Healthcare staffing factoring is beneficial for growing agencies struggling to make payroll while their clients (medical providers) take weeks or months to pay for their services. Oftentimes, these agencies can’t qualify for traditional financing because banks look at a company’s past-aka: a profitable operating history-in order to extend credit. However, healthcare staffing funding companies are more concerned with the agency’s future-aka: its growing accounts receivable-in order to extend credit.
Let’s take a look at how one healthcare staffing agency used invoice factoring to improve its cash flow.
Case Study: Slow Payments Hinder Staffing Agency’s Growth
A new medical staffing agency was successfully staffing LPNs and CNAs at a handful of local hospitals. Since the company’s inception six months ago, it had gained an outstanding reputation for placing the most qualified and hard-working nurses. Even though the healthcare staffing agency was a popular choice, the owner kept turning down new clients because he was struggling to make payroll and pay taxes. Simply put, payments coming in were much slower than the agency owner had originally anticipated, and his cash flow was out of sorts.
Limited Financing Options Available
Because this staffing company hadn’t been operating for very long, traditional lenders didn’t feel comfortable lending to the owner. Moreover, the entrepreneur’s personal credit was not that good, so he wasn’t able to qualify for a business credit card either. Frustrated with his lack of financial options, the agency owner started asking some of his successful colleagues how they surpassed the financial hurdles in the beginning of their businesses. A few suggested healthcare staffing financing, so the agency owner started researching factoring companies. Ultimately, the business owner chose to apply with a factoring company that specialized in factoring healthcare staffing receivables.
Healthcare Staffing Factoring Helps Balance Agency’s Cash Flow
The business owner was happy with the ease and speediness of the healthcare staffing factoring application process. Within a week, the he sold his first batch of invoices and had plenty of cash on hand to cover payroll and taxes for the rest of the month. The agency owner continues to factor invoices every 2 weeks to maintain a positive cash flow. To date, he’s been factoring for 6 months, and he’s never had to turn down another contract.
Having access to cash within hours instead of waiting months to be paid saved this business owner’s agency. Healthcare staffing factoring is an excellent way for business owners going through growing pains to turn their receivables into cash. Factoring firms are known to approve entrepreneurs with limited operating histories because they’re more concerned with the company’s potential to earn.
What is Invoice Factoring for Staffing Agencies?
Invoice factoring for staffing agencies is a financial solution that provides immediate cash flow by selling outstanding invoices to a factoring company. This process allows staffing agencies to receive payment for their invoices within days, rather than waiting for weeks or months. Invoice factoring is a popular financing option for staffing agencies, as it helps them manage cash flow, meet payroll obligations, and grow their business.
How Factoring Works for Staffing Agencies
The factoring process for staffing agencies is straightforward and efficient. Here’s how it works:
- The staffing agency submits its outstanding invoices to the factoring company.
- The factoring company verifies the invoices and advances a percentage of the invoice amount to the staffing agency.
- The factoring company collects payment from the client, minus a fee.
- The factoring company remits the remaining balance to the staffing agency.
Get Your Invoices Paid in Days, Not Months
One of the primary benefits of invoice factoring is that it allows staffing agencies to receive payment for their invoices within days, rather than waiting for weeks or months. This can help staffing agencies manage cash flow, meet payroll obligations, and grow their business. With invoice factoring, staffing agencies can:
- Improve cash flow and reduce financial stress
- Meet payroll obligations and avoid late payment fees
- Grow their business by taking on new clients and projects
- Reduce the risk of bad debt and improve credit scores
By working with a factoring company, staffing agencies can unlock the cash in their outstanding invoices and achieve financial stability and growth.