This post was written by Gregg Dourgarian, CEO of TempWorks, a provider of payroll funding services.
How do I know you are posting cash when the check arrives?
Funding companies make money by charging you interest on every day an invoice remains outstanding. If they get payment on an invoice but fail to post it against your account, they get to keep on charging you interest. How can you see when the check is actually received.
Is the relationship transparent to my clients?
You worked hard to create a high-trust relationship with your staffing client. How does it look if suddenly your invoice shows up with your funding company’s name on it?
Why do I have to commit for 12, 18, 24 months?
Your staffing clients can terminate your temps at any time. How fair is it that you can’t terminate your funding contract at any time as well?
Why do you charge 3% of invoicing instead of payroll?
Your grocer charges you by the pound for bananas – you don’t pay for the tree or roots do you? So why does your payroll funder charge based on invoice amount instead of the cost of your payroll being funded?
Are you affiliated with any entity that is in the staffing biz?
Is your payroll funder also a competitor?
{ 3 comments… read them below or add one }
Do you think these are questions that people ask? If so, what type of “sugar coated” answers do the funders give?
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Ricardo…they may not get asked often, but they are among the hardest ones to answer.
I’d give you the answer your looking for but i don’t want to get into a sales pitch here.
Like in all things it helps to have your agenda organized when you do a negotiation, and payroll funding is no different.
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Ricardo, I have answered these questions countless times in my 16 years of providing funding for staffing businesses. Funding companies do sugar-coat in the case of #1 and #5 particularly. Companies that do block pricing (say 1% every 10 days) are more inclined to leave collections mysterious. Look for a lender that has a per diem rate that kicks in after 30-45 days. Better to pay 1 day of interest than 10. Also, scanned copies of checks and communication with AP will help keep them honest. On #5, a little research should flesh out affiliations. I advise to never work with a staffing lender who is owned or owns a competing staffing business. And not just locally. Your portfolio of clients (including pay and bill rates) is there for the taking and for what? Surely there is an equally suitable lender without such ties. #2-#3 are normally policy driven and offer flexibilty, dependent on credit of both borrower and client. As for #3, I have heard that more times than I can count. The value of the collateral is the total invoice and has little to do with the payroll amount. Its a good question to ask, but since every funder does it the same way, it becomes a dead issue.
Jack Terrana
516-424-5500
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