As a recruiter, your clients may pay you in 30 to 90 days, yet you need to cover payroll every time it’s due. As a result, you must have access to working capital when you need it. Fortunately, you can use payroll funding to sell your invoices for a fee and receive the money you need. Here are five benefits your recruiting business can receive from payroll funding.
Consistent Cash Flow
Payroll funding provides you with consistent cash flow. Because you can’t stay in business without paying your workers, you need to have the funds available when it’s time to distribute their paychecks. Rather than trying to qualify for a bank loan, paying high interest rates on credit cards, or using another costly method, use payroll funding to obtain the money you need when you need it to keep your business operating smoothly.
More Working Capital
When you sell your invoices at a discount, you receive the working capital you need when you need it. Your costs typically depend on the size of the transaction, length of time you’ve been in business and the risk involved with collecting on the invoices.
Payroll funding helps increase efficiency in your business. When you sell your invoices, you won’t be spending time collecting late payments from clients. You can invest that time building relationships with new and current clients and candidates.
No Company Debt
Because payroll funding doesn’t involve getting a bank loan, you aren’t increasing your company’s debt load. With a traditional bank loan, your company has to qualify for funding and pay monthly principal, interest and fees. Even with a fixed interest rate and time span, a bank loan can become expensive very quickly. Also, because your recruiting business may not be established enough to have a proper credit history or performance metrics used to qualify for credit, there’s no guarantee you’ll be extended funding. Therefore, it’s easier to obtain capital through payroll funding.
Most companies consider the credit scores of the clients you have invoices for, rather than your company’s credit score, so you increase your odds of being funded. Also, because payroll funding is scaled according to your business growth, the more income you produce, the greater access to funding you have. In addition, you won’t face a lengthy application and approval process as you would with a bank. All you need are reliable clients and lien-free invoices to obtain payroll funding. Furthermore, your company won’t face losing hard assets as it would with a bank, since payroll funding is given against your accounts receivables, instead.
For help with your business expansion needs, get in touch with USA Staffing Services!