The right factoring company improves cash flow, supports payroll, and enables growth—while the wrong one creates hidden costs and operational friction.
Staffing agencies must evaluate factoring partners using industry-specific criteria, not generic financing terms.
This checklist walks you through exactly how to choose a factoring company that aligns with staffing agency realities, especially in healthcare and PRN staffing.
Before You Begin: Prerequisites
You should know:
- Your average invoice volume
- Typical client payment terms
- Weekly payroll obligations
- Growth projections for the next 6–12 months
Step 1: Confirm Staffing Industry Specialization
Not all factoring companies understand staffing.
Staffing-specific factors must manage:
- Weekly payroll cycles
- Credentialing-related billing delays
- Facility-specific invoice rules
Checklist:
- Do they work with staffing agencies exclusively?
- Do they understand healthcare billing nuances?
Takeaway:
Industry specialization reduces funding delays and disputes.
Step 2: Evaluate Advance Rates and Funding Speed
Advance rates typically range from 80% to 95%.
Ask:
- How fast are invoices funded?
- Are same-day or next-day advances available?
Why it matters:
Payroll timing is non-negotiable in staffing.
Step 3: Review Fee Structure in Detail
Factoring costs are not just the headline rate.
Evaluate:
- Discount rates
- Minimum volume fees
- Termination fees
- Wire or ACH fees
Example:
A 2% headline rate with hidden fees can exceed 4% in practice.
Step 4: Assess Credit Control and Collections Approach
Facilities care how they’re contacted.
Ensure the factoring company:
- Uses professional, healthcare-appropriate communication
- Preserves your agency’s reputation
- Allows transparency into collections activity
Step 5: Verify Non-Recourse vs. Recourse Terms
- Recourse factoring: You’re liable if clients don’t pay
- Non-recourse factoring: Credit risk is transferred (with conditions)
Takeaway:
Non-recourse options reduce risk but require strict client credit approval.
Step 6: Understand Contract Flexibility
Avoid long lock-ins.
Review:
- Minimum contract length
- Exit clauses
- Volume commitments
Best practice:
Month-to-month or low-penalty exit terms.
Step 7: Evaluate Technology and Reporting
You should have:
- Real-time funding visibility
- Invoice tracking dashboards
- Client payment status access
Why this matters:
Transparency supports better cash forecasting.
Step 8: Assess Relationship Quality and Support
Your factoring partner should act as:
- A financial operations extension
- A growth enabler
- A problem solver
Ask:
- Is there a dedicated account manager?
- Do they support scaling agencies?
Staffing Factoring Evaluation Checklist (Quick Reference)
| Criteria | Ideal Standard |
| Industry Focus | Staffing / Healthcare |
| Advance Rate | 85–95% |
| Funding Speed | Same or next day |
| Fees | Transparent, all-in |
| Contract | Flexible exit |
| Support | Dedicated manager |
Common Mistakes to Avoid
- Choosing based on rate alone
- Ignoring healthcare billing expertise
- Overlooking termination clauses
- Underestimating growth needs
Final Decision Framework
Choose a factoring company if:
- They specialize in staffing
- They fund payroll reliably
- Their fees are fully transparent
- They protect client relationships
Avoid providers if:
- Contracts are rigid
- Communication is opaque
- Healthcare experience is limited
