Most entrepreneurs who decide to open a nurse staffing agency are well-versed in the industry, and they have the passion to succeed. However, when it comes to accounting, and in particular managing cash flow, temporary nurse staffing agency owners often stumble. Entrepreneurs who have a hard time balancing payments coming in with financial obligations going out (i.e. payroll, payroll taxes) should take advantage of working with a payroll factor.
Now there are hundreds of payroll factoring companies out there competing for your agency’s business, each with their own set of claims and promises to help you achieve your financial goals. With so many different choices out there, how could you possibly narrow down the playing field? Take it from me-It’s much easier to narrow down the selection if you avoid some of the most common mistakes that business owners make when choosing a payroll factor.
Below are the three most common mistakes to avoid when choosing a nurse staffing payroll factor along with a few straightforward tips to help you find a payroll factoring company that best suits your needs.
Mistake #1: Knowing Nothing about Nurse Staffing Payroll Factoring before Choosing a Funding Partner
Entering into a factoring relationship blindly is not an optimal way to start a long-lasting business relationship. Nurse staffing agency owners should take the time to learn a little about the payroll factoring process before committing to a contract.
The basic day-to-day process of nurse staffing payroll factoring is this:
- You staff nurses.
- If it’s a new customer, the nurse staffing payroll factor will check the facility’s credit prior to purchasing an invoice.
- If it’s a pre-approved customer, the nurse staffing payroll factor merely verifies the invoices.
- Within 24-48 hours, the nurse staffing payroll factor initiates funding.
- The facility pays the payroll factor for the purchased invoices.
- The nurse staffing payroll factor releases the reserve minus the factoring fees.
Mistake #2: Assuming All Nurse Staffing Payroll Factors Are the Same
There are thousands of payroll factors available that can take care of your staffing agency’s needs. However, there is a big difference between working with a one-stop-shop kind of payroll factor that services all types of industries and working with a payroll factor that exclusively factors the receivables of nurse staffing agencies.
In addition, the size of your nurse staffing agency comes into play when choosing the right payroll factor. For example, there are some payroll factors that won’t work with small agencies, and other payroll factors that are too small for a larger corporation. Just be sure to inquire about monthly minimums and/or maximums prior to signing on the dotted line.
Mistake #3: Choosing a Nurse Staffing Payroll Factor Based on the Lowest Factoring Fee
The first question most agency owners ask a potential factor is “How much does nurse staffing payroll factoring cost?” Although pricing is an important issue to research, you should never base your decision to work with a payroll factor solely on cost.
Temp nurse staffing payroll factors have all sorts of different pricing models, making it difficult to compare multiple companies to one another. Keep in mind that some payroll factors charge per month, some per week and some per day, so when comparing and contrasting fees, it’s very important that you know how long it takes for your invoices to get paid. Moreover, if you truly want the best value, the question you should be asking is “How much does nurse staffing payroll factoring cost if my invoices are typically paid in X amount of days?”
It’s no question that nurse staffing payroll funding has many benefits for agency owners, as it’s a great way for them to balance their cash flow. However, in order to avoid some of the more common mistakes when choosing a nurse staffing payroll factor, it’s important for agency owners to do some research to ensure they find the right factor for their company.