1st Commercial Credit

Learn About Funding and Supply Chain Finance Solutions, Business Tips, and Industry Related Articles.

Over 18 Years in Business

Recent Transactions

invoice factoring for a clerical staffing agency in texas


Clerical Staffing Agency

invoice factoring for a industrial temporary staffing agency in texas


Staffing Light Industrial

Medical Receivables Factoring Used by Nurse Staffing Agencies

Every business needs sufficient working capital to pay employees, serve customers and keep the doors open. Lack of capital is one of the major reasons that small businesses fail. For nurse staffing agencies, capital shortfalls to meet payroll for talented people could give the competition an advantage. Unpredictable economic cycles only compound the concerns.

When the economy is booming, the nurse staffing industry has a tremendous opportunity to meet corporate demand for workers. Access to sufficient funds strengthens agencies to recruit, hire and fill positions. On the other hand, revenues decline during a recession because hiring is languishes. The nature of the industry's dependence on a strong economy and employment demand requires flexibility from financial institutions. Most traditional lenders are not inclined to circumvent their requirements for staffing agencies.

The Alternative: Medical Receivables Factoring

An option for nurse staffing agencies is to use medical receivables factoring to fill the cash flow gaps during lean periods. Often, companies that use staffing services are slow to make payments on invoices. Some can take up to six months to pay for work that they received today. Without a sufficient cash balance, this leaves many nurse staffing agencies in a financial crunch.

Medical receivables factoring is an excellent way to cover cash flow shortfalls. Typically, a factoring company will purchase accounts receivable for a percentage of the face value. Nurse staffing agencies can receive a cash infusion within three to five working days, which is much sooner than six months.

After a quick approval process, the agencies have a sound financial footing to continue providing talented candidates to fill orders. This is also faster than the average wait time for a traditional bank loan.

In addition to recruiting and meeting payroll, nurse staffing agencies can use factoring as a time-saver. They are no longer burdened with trying to collect on debts. Cash can be put to immediate use for investing in the growth of the business.

Medical Factoring Process

Once a factoring agreement is established, a standard process follows. First, the nurse staffing agency submits client invoices to the factoring company for hours worked by an employee. Next, the factoring company advances the agency a cash percentage of the invoice, which can be at least 90 percent of the value. The difference is held in a reserve until payment is received from the client.

Generally, decisions to enter into a factoring agreement are based on the invoicing process of staffing agencies and credit strength of clients that use the services.

As with all business decisions, nurse staffing agencies that are considering medical receivables factoring as a funding source should weigh the advantages and disadvantages. By all accounts, factoring is beneficial to agencies that need an immediate cash flow. Additionally, agencies prevent bad debt and carry no liabilities on their balance sheets.

Waiting months for payment of invoices is over; agencies can meet payroll and other business expenses in a timely manner. Nurse staffing agencies will not miss opportunities for expansion simply because they have a cash flow problem. Agencies that have these concerns will definitely benefit from a reputable medical receivables factoring company.