| Of all the responsibilities that temporary staffing | | | | the biggest asset that a staffing agency has is its |
| agency owners have, none is more important than | | | | employees. This makes them hard to finance. |
| payroll. Employees are the lifeline of the business and | | | | If we look at the problem, it's fairly simple. It's the |
| making sure they are paid in time goes a long way at | | | | payment gap between delivery of services and |
| ensuring your company has smooth operations. | | | | payment by the client. One easy way to handle this |
| Paying employees on time can be very challenging, | | | | is to use invoice factoring. Invoice factoring provides |
| especially if a client is late with a payment. | | | | a funds advance for the invoice. This gives you the |
| Let's look at a common scenario for a staffing | | | | funds to meet your payroll and business expenses |
| company. A client leases 10 employees for a short | | | | without having to wait for your client to pay. |
| term two week contract. At the end of the two | | | | Most transactions are structured with two payments. |
| weeks the staffing agency will have to pay the | | | | The first payment varies but it's usually about 85% |
| employees. Your client, on the other hand, will get an | | | | to 90% of the invoice. This payment is given to your |
| invoice from you and pay it in 30 to 45 days as is | | | | as soon as you submit the invoice for financing. The |
| the common practice in most Canadian provinces. | | | | remaining 10% to 15%, less a fee, is advanced once |
| Unless you have the funds to pay your employees | | | | your client actually pays for the invoice. |
| while waiting for your own payment to arrive - you | | | | One of the big advantages of factoring is that it's |
| are going to run into a problem. This situation is | | | | easy to qualify for. The most important requirement |
| unfortunately common in the Canadian market. | | | | is that your client have solid credit and the ability to |
| The obvious way to solve this problem is with | | | | pay the invoice on time. Fortunately, Canadian |
| business financing. This is easier said than done. | | | | corporate credits are doing reasonably well as |
| Getting a business loan in Canada can be very | | | | compared to US corporate credits. This is because |
| difficult. Most national banks are very conservative | | | | the current world recession had a smaller impact in |
| and will only make business loans to clients that can | | | | Canada. This makes factoring a great alternative for |
| show substantial assets and impeccable financial | | | | growing staffing agencies. |
| statements. While these are desirable characteristics, | | | | |