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Uncertainty Breeds Temporary Staffing
The US economy has experienced a major shift that has caused repercussions in the way businesses think about staffing. An uncertain economy equates to uncertainty in long term hiring of permanent employees. For half a decade, there has been a shift by businesses to hire temporary staffing. Business owners feel this is an answer to keeping better control of hiring costs and employee benefits. There is also the benefit of more flexibility in hiring temporary staffing. Businesses in an uncertain economy rely on the ability to create projects in increments of six months or per fiscal quarter. Formerly, business transactions and operations were projected over a longer time frame. More Information on Factoring Staffig Companies
Project Work And Temporary Staffing
Today, the picture of hiring is implemented by parceling daily business to fit shorter term operations. Business is segmented by creating projects for sales and marketing, advertising and promotion, manufacturing and production. Using a shorter time frame allows for minimizes the scope of management and control of expenses. The value of this is a reduction in cost of labor and labor-related employee benefits. By using temporary staffing, there's also a reduction in payroll and accounting costs and the cost of producing goods and services. In business mindsets today, temporary staffing is a mandatory objective to avoid high loss and high risk.
Are Temporary Staffing Agencies Prepared For The Next Job Surge?
Inevitably, an uncertain economy doesn't last. Businesses know they can rely in the interim on temporary staffing agencies to fill in labor gaps on an "as needed" basis. Temporary staffing agencies are witnessing an unusual change and increase in the number of businesses managing well by using temporary hires only. The onus of responsibility lies with these temporary staffing agencies to radically organize projections for labor needs to accommodate what may become a potential deluge of demand for temporary staffing should the next job surge occur.
How Temporary Staffing Agencies Prepare For The Next Job Surge
Realistically, temporary staffing agencies are reshaping the way they attract the best candidates for temporary job openings. Refashioning the fulfillment of temporary job order and hiring specifications is one way agencies manage this.
The Full Circle Of Temporary Staffing And Cash Flow Sustainability
In the past, a temporary agency's major focus might have been on placing job applicants into permanent positions to enjoy higher commissions. Today, temporary and project staffing requires increasing the number of available job applicants to fill increases in the number of temporary positions. Beyond this, temporary staffing agencies realize they must also consider how to increase incoming revenue to meet their own business operations needs. This creates a troika of concentration on cash flow sustainability. For these agencies, hiring trends can be the most significant factor that impact cash flow.
Temporary staffing agencies have had to retrofit their business operations into defined phases in order to maintain financial stability. By creating four pro-active fiscal phases, it's easier to make adjustments within each fiscal quarter and to produce comparative analyses of the financial picture from one quarter to the next. Managing a single fiscal quarter where focus on profitability, potential risk and job market helps to insure the tools needed to sustain cash flow are functioning and progressing. This type of cash flow management empowers a single fiscal quarter by endowing it with strength to withstand immediate cash flow problems. This may not have been a business operative in the past when job orders for permanent positions flourished. The ebb and flow of hiring requires new thinking and new structure for temporary staffing agencies to survive when temporary job orders are the rule rather than the exception.
Relying on a factoring company in times of financial stress is one tool that blends well with newly developed ideas and restructuring of business operations. This is a method of streamlining and updating agencies to fit neatly and seamlessly into today's changing employment sector. In a precarious job market, temporary staffing agencies need to concentrate more on empowering their fiscal responsibilities by reducing them into manageable quarters and phases. Allowing a factoring company to supplement gaps in revenue and to advise on managing their fiscal planning more comprehensively is another tool for stabilizing cash flow. Factoring companies infuse temporary staffing agencies with needed cash and also help manage accounts receivables comprehensively. Factoring companies pay an average of 75-85%, depending on the factoring company, of the value of receivables and outstanding invoices. Accounts receivables are liquid assets that can be of greater value to temporary staffing agencies than selling capital assets. Since selling receivables brings in hard cash to add to cash flow, there is no long-term interest to be paid as with a business loan. Factoring companies relieve these agencies of additional debt by infusing these businesses with immediate cash.
Factoring companies are in the market to buy active accounts receivables, which are then sold at discounts to interested buyers. In temporary staffing agencies, receivables are the result of invoices paid by client companies as payment for staffing they acquire from agencies. Factoring occurs in temporary staffing agencies when the factoring company buys these receivables and pays the agencies a specified sum. Agencies prefer to use factoring companies whenever there is an ebb in the job market and hiring reductions take place. Since most agencies are continually marketing for new client companies, using a factoring companies fills a need to stabilize cash flow. This is one way temporary staffing agencies prepare for the next job surge while enduring an uncertain economy.
In order to work with a factoring company, temporary staffing agencies need to arrive at the potential cash value of their receivables. Include all revenue-generating accounts receivable assets. This can easily be found in the accounting system's invoice tracking of business transacted with client companies. It's important to have a general consensus of the value of outstanding invoices whether they are for single job placements or for contractual job placements over a longer period of time.
These items create the total picture of the value of accounts receivables that will be sold. The factoring company will offer a bid on these receivables based upon their view of total asset value. Be aware that there is a difference between "factoring" and "receivables assignment." With factoring, receivables are sold. With "receivables assignment," outstanding invoices are used as collateral to borrow for increased cash flow and supplement working capital.
Each temporary staffing agency should decide if direct sales of their accounts receivable is preferable to borrowing against these receivables using receivables assignment. The credit rating of the business will have a big impact on borrowing. In times of economic uncertainty, borrowing for a business loan of any kind may not always be available to temporary staffing agencies, given that the nature of their business depends on the impact of the job market. In effect, a factoring company acts as the receiver of invoice amounts and is notified by the agency when invoices are paid. The factoring company then deducts fees from reserves held to agencies for providing th infusions of cash flow.
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