What’s the difference between invoice factoring, staffing factoring and payroll funding? When it comes to staffing financing services, there are many terms floating around the staffing industry. Most importantly for you to consider is which financial service makes the most business sense for your staffing company?
To help you keep your financing terms straight and make informed financial decisions regarding your staffing business, we offer a few explanations of the common industry terms as it relates to factoring services:
What is invoice factoring?
When you receive invoice factoring services, this means that your company’s accounts receivables or, in other words, your invoices are purchased. Your company is advanced cash based on the invoice amount. Industries which typically have longer payment terms will use factoring services to help with cash flow while they wait for clients to pay their invoices. Invoice factoring is common in many industries, such as manufacturing, trucking, and construction industries as well as in the staffing and recruitment industry.
What is payroll funding?
Payroll funding, payroll factoring, and staffing factoring are all terms associated with invoice factoring for the staffing industry. Payroll funding is the most commonly used term in the staffing industry for factoring services because the majority of the cash advancement from invoice factoring is applied to cover payroll costs. The terms payroll funding and invoice factoring can generally be used interchangeably but payroll funding is most commonly used in the staffing industry.
If you’re interested in learning more about how payroll funding can support staffing agency growth, check out our blog article: 3 Ways to Grow Your Staffing Agency with Payroll Funding. Or contact us today to talk to our team of payroll funding and back office experts to learn more about factoring services and how payroll funding can help streamline your cash flow!