Benefits of Payroll Funding for Staffing Companies

Access to funds is critical to any business, particularly temporary staffing firms. A staffing company puts people to work, pays temps and taxes, yet still needs to wait about 30 to 120 days to receive payments.

Therefore, the need to have working capital is high to cover the gaps in business. The staffing agencies need constant cash flow as they wait for their customers' payments.  These funds help add more temps, grow the business, and cover unexpected expenses. It is not an understatement to say that a staffing company's working capital is essential to boost its success.

Most staffing agencies turn to reliable payroll funding to get finances and boost their operations. It is a unique finance option tailored to staffing firms requiring working capital. The cash they get is the primary benefit but, there are more perks in payroll funding. Find the top benefits here.

Gives You More Flexibility with Your Cash Flow

Flexibility is arguably the biggest benefit that staffing agencies get when using payroll funding. Working capital in staffing can decrease or increase dramatically due to the business's nature and changing atmosphere. Therefore, working with a bank or your own money makes it challenging to finance the operations.

Payroll funding gives you the flexibility to scale up or down as you require. It focuses on the volume and unique business needs. Also, when you don't have payroll funding, businesses cannot estimate when they will get funds. So it enables you to have confidence in your operations and ensure you meet ensures each week.

Take On More Customers

Payroll funding is not a way to drive your business but will enable your growth by offering opportunities to get more customers. You free the business from administrative tasks to focus more on revenue-driving operations. It is easier to accept a new contract for your business. Also, the financing coming from the factoring company will grow with more customers in your agency. 

You get finances that you can scale the way you want. Delays from payments affect your cash flow and the productivity of your staff to accept new contracts. Payroll financing will boost these processes, and you can quickly fulfill orders from new clients.

Get a Better Rate than a Bank Loan

Payroll funding is easier to get than any other type of financing. For example, factoring is a type of payroll financing that focuses on the creditworthiness of your clients. It is easy to get them as long as there are unpaid invoices that you can sell.

These companies don't require any lengthy underwriting processes that you would need with banks. Their rates are better and suit any small and midsize business that doesn't meet basic leading requirements.

Also, payroll funding is not a loan. There is no additional debt that you will add to the balance sheet by getting funding this way. You can build a more robust credit profile that you can use to negotiate rents, equipment purchases, and other business expenditures.

Offers Financial Security

With payroll funding, you are always confident that you have enough working capital to pay employees and fund your business operations. The cash flow is also steady to keep up with bills and growing business. Also, you receive your invoice payments every day, so you don't have to wait for too long.

Payroll funding is an ideal solution for any staffing agency growing exponentially and needing to cover its staffing costs. The solutions work best when you operate with creditworthy clients.

With steady cash flow, you can streamline your operations and ensure you meet your agency goals. Contact us at Crown Financial, LLC, to apply for factoring and enjoy the best rates in the market.

How to Qualify Your Business for Invoice Factoring

Everyone has big plans for their business. But, to achieve your goals, you must have cash. You need to pay your employees on time, increase stock, fund your internal marketing campaigns, and more. However, businesses face a common challenge where customers don't pay at preferred schedules.

You are likely to run short of funds when your customers take a lot of time to pay their invoices. Every day that passes without your invoices getting paid, your goals slip further into the abyss.

A business needs constant cash flow for smooth operations. So how can you resolve such issues? Some business owners decide to take loans, which sometimes is daunting to underwriting requirements. Other banks also take a long time to process loan applications. By the time a loan gets approved, you may have resolved all your issues.

Invoice factoring is the most popular and reliable way to fund your business in this situation. They are easier to qualify for than any other conventional financing. Anyone can be eligible for factoring since they do not build on your credit, rather the credit worthiness of your customers. It is the best viable option to finance your business when you have a poor credit history.

The following is the list of the major requirements you will need to qualify for invoice factoring.

Invoices to Factor

Unpaid invoices are arguably the most important thing to consider when looking for invoice factoring. After all, they are the ones you need to factor in.

