"With TempWorks, we're able to focus on what we do best: getting great staff to our clients." - Ed Luna, owner of One Source Staffing

Payroll Funding Perspectives

A Payroll Factor (Funding Company) – or a Bank?

By Gregg Dourgarian

The funding of payroll through the sale of invoices (factoring) has been around since the post-WWII get-go of the staffing industry, and has played a key role in the advancement of many great staffing companies.

I remember my Dad telling me about Design Service, a national technical staffing company he helped build-up some 50 years ago. The owner – a polio-stricken man with great sales skills – would trudge down to Manhattan’s financial district each month with his stack of invoices and return with the funds necessary for payroll.

Benefits of funding through a payroll factor

As staffing has become a mainstream industry, so has payroll funding. Many factors (funding companies) have entered the staffing market, increasing competition and providing alternatives for a staffing company in need of funds. Working with a payroll factoring company, particularly one that understands the staffing business, can provide benefits over working with a bank.

Hidden banking fees and poor terms

Better than a bank? Banks do offer a low rate of interest, local presence, and may serve as a new business’s introduction to the world of finance.  Loan terms, however, often include hidden fees and burdensome collateral requirements. If you read the fine print in most bank loan contracts, you’ll find that they can cancel the loans at any time or include extraordinary charges and penalties if the borrower does not meet certain qualifications. A recent victim of an abusive banking practice is the California staffing company that spiraled into bankruptcy after a bank hastily pulled its loan.

Payroll factoring – a complex, long-term relationship

A good payroll factor contract has clear and reasonable clauses defining the term of the contract, interest rate, advance rate, late-payment charges, and other issues. At TempWorks, we will work out an arrangement that will enhance your staffing company’s ability to meet opportunities with growth and flexibility. For a rate quote and more information about our factoring services, call us at 1-877-452-0326 or request more info.

What technology does your payroll lender use?

Banks and computer technology are a bad marriage. Because they are heavily regulated, many banks fail to adapt to current technology, and use dated information technology (IT) systems. Many are unable to integrate banking with customers’ ACH, pay-card, automated bank reconciliation and other e-business solutions for staffing companies. A bank loan may lock you into a partnership that can’t respond to your staffing agency’s technical needs.

TempWorks staffing services and payroll factoring services employ the most current technology solutions. If you are interested in payroll factoring or any other product or service, call us at 1-877-452-0326 or request more info.

Competition in the payroll factor industry improves service

Take a quick look at all the charges on your last statement - banks are a poor solution, but aren’t factors loan-sharks? From ancient times, lending has been burdened with negative connotations, and it is true that the industry has unethical players. There are a number of ethical, businesslike factoring companies, however, and that competition means you can find a payroll lending service that allows you to maintain flexibility and your own competitive advantage.

Factors offering enhanced or related services

Today, you can find factors offering rates competitive with that of banks. Others differentiators include a high percentage of initial funding, flexible remittance systems and stellar credit and collection services. Some factors integrate all of those with staffing software and service solutions including payroll and invoicing. Such a one-stop shop provides an ideal platform for a staffing entrepreneur that wants to focus on sales and recruitment.

TempWorks today provides a wide range of software solutions and services for staffing companies. For price quotes or more information about the company’s services, call us at 1-877-452-0326 or request more info.