Recruiters
Staffing
How will this help my agency?
As a staffing agency grows it requires access to increasing cash flow in order to deal with overlapping pay cycles and cover its payroll needs. If sales are increasing rapidly, profits alone will not cover this growth. More agencies have faltered not for want of profit but through lack of cash flow.
With our payroll funding solution, not only do we provide an advance of cash against the value of your outstanding invoices but then as invoices are raised we can release up to 90% of their value into cash within 24 hours of them being raised. The remaining 10%, less a small service fee, is paid to you once your customer pays. This means your business has access to an ongoing supply of cash linked to your sales. So as your business grows so does the amount of funding available to you.
We will enhance your cash flow and also reduce your administrative expenses and responsibilities by professionally dealing with time-consuming tasks such as credit control and collections, leaving you free to focus your manpower on key business tasks such as marketing for growth.
Bibby has extensive experience in dealing with the staffing industry, over 15% of our clients being in this industry. As a result we understand the importance of dealing with staffing funding requirements promptly ensuring cash flow aligned with the businesses payroll cycle.
We can make available credit insurance for the businesses customers. We are also one of the few receivables funders willing to consider permanent placement funding as eligible as a proportion of your overall business volume.
Payroll Funding example:
Many staffing agencies can be adversely affected by their own success. As the agency grows it requires a greater amount of cash in order to cover its payroll needs. Unfortunately if sales are increasing quickly, profits alone will not cover this growth.
Here are some examples of this: If your agency is billing $20,000 per week with a 50% markup, its gross payroll will be $13,333. Adding to this the required employer portion of taxes (approximately 12%), means a weekly cash requirement of around $14,933. Now, assuming a five-week turnaround time on receivables, your agency must be able to cover $74,665 in payroll expenses in order to continue billing $20,000 per week. Using a gross profit margin of 25%, your agency will realize $5,000 in gross profits per week or $21,667 per month. Subtracting expenses for in-house salaries/commissions, rent, telephone, advertising, etc., your agency will be lucky to be left with $5,000 per month that can be invested back into the business to fund an increase in sales. At this rate it will take approximately 15 months to generate sufficient profits to create the additional $74,665 necessary to fund the increased payroll that will allow sales to grow to $40,000 per week. There are at least two problems with this approach: 1) Your agency has the opportunity to double its sales now, and you do not want to have to wait the necessary 15 months before your agency can bankroll the larger payroll; and 2) When your funding is limited, you are at your clients mercy – their not paying as quickly as you had expected may cause you to start sweating the dreaded bounced paychecks.
One possible solution is a bank loan. The obstacles to be overcome in selecting this alternative are twofold. First, banks do not relish lending money to new businesses. They like to see at least a two-year track record before considering making a loan. Second, banks, being the conservative institutions they are, require collateral to secure a loan, and what they prefer as collateral is either machinery, inventory or personal assets. Unfortunately almost all the assets of a temporary employment agency are in the form of accounts receivable. If your agency should receive a bank loan secured with receivables, it must be kept in mind that 1) it is often required that this type of line be paid off once annually and 2) the bank is unlikely to be willing to increase this line at a frequency that will keep pace with your anticipated business growth.
As a Receivables Funder, Bibby Financial Services, can meet both those challenges. By advancing up to 90% of your accounts receivable within 24 hours of billing you have the cash to fund that growth. The facility also grows with the value of your accounts receivable therefore ensuring that you success is not your downfall.
Payroll Funding - How much does it cost?
Our services are tailored to your agency so the fees will depend upon your specific needs.
There are two types of fee. The first is the cost of the money you use, which is extremely competitive when compared with other forms of finance. The second is a service fee, which encompasses the collections service. We are happy to provide a proposal.
What Next?
If you would like to speak with one of our Payroll Funding specialists simply complete our contact form. Alternatively you can call us on 877-88-BIBBY (1-877-882-4229), email us at sales@bibbyusa.com or request a call back.
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