Bridging the Payroll Financing Gap with Alternative Lenders


By Bibby Financial Services

15 Oct 2018

Every business has cash obligations that it has to meet. Chief among these obligations is payroll. Whether paid weekly, biweekly or monthly, payroll is a crucial cash need for most businesses and a key component of cash flow. Late payments and extended payment terms from large customers can strain cash flow for businesses. As more and more clients demand extended payment terms to secure the sale, businesses need to have a plan in place to manage cash flow and the demands that liabilities make on the business. Payroll financing and staffing factoring from alternative lenders can become part of a comprehensive business financing solution, especially in this sustained labor market where there is competition to attract new hires and retain workers.

Customer payment Instability can stifle cash flow

Staffing companies often pay employees every week or every two weeks but invoice their customers less frequently. This ‘mismatch’ in cash flow timelines makes managing working capital challenging. Adding in extended payment timeframes and the variation that occurs when you have clients with different extended payment terms, cash flow management can become complex. When payment expected in 45 days stretches to 60 or 90 days, it causes a cash shortage that can be felt in other areas of the business that could impact their most valuable employees or with the potential to impact customer retention. 

Back-office administration is hard to scale

As a staffing company grows, so does its needs for back-office administration. Administrative tasks take considerable human capital to manage properly because they require everything from tracking and calculating approved hours for workers, collecting on payroll and tax contributions, and billing clients for hours of work. For a start-up or smaller established company, the administrative team wears many hats and scaling up or adding on more tasks to support their own companies can be an unreasonable solution. 

Solving the back office so staffing companies can focus on their clients

Bibby Financial Services (BFS) is in a partnership with Precision Consulting Group (PGC) to offer comprehensive administrative support for staffing companies that most alternative lenders do not provide. These administrative services complement custom-tailored payroll financing through accounts receivable financing to ensure staffing companies have a smooth, predictable cash flow without the payment liability a loan or line of credit creates. Payroll financing provides you with the cash flow your business requires to make payroll and take care of your back office needs—payroll tax management, client billing and contracting, onboarding of employees and workplace insurance. BFS has worked side-by-side with staffing companies for over ten years and understands the challenges they routinely encounter. BFS believes staffing & hiring companies thrive when they are doing what they do best—building relationships and providing services and we provide the funding solutions and services that closely match their business needs.

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