Creditworthy Clients

Factors are more concerned with the credit worthiness of your clients than they are with yours. The main reason for this is because your clients are the ones who pay the invoices.

Therefore, it would be best to consider if your customers are the kind who honor debts, have solid credit, reputable relationships, and have good references with other vendors. If so, then you are an excellent factoring candidate.

A Completed Factoring Application

Factors require an application that will vary according to the needs. They will request business or personal contacts like phone numbers, email addresses, and other essential business details. It may also include the monthly invoicing volumes. Generally, the more information you have, the higher the chances of getting an accurate invoice factoring quote.

Accounts Receivable

The reports show all the unpaid invoices, notes by date, and credit memos. Factors use these reports to keep track of the outstanding invoices, the money pending, and when they are likely to receive payment.

It is an essential part of the factoring paperwork since it helps determine an accurate timetable for submitting the required paperwork for eligibility.

A Business Bank Account

Using invoice factoring means you are looking for funding to help boost your business. Therefore, you are going to need a business bank account. Factoring companies do not offer cash or transfer money to a personal bank account. They only send money to business-only accounts through wire or ACH transfers.

A Tax ID Number

You also need to provide a government-issued tax identification number. The factoring company uses the tax ID to check if your affiliated companies have all recent tax requirements. It also helps them to check if you may have outstanding liens.

A Form of Personal Identification

You must provide personal identification documents. The factoring companies want to ensure that the person they are offering money to is legitimate. Personal ID can be your passport, driver's license, or social security number.

Invoice factoring has numerous business benefits. With extra cash in hand, you can boost your business processes and pay all your bills to enable you to grow your business exponentially. Contact us at Crown Financial, LLC to apply for factoring and get the best rates in the market.

Is Your Business Credit Healthy? Here's How To Know

So you've finally decided to go for it — You're ready to be an entrepreneur and get your business off the ground. You've done your research, you've found your niche' and you're ready, Woo-hoo! But wait — are you really ready? How does your business credit profile look? Did you know that building and maintaining a solid business credit profile can facilitate and secure certain perks for your business, including: 

• Better Premiums

• More Desirable Loan Terms

• Successful Vendor Negotiations

However, in order to build business credit you will need attention to detail and patience. Yes, patience, as it can take a little while to build up your business credit profile. Your business credit profile will display your business's effectiveness in its purchasing power, debt, and how it handles the business's finances in general.

What's Business Credit — Isn't It the Same As My Personal Credit?

Well, not exactly, although it is true that just like your personal credit, building business credit happens over time. Business credit takes into account many other factors which form your business credit score.

Equally, personal and business credit alike can impact the rates you pay for services and goods. For instance, if your business's credit scores are good, you could be afforded the benefit of paying lower insurance premiums, or, you could receive lower interest rates on lines of credit as well as small business loans. This could come in handy for you when you need to negotiate extended vendor terms, which could offer you more room to manage your business's cash flow.

Crown Financial, LLC has put together some tips on how to build your company's creditworthiness, including, what business credit is, and how businesses can use it to their advantage.

What You Should Know About Business Credit

First things first, prior to establishing any credit for your company, you'll need to legally register it as a business entity. You'll also need to have adopted your business structure in order to build credit with the business credit reporting agencies.

Business Credit and How It Works

When a business works with creditors, vendors, or suppliers, a business credit report is normally generated that shows a company's activity and accounts to the business credit bureaus. This is how your business's credit scores are produced.

Who Is Business Credit For?

Any eligible business can benefit from credit. Business credit is generally sought when you need to pay vendors or suppliers on payment terms, or you need to borrow money for your business. So having good business credit is essential for your business, and it could make a difference in your business succeeding or crashing.

Why Do I Need Business Credit?

The creditworthiness of your business affects many decisions, including:

• Your business's insurance premiums

• Your effectiveness to raise investor money

• Your qualifications for obtaining contracts with other agencies

• Your credit line and net terms that you acquire from suppliers and vendors.

• Rates on loans and your eligibility for Small Business Administration loans.

