New to the blogosphere I felt compelled to take one step back from my initial post and fill readers in on the basic fundamentals of my business (providing payroll funding w/ back office support) and factoring. In short, I am a former recruiter now in the business of providing financial and business processing support to staffing companies across the country. Lately when speaking to prospects in the initial stages of dialogue the person I’m speaking to will often confuse my services with that of a factoring company.

Factoring? A what? Didn't you study factors in high school math class? While this form of financing is unfamiliar to most folks, now that bank loans are hard to come by, factoring companies allow small business to get the funding they need based on their current accounts receivable. Factoring is a legitimate source of funds in hard times; it’s a huge business and, at a time when people can't get other types of lending, factors are skilled experts at lending against accounts receivables. Very simply what a factoring company does is- it buys company’s invoices at a discount and allows the company selling them their invoice to turn their invoices in to instant cash! Sounds good right? Well for a company that has no other option it just might be. However, the company at best is only getting 80%-90% of the invoice because the factor is keeping the balance of the invoice in reserve as a security. They remit the balance of the reserve minus their fee once the client pays. Often times the factoring company will reach out to the company’s clients to ensure they are valid to protect themselves against fraud. In the past two weeks I have heard two factoring companies advertising their services over the radio--which leads me to believe this will be a burgeoning industry in the tumultuous economic times to come-But is factoring the best option for a recruiting company?

The short answer is NO and it this leads us to the world of payroll funding w/ back office support. Payroll funding companies mechanically will provide the same service as a factor but they take it one step further. These services including advancing 100% of the invoices keeping only 1% of the invoice as a reserve not the 10%-20% of a factor-for a staffing agency owner this can mean covering or not covering your burden or even paying your internal staff payroll. In addition to providing a higher advance on each invoice this service also includes the processing weekly payroll, processing weekly billings, creating original invoices and submitting those invoices to the staffing clients on their behalf, preparation and submittal of payroll taxes as required, creating payroll checks, payroll journals, check registers, invoice previews, accounts receivables agings, gross profit reports, and preparation of year-end W-2’s.

Lastly, if you would like to discuss your current funding situation, you may contact Dan Stacy, Sterling Resource Funding Corp, at (516)-683-1434 or via email at

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Comment by Amber Powell on February 23, 2009 at 12:43pm
Hi Dan,

I know exactly how you feel and understand the services that you offer. My family owned business provides these services as well. Good luck to you in 2009


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