Payroll Funding for Staffing Companies
Press Release: Data Center Expansion, New Funding Contract
Essay: Payroll Funding
Perspectives by CEO, Gregg Dourgarian
TempWorks provides payroll funding for all sizes of staffing
companies, from start-ups to well-established recruiting services
with large corporate clients. We will help you grow and flex with
your client base.
A payroll funding contract represents a complex, long-term
transactional relationship; terms can be critical to your
profitability. TempWorks will work with you to design
a reasonable arrangement that addresses your unique needs.
How to Review Payroll Funding Alternatives
Consider the following issues when choosing a payroll funder
(factor) and negotiating a contract:
- Experience in the industry: TempWorks has
roots in the staffing business going back to 1959 and has helped
many leading companies flourish.
- Term of the agreement: Payroll funding
contracts vary in length from one month to several years. A
contract of one month or less in length will typically have higher
costs and interest rates than a longer contract.
- Interest rate: The interest rate varies based
on your volume and history. A start-up will pay a higher rate than
a large, well-established company.
- Cancellation policy: A default provision may
take effect at cancellation or if you stop funding. Penalties cover
costs to the funder in new account setup, due diligence and
covering the start-up phase.
- Term of renewal: A contract may include an
evergreen clause that automatically renews unless you give a
120-day notice of cancellation. If so, you should re-evaluate the
contract before each renewal period begins.
- Billing: An important factor to negotiate,
based on expected aging of your invoices, is the application of
overdue payment charges. Variations include a single fee at 30, 45,
60 or 90 days, or a fixed-percentage charge every day after 30
days.
- Advance rate: This is the amount advanced to
you when the funder buys your invoice. A rate of 90% means the
funder advances $9000 on a $10,000 invoice, retaining the balance
as a reserve.
- Where the funding fee is applied: In a 90%
rate agreement where a 5% funding fee is taken from your advance,
you only receive 85% of your invoice. At TempWorks, you will
receive the full advance rate quoted, and your funding fee comes
out of the reserve value of your invoice.
Funding from a full-service provider
TempWorks is a full-service funding provider for staffing
companies. We provide complete software and service solutions for
recruitment and payroll, in addition to payroll funding with a
flexible remittance system.
Since coming on as a TempWorks Venture customer, I have
been impressed with great customer service. The staff is so easy to
work with and is always there to help with any questions that I
have. My issues are always addressed promptly and professionally.
The TempWorks application itself is FANTASTIC. I have used several
other systems in the past, but this one is outstanding. It is so
user- friendly and training my staff on it has been very
easy.
- Celina Bianco, First Source Labor & Staffing