Payroll Funding for Staffing Companies
Staffing companies face unique working capital challenges that aren’t as prevalent in other industries. The cause for the cash crunch is the lack of financing available to staffing companies from traditional banks. Consequently, many staffing companies are relying on alternative financing solutions– one of which is payroll funding.
What is payroll funding?
Payroll funding is a means of infusing cash into a business in order to supplement the staffing company’s working capital. More often than not, staffing companies are required to pay employees on a weekly basis, yet they’re not paid by their customers for these employees until 10 to 15 to 30 plus days later. This gap between when staffing companies must pay their employees and when they’re remitted payment by their customers causes enormous strain on cash balances.
Payroll funding is a form of factoring or accounts receivable financing that eliminates this cash gap. When the invoice or timesheets are submitted, the payroll funding company purchases the invoice providing the staffing firm cash to pay their employees. The payroll funding company then collects payment from the staffing company’s customers when payment is remitted weeks later.
For most staffing companies, accelerating cash conversion is the primary benefit of payroll funding. By funding their payroll, they’re able to get back to growing their business.
The Southern Bank’s Payroll Funding Solution
Unlike other traditional lenders, The Southern Bank is committed to partnering with small and midsized staffing firms. One of the ways in which we do so is by offering payroll funding for staffing companies.Whether you’ve been in business for twenty weeks or twenty years, The Southern Bank is willing to structure a payroll funding solution that meets your needs.
Choosing the right payroll funding company can make or break your business. By partnering with an FDIC regulated bank like The Southern Bank, you’ll be assured of receiving low rates, great service, and access to a broader set of product offerings that may not be available through independent financing companies.