How do Nurse Staffing Agencies Get Funding?
Running a nurse staffing company is no easy task. Even the most well-managed nurse staffing agencies find payroll, rapid growth and similar challenges complicated issues to deal with. Scheduling, federal and state staffing regulations, patient acuity, and balancing nurse-patient ratios all impact the bottom line. Having readily available working capital on hand makes it easier to balance these requirements and ensure profitability.
One of the most effective methods to secure nurse staffing agency financing is through invoice factoring. Staffing factoring is the practice of selling invoice receivables at a discount in exchange for immediate payment. Nurse staffing factoring is a fast, safe and affordable way for the nursing staffing industry to meet their business needs by providing easy access to working capital. The huge benefit of a factoring facility is that it provides nurse staffing agencies immediate payment on invoice receivables compared to typically waiting 30 to 60 days for customers to pay.
eCapital’s staffing factoring program provides convenient funding, plus A/R management services and comprehensive credit protection. These benefits all add up to ensure that running a nurse staffing company is much less complicated.
Funding Options for Nurse Staffing Companies
Payroll funding through invoice factoring serves a wide range of nurse staffing segments. This includes, but is not limited to:
- General Nurse Practitioners (NP) and Family Nurse Practitioners (FNP)
- Travel or Traveling Nurses
- Registered Nurses (RN) and Licensed Practical Nurses (LPN)
- Home Care Registered Nurses
- Locum Tenens Physicians
- Private Duty Nurses
- Temporary Nurses
- Certified Registered Nurse Anesthetists (CRNA)
- Clinical Nurse Specialists (CNS)
- Pediatric Nurses
- School Nurses
- Government and Public Agency Nurses
What is an Example of a Factoring Facility for a Nurse Staffing Agency?
Your nurse staffing agency has an outstanding invoice for $100,000 from a creditworthy customer. The problem is that this customer has been given payment terms of 45 days to secure their business. This lengthy payment structure places stress on your cash flow, which could negatively impact your payroll. However, since you are a staffing service-based company with good and creditworthy customers, you can turn to a factoring company for immediate payment. By factoring receivables, you get up to 90% advance on the face value of invoices transferred directly to your account. Most of your expenses are in payroll, but other significant costs have to be planned for as well. Invoice factoring provides positive cash flow ensuring you have working capital consistently flowing in to pay your temp nurses, payroll taxes, SUTA, FUTA and workman’s comp premiums.
Once the $100,000 invoice is verified, your nurse staffing company receives a same-day wire transfer of $90,000 into your bank from the factoring company.
How does invoice factoring work? It’s very simple:
- Invoice your customer and send a copy of the invoice to your factoring company.
- The factoring company verifies the invoice to ensure services were provided and the invoice is accurate. Advance payment, up to 90% of the invoice face value, is transferred directly to your account within 24 hours. A small fee is deducted and the remaining amount is held as a reserve until your customer pays the invoice in full to the factoring company.
- When the invoice is paid, the reserve is lifted and transferred directly to your account.
All transactions are recorded in real time and available to view 24/7 through your online client portal for full transparency. The big payoff is – the more your business grows, the more you get paid. Invoice factoring is the only funding option that grows with your staffing business. This feature allows you to take on new customers and grow your staffing pool knowing that your access to working capital increases as your business grows.