step 2: You Issue an Invoice
You bill the hospital, facility, or corporate client.
Step 3: You Submit the Invoice to Your Factor
The factor verifies the invoice amount and confirms the work was completed.
Step 4: You Receive an 80–90% Advance
Funds are deposited into your account within 24–48 hours.
Step 5: Your Client Pays the Factor
Once your client pays, the factor releases the reserve balance minus the discount fee.
Common Misconceptions About Invoice Factoring
| Myth | Reality |
| “Factoring is only for struggling companies.” | Many fast-growing staffing firms use factoring to scale. |
| “Clients won’t like it.” | Healthcare facilities work with factors daily; it’s normal in staffing. |
| “It’s too expensive.” | Factoring fees (1–4%) are often less costly than cash shortages. |
| “It’s the same as a loan.” | Factoring is non-debt financing based on receivables. |
Invoice Factoring vs A/R Financing
Though similar, these two services are not identical.
| Feature | Invoice Factoring | A/R Financing |
| Ownership of A/R | Sold to factor | Retained by business |
| Debt Added | No | Yes (loan) |
| Client Notification | Usually yes | No |
| Best For | Staffing & payroll cycles | Established companies with strong credit |
How Staffing Companies Use Factoring
- Cover weekly payroll
- Hire more clinicians or temps
- Enter new facility contracts
- Manage growth and seasonality
- Reduce strain from late-paying clients
According to the International Factoring Association (2025), staffing represents one of the fastest-growing factoring sectors.
Final Summary
Invoice factoring is a fast, flexible, and scalable financing tool that helps staffing firms maintain cash flow, meet payroll deadlines, and grow without taking on debt. For healthcare and nurse staffing agencies in particular, factoring is often the most practical funding solution.
Need fast funding? PRN Funding specializes in staffing and healthcare factoring nationwide.
