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A Detailed Guide To Staffing Factoring: How Does It Work And Its Benefits

Thousands of companies in the United States make use of ‘staffing factoring’ so that they can pay their employees on time each payroll period. This helps smooth cash flow, whether the payment terms from their clients or customers are in days or months. A factoring for staffing company involves purchasing invoices from the companies and paying out a portion of the receivables upfront. Staffing factoring is typically a subset of invoice factoring and applies specifically to staffing companies. This article informs how staffing factoring works and its benefits.

How does staffing factoring work?

Staffing factoring, like traditional invoice factoring, offers cash for unpaid invoices to the companies. The invoices of the staffing companies are purchased by the factors, and then they pay out a certain percentage (mostly 80%-90%) upfront. The remaining amount of paid by the factor when the company’s clients have paid the invoice. In addition, a certain percentage from the invoices is deducted by the factoring company as a commission.

Benefits of partnering with a staffing factoring agency

The following listed are some significant benefits that a staffing business can avail of by partnering with a staffing factoring company:

  • Access to the cash required for making payroll

Now that factoring for staffing company gives the entrepreneur the ability to have access to cash the same day the invoice is created, the company need not worry about cash to make payroll. The staffing company can receive the funding on time from the factory and send it to the payroll provider to pay its workers on time.

  • Capital to grow a business

Temporary staffing is a capital-intensive business as most of the cost is used to pay temporary workers. The payroll cost grows with the growth in the staffing business, and many owners cannot grow to avoid missing the payroll. Partnering with a staffing factoring company enables the owner to have continued access to the capital at the current growth rate. As long as the customers pay on time and the factoring company provides the required funds to the business, there is potential for unlimited growth.

  • In-depth experience in credit and collection 

With the staffing factoring company’s job to purchase outstanding invoices, their main priority is to handle credit and collections. Partnering with a factoring company like this can help staffing companies make innovative credit and collections decisions based on real-world experience.


Cash flow is a significant element in the staffing industry, and a company having more capital on hand can maintain higher liquidity even after making payroll. Depending on the size of a business, factoring for staffing company can expedite its growth as efficiently as a loan without facing debt-related challenges. Invoice factoring services have come across the invaluable partner to staffing companies. Partnering with a reputed and professional factor enables staffing companies to take better-calculated risks when working with new clients. As a staffing agency expands and builds relationships with the factoring company, the former can make more informed business decisions.

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