The float, in one paragraph
A staffing agency that places temporary or contract workers becomes the employer of record for payroll. Wages, payroll taxes and workers' compensation insurance are due weekly. The agency invoices the client for the same hours, plus its margin, and the client pays on terms. The gap between paying workers and collecting from clients is the float, and the agency has to fund it from its own account.
Why growth makes it worse
| Placed workers | Weekly payroll (for illustration) | Cash tied up at 45-day terms |
|---|---|---|
| 20 | $15,000 | About $100,000 |
| 50 | $37,500 | About $250,000 |
| 100 | $75,000 | About $500,000 |
These are round numbers for illustration and are not our terms. They show that the cash an agency needs rises faster than its profit as it adds workers.
Types of agency, different pressures
- Light industrial and warehouse staffing has large headcount and tight margins.
- Office and administrative staffing places fewer workers at higher wages.
- Healthcare and technical staffing involves higher pay rates and credential checks.
- Event and hospitality staffing sees spikes around busy dates, with costs concentrated in a few days.
Costs that come before the placement
Recruiting, advertising, screening, background checks, onboarding and software all have to be paid before a worker bills a single hour. If a client cancels or delays a start, the agency has already paid for the search. Insurance costs rise with payroll, and an agency that adds a large client can see its premium deposit grow before the first invoice is paid.
One slow client changes the picture
Agencies often have a few large clients. If one pays late, the agency still has to meet payroll the same Friday. Many owners find that a single delayed payment is more disruptive than a slow month of sales. Having working capital in reserve lets the agency keep paying workers on time, which protects its reputation with the people it places.
A worked example, for illustration only
For illustration, an agency wins a contract to supply 40 workers for a seasonal ramp-up. Weekly payroll and taxes for the group come to $30,000, and the client pays 45 days after invoice. The agency funds about six to seven weeks of payroll, or roughly $190,000 to $210,000, before the first payment. Working capital lets the agency accept the contract in full. These figures are not our terms or a typical result.
How to apply
If a new contract means a bigger payroll than your account can carry, a funding decision based on your bank deposits can bridge it. The application takes about five minutes. We ask for roughly three months of business bank statements and use a soft credit pull; no tax returns are required. FICO 500 and above is considered, funding runs from $25,000 to $5,000,000, and money can arrive in as little as 24 hours. Sole proprietors can apply. Start your application.