Most entrepreneurs who decide to open a healthcare staffing agency know their industry well, and they have a drive to succeed. However, when it comes to managing cash flow, some agency owners often come up short. Luckily, entrepreneurs who have a hard time managing payments coming in and payments going out (i.e. payroll, payroll taxes) could really benefit from using with a healthcare staffing payroll factor.
Now there are hundreds of healthcare staffing payroll financing companies out there competing for your staffing agency’s business, each with their own set of claims and promises to help your company become financially sound. With so many different choices out there, what’s the best way to narrow down the playing field? Start with what NOT to do first.
Below are the three most common mistakes agency owners tend to make when trying to find a payroll factor. Read them. Memorize them, and then don’t make them.
Mistake #1: Not Understanding the Healthcare Staffing Payroll Factoring Process
How can you compare payroll factors if you have no idea what factoring really is?
The basic day-to-day process of healthcare staffing payroll factoring is this:
- You staff healthcare workers.
- If it’s a new customer, the healthcare staffing payroll factor will check the customer’s credit prior to purchasing an invoice.
- If it’s a pre-approved customer, the healthcare staffing payroll factor will verify the invoices.
- The healthcare staffing payroll factor initiates funds.
- Your customer pays the payroll factor for the purchased invoices.
- The healthcare staffing payroll factor releases the reserve minus the factoring fees back to you.
Mistake #2: Thinking That All Staffing Payroll Factors Are Created Equal
There are literally thousands of healthcare staffing payroll factors out there, ready and willing to take on new business. Make sure you find one that knows the healthcare staffing business, and try to find one that is accustomed to working with companies similar in size to yours.
There is a big difference between working with a one-stop-shop payroll factor that services all types of industries and working with a payroll factor that exclusively factors the receivables of healthcare staffing agencies. So be sure to inquire about monthly minimums and/or maximums prior to signing on the dotted line to avoid any frustration on down the road.
Mistake #3: Not Asking the Right Questions about Healthcare Staffing Factoring Fees
The first question most agency owners ask a potential factor is “How much does healthcare staffing payroll factoring cost?” Although asking about the factoring fees is important, it’s just as important to understand how often the fee is charged.
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 healthcare staffing payroll factoring cost if my invoices are typically paid in X amount of days?”
It’s no question that healthcare staffing payroll financing has many benefits for agency owners, as it’s a great way for them to even out their cash flow. However, before making a commitment to work with a payroll factor, a business owner needs to take some time to research multiple factoring programs so he/she can be sure that they’re choosing the right one.