Seven Tips for Building Business Credit

Building your business's credit can be more challenging than building your personal credit. And, just as your personal credit score takes time to build, your business credit score will also take time. Whether you're starting a new business or if you've been in business for a while, and you're just learning of business credit, follow these seven steps to make sure you're on the right track.

1. Verify Your Personal and Business Credit

Not sure if your business has even obtained any credit? Don't fret: There are ways that you can check your business credit reports.

Dissimilar to personal credit reports, bureaus are not legally required to give you free access to your business credit reports. However, you can pay to get a full copy of it from all three of the major business credit bureaus, which include: 

• Equifax

• Experian

• Dun & Bradstreet

Some free services may be able to provide you with also give you summaries or access to your scores and business credit reports.

2. Is There One Single Business Credit Score?

Simply put, no. Experian, Equifax, and Dun & Bradstreet are competing agencies that each develop, and sell their own business credit scores. Also, when evaluating your business, many vendors and lenders may also prefer specific business credit reports.

3. Build Your Business Credit

If you only use your personal credit card to cover your business expenses, don't be surprised if your business has yet to acquire business credit. Some businesses depend entirely on data regarding your business. However, some business-scoring models may produce a business credit score dictated by your personal and business credit.

In order to attain business credit, you will first need to complete the following steps:

• To ensure your business and personal identities are separate, you will need to form a limited liability company (LLC) or incorporate your business.

• Obtain a federal employer identification number (EIN). An EIN works as your business's Social Security number.

• Use your business's legal name to open a business bank account.

• Use your business name to install a business phone line.

• Register with Dun & Bradstreet to get a D-U-N-S number. This number is free for businesses.

Business credit bureaus may use your D-U-N-S or EIN numbers to analyze your business's activities and payments when they're reported, while business credit-scoring systems can use the information to create scores.

4. Obtain a Business Credit Card and Only Use Vendors That Report

You will need reporting from vendors and other accounts that report to the credit bureaus to build a business credit profile. A business credit card may provide rewards programs and other benefits that could be instrumental for business owners. 

5. Pay Your Vendors In Advance

The Dun & Bradstreet PAYDEX score is a highly used business credit score that's based on your business's payment history relating to vendors, and it ranges from one to one hundred. Paying your vendors and suppliers early can get you a higher PAYDEX score.

6. Monitor Your Business and Personal Credit Reports

Don't be caught off guard or inconvenienced by fraud or errors on your business credit file. This can negatively affect your business credit, so it's important to check your business credit regularly.

Next Steps 

If your business requires a new source of funds — to grow or save your business, satisfy payroll, acquire new customers, or, if you just need help managing your company's cash flow, call us today at 281.646.2905 or complete our contact form right here. 

The staff at Crown Financial, LLC look forward to working with you so that you can work on boosting your business's creditworthiness. In the meantime, check out our blog over here.

Recourse vs. Non-Recourse Factoring: Which Works Best for Your Business?

Invoice factoring is great for any business. In fact, it's one of the best cash flow solutions out there. You get to increase your cash flow, so you don't have to worry about operating expenses, payroll, and even business expansion. 

On the downside, we all have that one customer, you know, the one who delays paying their invoice, and in some cases, outright refuses to pay their dues. So, what happens in such a case? Who bears that financial burden? 

The outcome of this situation all comes down to the agreement you have with your factoring company. Like everything else in life, you get two choices; recourse and non-recourse factoring. So, what's their difference? Let's check it out.

Recourse Factoring 

Recourse factoring works as an agreement between you and the factoring company. You are expected to buy back the unpaid receivables from the factoring company in case of a non-payment. In this case, you bear all the credit risk.

One of the most attractive attributes of recourse factoring is that you can get funding regardless of your creditworthiness. This is because the factoring company protects itself through a contract that stipulates that the business (you) will bear the responsibility for any unpaid invoices.

This makes recourse factoring very popular among factoring companies since they don't bear any financial risks due to unpaid invoices. Heck, even the responsibility of dealing with the defaulting customer (either legally or through collection agencies) falls into your hands.

