Payroll Funding for Staffing Services - Types of Providers and Regional Considerations

There are three basic providers of payroll funding for temp agencies. When shopping for funding you need to be clear about which type of company you are talking with.

General Factoring Company -- A generalist in receivables funding, will fund staffing but is not a specialist in staffing. Because there is "purchase" of the invoices (rather than "assignment" of the invoices) and much more ability to control the collection of the invoices they may be able to fund much riskier account debtors.

Staffing Payroll Funding Specialist -- For staffing agency funding ONLY and therefore understands your business. Some of these companies will only do the funding when they provide payroll processing and back office support services. A few companies will do it either way. Staffing business consulting and added-value services are often included at no extra charge.

Employer-of-Record Payroll Funding Company -- Becomes the employer of record for your temps, picking up the workers compensation insurance for you while funding and providing payroll services. Of course, the price is higher for the bundled services. Only a very few of these companies will do the higher risk categories such as light industry. A number of them will do the lower risk categories such as IT and office professionals.

Funding Company Office Location

Region is a consideration for many payroll funding shoppers. All of the temp payroll funding companies and many factors will fund in any state. If you are in the Western half of the U.S., be aware that most payroll funding companies located in the east will turn off their phones at 5:00 eastern time and any service requests will have to wait until the next day.

One regional consideration is the venue of the funding contract. If something goes wrong, does the contract call for court or arbitration, and in what state? Some states are heavier on "business consumer" protection while other states tend to protect businesses (funding companies) located in their territory.