WHAT'S IN THIS GUIDE
Hospitality staffing covers a wide range of temporary and permanent solutions to serve the needs of large and small businesses. From waitstaff and housekeepers or janitorial staff to kitchen staff and front desk managers, in 2020, the hospitality industry was faced with one of the tightest labor markets in years amid the coronavirus pandemic.
But even in the best of times, hospitality staffing agencies often operate on very tight cash flows.
It’s not uncommon for staffing companies to wait to receive payment for their services until job vacancies are filled, and applicants are working. This can cause cash flow problems from slow payments of receivables. It also makes it more challenging to take on new contracts, make payroll, or hire additional staff.
Factoring services for small businesses is an alternative source of business funding. It is not a loan or line of credit. You make no recurring monthly payments or pay interest. If you’re a start-up or small staffing agency, it can be challenging to qualify for a loan. It can also take months to receive funding if you’re approved. Factoring does not look at your credit score or history but instead relies on the creditworthiness of your clients.
Small businesses and staffing agencies can benefit from invoice factoring with a steady influx of cash.
As with many small businesses, hospitality staffing agencies have to wait a long time to get paid. Stifled cash flow and lack of working capital can cripple your business. But even when payments slow, you must still meet your obligations. Factoring helps get you over those times by providing the consistent funds you need to pay your everyday expenses and grow your business.
It can be a long, drawn-out process to qualify for business loans and lines of credit from a bank or other financial institution, and it takes months to get the funds you need. Factoring for hospitality staffing agencies is fast and easy. Once you’re approved, you simply submit one or more invoices to factor. Upon approval, funds can be available as soon as the next business day.
Banks can limit how much you can borrow based on things like your credit score, credit history, and time in business. But factoring allows you to obtain unlimited funds based on your accounts receivable.
In addition to the costs of sourcing, recruitment, and hiring, factoring can provide consistent funding so you can confidently bid on larger projects.
In the past, factoring was largely misunderstood. Business bank loans and lines of credit were the traditional and accepted forms of financing, along with credit cards. Each of these different funding options have pros and cons to consider.
Costs for a new or growing hospitality staffing business can be significant. You may need to purchase equipment and inventory, pay employees, and keep up with rent, taxes, and marketing. You may consider taking out a business loan.
A line of credit (LOC) is a lot like a credit card. You can borrow/withdraw money up to a certain maximum amount determined by your financial institution. You can cover day-to-day expenses and pay back your debt, only to borrow again when needed.
Like all forms of funding, business credit cards must be used wisely or things can go sideways very quickly.
Invoice factoring is not a loan. The application process is quick, there is no repayment obligation, no high interest rates, and no debt to record on your company’s balance sheet. Plus, many more companies will qualify.
Choosing a factoring partner is a lot like choosing any lender. It pays to do your homework. There are also several questions to ask prior to starting the application process:
Most factoring companies work with most industries, but not all. Some factors specialize in only a few industries.
FundThrough works with hospitality staffing agencies.
Advance rates can range from 60% to 100%, depending on the factoring company and sometimes the industry.
FundThrough advances 100% of the invoice amount, less a fee.
A factoring company should be able to provide what factoring fees it charges upfront. But some companies may make it difficult to determine the total costs of using their service. FundThrough offers transparent pricing so you know prior to signing an agreement.
FundThrough pricing – 100% advance rates minus a flat fee. One up front price.
A minimum is the amount you must factor every period (month, each quarter or every year). Some factoring companies offer plans that require minimums, while others do not.
FundThrough doesn’t require minimums. Only fund when you need to.
Cash flow is the number one problem for most startups and small businesses, especially in the early stages of growth. Invoice factoring companies typically consider several situations before offering you an advance.
Factoring invoices is a sound financial strategy if you—
FundThrough takes the legwork out of accounts receivables financing. It’s fully automated platform is easy to navigate, it’s fee structure is transparent and a customer service rep is there when you have questions. Find out what FundThrough’s clients have to say, and start factoring your invoices today.
Interested in possibly embedding FundThrough in your platform? Let’s connect!