How does a company pay 3,000 employees each week if it doesn’t get paid?
That’s the dilemma a temporary staffing company faces every Friday. We place 2,000 to 3,000 temporary workers weekly and the following Friday they need to be paid. Payroll tax deposits need to be made as well.
Even though our payment terms are Due Upon Receipt, our clients typically pay us around 30 days. Who fills that gap? I’ll tell you who – Bibby Financial Services. Factoring plays a key role in our industry and without Bibby, we wouldn’t be in business.
Most staffing companies use factoring, but Bibby is more than a vendor; they’re really our partner. Their flexibility has been incredible in supporting our growth. In three years our facility limit grew from $4 million to $10 million; each time, they have responded quickly to our need for more money. They also help us on the administrative side. A couple of years ago we generated our invoices on Thursdays; Bibby would wire funds on Friday. Now we invoice on Monday, Tuesday and Wednesday, and Bibby wires us funds three times a week. If we have high cash demands, they can wire funds the same day. They anticipate our needs and have the flexibility to meet them.
I think what really differentiates Bibby is that they care about our business. They understand what it means to us and thousands of temporary employees if they aren’t there kicking on all cylinders. I know factoring is more expensive and I don’t blindly sit back and just accept it. I’ve done some comparison shopping, and it’s clear Bibby has been more than fair with us. A lot of factors nickel and dime you to death with hidden fees to the point you that need an attorney and a CPA to understand their fee structure.
Bibby’s pricing is very straightforward; it’s a prime plus daily interest rate. No surprises. Bibby has also taught us to control our expenses. As recently as a year ago, our invoices were paid at more than 30 days, today it is in the low 20s. We have learned that by managing our receivables, we can improve our business and reduce our costs. So now we target growth with clients who are quick payers.
With the current recession, we are entering the next stage of our business. Till now, our growth has always been organic – we started five years ago at one location, now we staff four locations. Our model has been based on retaining and growing with our clients. Today, it is more difficult to use that model, so we are starting a merger and acquisition initiative. Smaller firms are finding it hard to survive and we are asking these companies how we can partner to keep them in business. Because Bibby knows some of the customers of these staffing companies, they can review their accounts receivable and tell us if they see any red flags. It’s good for Bibby because they will have more invoices to fund and it’s good for us because we are expanding. We are succeeding together.