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Why Staffing Companies Should Be Prepared with a Back Pocket Plan for Funding

By 09.12.22September 19th, 2022No Comments
Why Your Staffing Company Should Be Prepared with a Back Pocket Plan for Funding

To ensure you keep your funding pipeline ready to support your staffing company’s evolving needs, never become complacent with your lender. Continuously monitoring lender services ensures readiness to meet the financial obligations of future payroll burdens. Any indication of red flags today could be an early warning of potential funding failures – a financial brick wall you don’t want to hit! Taking pre-emptive action to investigate alternative funding sources will better position your staffing company to pivot quickly and seamlessly to a more reliable funding source if and when needed. Talking with other providers may also give you additional insight into the quality of service you are receiving today

In this article, we speak with Dale Busbee, senior vice-president of business development at eCapital Corp. As the former owner of a staffing company and now a veteran of staffing financing, he has an acute understanding of the extreme importance of having a trusted financial provider. Dale strongly advises staffing companies to carefully monitor lender services and be prepared with a back pocket plan to ensure client payrolls are paid accurately and never missed.

Don’t Feel Trapped – Take Action Now

If it’s not broken, don’t fix it. This is a famous adage for sure, but for staffing companies, it could become a significant misstep when managing your funding resources. The more prudent approach would be to have a plan B in place in the event that your current provider isn’t keeping up with your evolving needs.

Working with a payroll funding company is a mainstream financial strategy to meet payroll burden. Yet, despite the regularity of weekly financing, some staffing companies feel trapped in a relationship with an inadequate payroll funding provider. Perhaps they’re locked into a contract with an early termination fee – a clear disincentive for switching early. Reluctance to disrupt inertia is another common reason to avoid changing funding partners midstream. Staffing companies may feel their teams are too busy to learn another lender’s new funding tools and work practices. “This is a people business, so staffing companies typically bond with the vendors they’re working with,” says Dale Busbee. “They get comfortable with the company and people they deal with … why rock the boat?

And of course, the biggest concern that generally prevents the pursuit of an alternate payroll funding company is the fear of missing a payroll. Transitioning to a new lender opens the door to the possible interruption of funding at a critical moment, resulting in a payroll funding shortfall. The fear of entirely missing a payroll can be greater than the frustrations of handling mismanagement problems. This fear tends to overshadow the obvious – continued customer service support issues increase the certainty of a funding failure down the road, threatening the staffing company’s all-important ability to meet payroll.

If your current relationship with a payroll funding company leaves you with some question marks, don’t feel trapped – take action now! Assessing your funding options and laying the groundwork to switch lenders quickly and seamlessly if the need arises, could pay dividends down the road.

Don’t Wait Until the Last Minute to Put Plans in Motion

The strongest defense against a funding failure is to take pre-emptive action. Having an alternate lender in the wings is not just smart for staffing companies – there are times when it can be a business necessity. Even if you aren’t reacting to red flags with your current financial provider, conducting research well before renewing an existing funding contract is well advised. The earlier you start, the more protection you have. If a transition is needed, pre-planning will facilitate a more effortless changeover without funding gaps.

Staffing companies should start speaking with payroll funding companies about six months from their current contract renewal date,” says Busbee. “Interviewing different payroll funding companies may confirm that, except for some minor issues, your current partner is doing an excellent job for you, giving you peace of mind. On the other hand, it may introduce you to a new payroll funding company that can meet your needs significantly better, setting you up for a more successful future.

The application process typically costs nothing – so as soon as you have a short list of potential partners, start applying for funding. Once approved, you can make your final decision and move forward. If your current provider answers any concerns that you currently have and demonstrates the capacity to meet your future needs, then not rocking the boat may be your best solution. If not, then you now have options that are ready to go. Generally, a switch occurs when a current contract expires. Still, if the comparison with other lenders uncovers issues that you have been ignoring, it may be worth breaking the contract early and switching providers immediately to ensure reliable payroll funding.

If switching to a new lender is warranted, your pre-emptive diligence will help ensure you have selected a new financial partner who can help you quickly address any changeover hiccups. A smooth transition will provide confidence in your new lender and validate your decision to switch payroll funding companies.

Conclusion

Meeting payroll every week is one of the essential functions of a staffing company – worrying about whether funding will happen is not. Take the time to assess your current payroll funding company and become familiar with the alternatives to help protect your business, workers, and clients from the high consequences of payroll disruptions.

You can check many boxes with the right payroll funding company in place,” says Busbee. “You’ll have the capital you need to grow, a back-office team that understands your business, and have the financial flexibility to manage additional capital needs – perhaps you’re looking to acquire a company. An innovative, tech-enabled lender rooted in staffing industry experience is the ideal financial partner for staffing companies. Backed by a trusted lender of this caliber, you can run your business as you see fit and not worry about weekly funding or growth financing.

The ability to meet clients’ payroll on time and accurately is a significant contributor to the success of your staffing company. Never take your lender’s quality of service for granted. Continuously monitor your lender to ensure timely, accurate funding and the ability to meet future capital needs. Meanwhile, investigate alternative funding sources and be prepared to pivot quickly and seamlessly to a more reliable funding source if and when needed.

About eCapital

eCapital understands the extreme importance of meeting payroll. Since 2006, our organization has been a trusted financial partner for thousands of staffing companies in all stages of development. Leveraging advanced technology to ensure fast, easy onboarding of new clients, our experienced team facilitates an easy transition to our simple processes and uninterrupted funding. Our customer base continues to grow as eCapital’s reputation for dedicated service and forward-thinking solutions to even the most complex situations endure.

For more information about how our payroll funding solutions and industry expertise supports staffing companies through all stages of development, visit eCapital.com

 


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