![]() ![]() Non-recourse factoring, however, means that the factor will take the bulk of the risk in the event of an unpaid invoice. Recourse factoring means that in the unlikely event an invoice is not paid, you – the staffing agency – are essentially responsible. The factor forwards you the remaining amount, minus any feesĬompanies may have to decide whether to use non-recourse loans or recourse factoring when partnering with a factor.Your customer makes payment on the invoice to the factor.The factor pays you an advance on the invoice.Here’s how staffing factoring works, step by step: Instead, the factor pays you a percentage of the invoice upfront, then once the invoice has been paid by your client, the factor will pay you the rest of the invoice amount minus fees.īecause invoice factoring involves three parties – a staffing agency, a staffing agency’s customer, and a factor company – there are more steps to the process than you would find with more traditional forms of financing. Because the factor is purchasing your invoices, you won’t be making monthly payments like in the case of a business loan. Similar to traditional invoice factoring, staffing factoring offers cash for unpaid invoices. Staffing agencies regularly partner with factors because invoices from temporary workers traditionally take several weeks to pay out. Staffing factoring, which is also sometimes referred to as payroll factoring, specifically applies to staffing companies which organize and assign temporary employees. ![]() Factors will take anywhere from 1% to 3% of an invoice as a fee and pay out the remaining amount of the invoice to the company when the invoice is actually paid. This means that the capital from an invoice that would usually payout in 30, 60 or 90 days is immediately usable. The factor pays out a portion of the receivable upfront. A company performing invoice factoring services – commonly known as a factor – purchases invoices at a discount from business-to-business (B2B) and business-to-government (B2G) companies. Staffing factoring is a subset of invoice factoring, a type of business financing commonly used by several industries to maximize cash flow and more effectively fund day-to-day operations by allowing businesses access to expedited cash without taking on debt. ![]()
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