That being said, with recourse factoring, you get to enjoy less factoring fees and more flexibility on advance rates. So, when dealing with recourse factoring, you trade price to risk. If you have faithful customers, this might just be the best way to go.

Non-Recourse Factoring 

In non-recourse factoring, you get into an agreement with the factoring company whereby the factoring company bears all financial obligations pertaining to the unpaid receivables. In this case, your business remains unaffected by the unpaid receivables.

With recourse factoring, your financial benefits are literally two-fold. You get to solve your cash flow problems without any credit risk. This form of factoring also works like credit insurance in that you get access to your money on time and at no risk. On the downside, non-recourse factoring is synonymous with higher factoring fees. 

Which Factoring Type Will Work Best for My Business?

Like any other financial transaction out there, both recourse and non-recourse factoring come with distinct advantages and disadvantages. 

Benefits of Recourse Factoring

• Faster approval process

• More returns for invoices

• In most cases, the factoring company performs a credit check on your clients to minimize the risk of defaults.

• More affordable compared to non-recourse factoring

Drawbacks of Recourse Factoring

• The factoring company has the right to demand payment from you if your customer defaults.

• You essentially put your business's income and bank accounts at risk of being garnished. In case of non-payment, you have two options; you can either give the factoring company an invoice of equal value or pay back the invoice amount.

Benefits of Non-Recourse Factoring

• Better debt protection

• All liabilities of unpaid invoices are transferred to the invoice factoring company.

• No additional debts

• You remain protected if your customer goes bankrupt.

Drawbacks of Non-Recourse Factoring

• Not all factoring companies offer non-recourse factoring

• Not the best choice of your clients have a bad credit rating

Ready To Get Started?

Both recourse and non-recourse factoring can help boost cash flow in your business. And now that you know the difference between the two, you're better equipped to make an informed decision on which type to go for. Apply now and get faster cash flow with the best invoice factoring solutions.

How Much Does Invoice Factoring Cost?

Let's face it, unpaid invoices suck! Especially when they take too long to be paid. But wait, isn't there a way to fix this? Yes, through invoice factoring. This is probably not a new concept to you. So, why haven't you tried it yet?

The best guess is that you're skeptical about it. After all, having someone else pay out your customer's invoices as soon as you need them sounds way too easy, right? Well, it sounds easy because it is. But, it comes at a cost. You might part with 1% to 3% of your invoice's value. But considering the monetary benefits it presents to your business, I'd say it's worth it. So, how do invoice factoring companies come up with these rates? And how much do you expect to part with?

What Invoice Factoring Rates Should You Expect?

Discount Fee

Discount fees can vary anywhere from 1% to 5%, depending on the invoice factoring company you choose to get into a relationship with. A discount fee is imposed on the total value of your invoice. It covers a period of about 30 to 45 days from the day you sell the invoice to the day the receivable is paid.

Application Fee (Flat Fate)

Both the amount and the way you pay application fees all come down to the company you're using. Some companies charge application fees upfront, while others recover the fee by increasing your initial financing fees. 

The intricate nature of application fees causes them to vary by a great amount. It can range from zero to a few thousand dollars. So, whenever you're choosing an invoice factoring company, you'd better watch out for this.

Monthly and Termination Fees

Like the application fees, monthly and termination fees vary greatly from company to company. Some companies require you to sign a long-term contract and sell a percentage of your invoice each month. If you don't meet this monthly target, you may incur a minimum monthly fee. They might also charge you a cancellation fee for terminating the invoice early.  

Factoring Fee

Suppose the receivable goes unpaid past the 30 - 45 day period covered by the discount fee. In that case, the invoice factoring company might charge you an extra 2% to 3% for every 30 days the receivable goes unpaid. That being said, some companies may charge lower factoring fees but compound the rates on shorter periods of about ten days.

How to Calculate Invoice Factoring

Now that you know all the costs involved, how do you add them up? Two costs come into play when calculating invoice factoring; flat rate and variable rate. A flat rate is simply the one-time upfront (application) fee you pay. The variable rate encompasses all other variable costs like factoring fees and monthly and termination fees.

