The Benefits of Payroll Outsourcing & Invoice Factoring for Staffing Firms

Two Beneficial Strategies for Staffing Firms

As the economy continues to improve gradually, staffing firms are seeing higher demand for their services. Staffing employment was up 2.4% in March vs. a year earlier, according to a report from the American Staffing Association.

Further increases in staffing employment are anticipated throughout the year in a wide range of areas, including IT, healthcare, security personnel, and other sectors.

As demand continues to grow, staffing companies will need to focus more and more on their core activities of working with client companies; identifying the best, most talented temp personnel for their clients; and deploying this staff into the field.

Further, they will want to grow their bottom line more rapidly, as they pull away from the less-profitable periods of recent years that occurred in the aftermath of the financial crisis.

How does Payroll Outsourcing Save Money?

To increase profitability, many staffing firms outsource their payroll function for a variety of reasons. Primarily, outsourcing can help to reduce a staffing firm’s costs significantly. Payroll companies are specialists. It can handle the firm’s payroll more quickly and efficiently than an in-house bookkeeper or other back-office personnel. Indeed, the cost of payroll outsourcing is typically much lower than having in-house people do the job.

Second, payroll firms keep themselves up-to-date on tax laws and state and federal regulations, which helps staffing firms comply more fully and completely with tax and legal requirements. A staffing firm’s in-house personnel may not be as fully current on the tax and regulatory environment, which can cost the firm dollars and cents. In some cases if the wrong paperwork is filed or if filing deadlines are not met, fines and penalties can run into the thousands of dollars.

Another benefit a staffing firm gains from working with an outsourced payroll company is a degree of industry specialization. Many payroll companies specialize in different industries and the services they need. Staffing firms hiring a payroll service provider should work with one that has specialized knowledge of the staffing industry.

How does Payroll Funding Through Factoring Provide Fast Cash Flow?

Staffing companies also need to make sure that they can meet their payroll every week and every month, year in and year out, but they typically face cash flow shortfalls as payments from client companies often lags as much as 60-90 days behind the services rendered by temp staff they have hired.

Invoice factoring can provide low-cost, low-risk cash flow to meet your payroll and other obligations promptly. This can also help expand your business as well.

Paragon Financial has been providing payroll funding for staffing companies for over 26 years. We understand your industry and the services you need.

Our factoring services minimize credit risk. Before you take on a new staffing client, we will evaluate the firm’s credit standing, and provide you with a comprehensive report on their payment and credit history.

Paragon provides complete flexibility in factoring your invoices. You choose the receivables you wish to factor when you want, and for as long as you want.

Further, we provide an advance rate of up to 90% against your receivables, delivering cash flow in a hurry.

Finally, the cash flow provided by factoring will enable you to take advantage of quick-pay discounts from your suppliers, which can often cover most of your factoring cost.

Put all of these benefits together, and there is only one conclusion – factoring your staffing receivables through Paragon Financial is a profitable strategy that will minimize your cost and credit risk, and provide you the cash flow you need when you need it.

Fast funding for your staffing receivables through Paragon Financial!

Apply Securely, call 888-400-5931 ext 1 or email us.

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