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Factoring Companies: Number one source for growth capital in the IT
Staffing industry.
March 09, 2005
Perhaps more so than any other businesses, IT staffing
firms can reap huge rewards from factoring their receivables. Why is
this?
It is a rarity to find an IT Firm that has been in
business more than five years. 9/11 taught owners of those firms what
it’s like to be in an industry that has imploded. All but the
best-capitalized IT staffing firms shut their doors shortly after 9/11
as technology spending dwindled to unprecedented lows. 9/11 is the
major reason the staffing industry lacks firms having a long enough
track record to qualify for loans from traditional lenders.
Unlike the high-profile travel industry, which gained
national news coverage as it went into a post-9/11 tail spin, the IT
staffing industry suffered in silence. Highly fragmented, typically
under-capitalized, and comprised largely of young upstarts, the IT
Staffing Industry had few players with the capital resources to
withstand a dramatic, long-term downturn in their industry. What’s
more, because most IT Staffing firms lack the type of tangible assets
that traditional lenders like to loan against, those that would
otherwise qualify for loans from traditional lending sources, rarely
could borrow as much as they needed to support their working capital
needs.
Three or four years post-9/11, firms began expanding
tech spending and the IT staffing industry was reborn. But with so
many start-ups and the few older ones seeking to expand their
businesses, where would the capital come from to take advantage of
this tremendous growth opportunity. Banks? Not.
To fuel the growth of their firms, post 9/11 IT
staffing firms have increasingly turned to factoring as the preferred
financing resource. The one thing that most IT staffing firms have in
common is good margins. It is not uncommon to see 30%+ gross profit
margins in IT Staffing, so giving up 1.59% to 3.5% off the top of an
invoice in exchange for obtaining immediate payment from a factoring
company makes a lot of sense to growing IT Staffing firms.
Factoring companies that specialize in IT Staffing,
Temporary Staffing, and Medical Staffing provide other value-added
services—for no additional fee. For example, the best factoring
companies employ a department of professional collection specialists
who will assist you in keeping delinquent payments to a minimum. These
collection specialists can work independently of or in tandem with
your own administrative staff. In many cases, IT staffing firms will
totally outsource to their factoring company all collection work,
freeing up other individuals for more productive activities. Factoring
companies will also help the IT staffing firm to establish prudent and
realistic credit limits for the staffing firm’s customers. Good
factoring companies provide their clients with the ability to request
and manage their credit limits on line and will also provide their IT
staffing clients access to all their bookkeeping reports in real time
on line on the factoring company’s web site.
Other factoring companies that have a staffing
specialty also provide back office support such as software, payroll,
and invoicing (billing service) for an additional fee. These services,
when combined with the funding service, are described as “full service
factoring”.
If you own a growing IT Staffing firm, and cash flow
won’t permit you to take on new, larger clients, or grow with your
existing clients. Call us today at 1 800 450 9653, we specialize in IT
Staffing Funding for small and large clients.
Start Factoring Today!
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1st Commercial
Credit, a
nationwide
factoring company headquartered in El Paso, Texas. Provides accounts
receivable financing in the US, Canada, and the UK; offers
export trade finance to clients in every major world
market and can convert receivable finance transactions in 17
currencies.
Other Articles:
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industry:
Factoring Temporary Staffing Companies
Factoring Medical Providers
Factoring Medical Staffing Agencies
Factoring IT Staffing Firms
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