Variable fees affect the cost of invoice factoring in that; the higher the volume of invoices you sell, the lower your factoring costs drop. The amount of time you take to pay the receivable also plays a part in determining the cost of invoice factoring.

You can calculate the cost of invoice factoring yourself by multiplying the factoring rate with the invoice amount and payment period, ie.

Invoice factoring cost = factoring rate x invoice amount x payment period

You can also use our Invoice Factoring calculator.

Ready to Get Paid?

Invoice factoring can do a lot for your business. With cash in hand, you're in a better position to pay your bills on time and grow your business exponentially. Say goodbye to cash problems due to unpaid invoices. Apply now! And get the best invoice factoring rates on the market.

Pros and Cons of Invoice Factoring

Running a business can be a little hectic sometimes. For example, you may find yourself with a couple of invoices meant to bring you money but have no cash at hand. This can put you in a tight place, and your business may take a hit. Perhaps you need the money to take on another project or to finance your day-to-day business activities. 

If you ever find yourself in this predicament, worry not. There is an easy way to get money flowing backing the business. 

Invoice factoring is the process where you "sell" your outstanding invoices in exchange for cash at hand. Crown Financial, LLC advances 80% - 90% of the invoice total and then collects the money from your client. You get to run your business and have money in circulation without needing to wait for a month or even three for the invoice to clear.

If, at this point, you're wondering whether factoring invoices is good for your business, then read on to learn more as we double down on its pros and cons.

Pros

Here are some perks that come with factoring invoices.

Get money when you need it.

If you need money on short notice, then this is the best option for you. There will be less paperwork to do, and the procedure is straightforward.

Immediate cash flow

If you need money, bank loans can take a while to be processed and sent your way. On the other hand, factoring invoices guarantees you instant money, there is no long wait, and you can put the money into whatever use you needed it for in the first place.  

Ongoing cash flow

For your business to thrive, you need to have money in circulation. Once you have a rapport with the factoring company, they can sort you out whenever you need money. It ensures that things keep running in the business without a hitch. Factoring invoices does not only save the day during emergencies; it can help with the regular cash flow needs too.  

Your factor grows with you.

The more invoices you sell, the higher your chances of you getting cash when you need it. It is like developing a good credit score for when you need a bank loan.  

Take on more work

Any business person can tell you the pain of bypassing great project opportunities simply because of a lack of funds. Luckily, factoring ensures that you can work on a new project without completing another because you have the money to get the job done.

Better chance to get approved

Bank loans require a lot of paperwork and have so many hoops that are hard to jump through. With the factoring option, all you need is to have trustworthy clients who honor their pay, are B2B and they are a domestic business. Your credit score will not be an issue, your client is on the hook for that.

Cons  

Your factor works directly with your customers.

Since the factoring company will collect the money from the customer, you may run a risk of losing your clients. For instance, if the factoring company is harsh and aggressive when collecting the money from the invoices, this can work against you and ruin the relationship you built with the client. So make sure you choose a trusted invoice factoring company like Crown Financial.

Might pay higher fees than traditional loans

Typically, the factoring company takes away a percentage of your earnings. Most companies charge around 1 to 3 percent of your total invoice amount. While you will get the cash instantly, you lose a chunk of it. That is something you have to consider and figure out if it is worth it in the end. But not every factoring company is the same. Crown advances you more money and doesn’t charge anything for it.

Your finance depends on the customers' credit.

While the factoring company will not look at your credit, they will look at your customers. If they feel like they cannot trust the customer, they will not give you the money. They might also charge you a higher fee if they feel there is a risk attached to it. Always make sure to choose your customers wisely.

If you feel pressed for cash and there is no money in sight, or you want to know how your unpaid invoices could help you out of a tight spot, worry not. Our staff at Crowd Financial, LLC is willing to work with you and develop a solution that is beneficial to you. Reach us today at 281.646.2905 or check out our website here. You can also check out our blog to read more about factoring invoices and how it can benefit your business.