Setting Yourself Up for Success
Choosing a funding partner is a crucial decision for any staffing company. The right lender can fuel your growth, provide stability during fluctuating cash flow cycles, and help you scale confidently. But the process of onboarding with a new funding partner can feel overwhelming if you’re not sure what to expect.
This guide walks you through the essential steps to ensure a smooth transition, from vetting potential lenders to preparing for onboarding. By following these steps, you can approach the process with confidence, knowing that you’re making an informed and strategic decision for your staffing business.
Step 1: Identifying the Right Funding Partner
Not all lenders are created equal, and the staffing industry has unique funding needs. Before you commit to a funding partner, ask the following questions to determine whether they’re the right fit for your business:
Questions to Ask a Prospective Lender
- Do you specialize in funding for staffing firms?
- The staffing industry has unique challenges, such as payroll timing and client payment delays. A lender with experience in staffing understands these nuances and can provide you with the appropriate financial solution.
- What types of financing solutions do you offer?
- Factoring, asset-based lending, and payroll funding each serve different needs. Ensure the lender provides a solution tailored to your business model and growth trajectory.
- What are the typical terms and conditions?
- Be clear on contract length, fees, advance rates, and recourse vs. non-recourse factoring options.
- How does your approval process work?
- Understanding the underwriting process helps set expectations on timeframes and required documentation.
- What support do you provide beyond funding?
- Some lenders offer advisory services, industry insights, or back-office support, which can be invaluable to growing staffing firms. Get clear on what other services you might need in addition to funding to properly match with the right lender.
Step 2: Preparing for the Review Process
Once you’ve chosen a lender, the next step is to prepare for a thorough review. Funding companies will require various financial and operational documents to assess your company’s creditworthiness and ensure a smooth funding process.
What Information Will a Lender Ask For?
Expect to provide the following:
- Financial Statements: Balance sheets, profit and loss statements, and cash flow reports for the last 12–24 months. These documents will be reviewed by the lender to ensure accuracy and assess financial stability.
- Accounts Receivable Aging Report: A breakdown of outstanding invoices and payment timelines.
- Client Contracts: Proof of customer relationships and payment terms.
- Business Entity Documents: Articles of incorporation, tax ID, and ownership structure.
- Bank Statements: Typically, the last three to six months of banking activity.
- Payroll and Tax Records: If seeking payroll funding, lenders will review employment tax filings.
- Operational Overview: Lenders may request details on your internal invoicing and collection processes to gauge your company’s financial discipline.
Step 3: Navigating the Due Diligence Process
Once your documents are submitted, the lender will conduct due diligence to assess your eligibility. Here’s what to expect:
Credit and Background Checks
Lenders will evaluate:
- Your company’s creditworthiness
- Payment history with clients
- Any outstanding tax liens or judgments
Client Verification
Some lenders may contact your clients to confirm payment terms and invoice verification. Being transparent with your customers about this process can help ensure a smooth transition.
Field Exam Requirement
Most lenders will conduct a field exam before finalizing the agreement. This process involves an in-depth review of your financial records, receivables, and operational processes to ensure compliance with the lender’s funding requirements. The field exam helps the lender validate the accuracy of financial data and assess the overall risk of the funding arrangement.
The field exam may also assess your accounts receivable management, invoice verification processes, and customer payment behavior. If any issues arise, the lender may suggest improvements to streamline funding operations.
Finalizing Agreements
Before signing any contract, carefully review:
- Advance rates and fees
- Funding timelines
- Termination clauses and penalties
- Customer payment handling (especially for factoring agreements)
- Ongoing reporting obligations
- Termination clauses of your current lender (if applicable)
Step 4: Setting Up Funding and First Transactions
Understanding the Funding Timeline
Depending on the lender, the initial funding can take anywhere from a few days to a few weeks. After the first transaction, funding turnaround times are typically faster—sometimes within 24 hours.
Building a Strong Relationship with Your Lender
A good funding partnership is more than just transactional. Maintaining an open line of communication with your lender helps you navigate challenges and take advantage of opportunities. Regular check-ins can also help address potential issues before they become roadblocks.
Ongoing Reporting and Compliance
To maintain access to funding, you’ll likely need to provide regular updates such as:
- Monthly financial statements
- Updated accounts receivable reports
- Any changes in client payment behavior
Additionally, some lenders may conduct periodic audits or follow-up field exams to ensure ongoing compliance with the funding agreement.
Conclusion: Making Funding Work for You
The right lender does more than collect and analyze information—they take the time to understand the unique story and goals of your business. By gaining a deep understanding of your operational model, growth trajectory, and industry challenges, they can structure a funding facility that not only meets your immediate needs but also anticipates future financial requirements, ensuring long-term stability and scalability.
Onboarding with a new funding partner does not need to be a stressful experience. By asking the right questions, preparing the necessary documentation, and understanding the process, you can position your staffing company for long-term financial stability.
Access Capital specializes in funding solutions tailored to staffing companies, ensuring a seamless onboarding process with expert guidance every step of the way. If you’re ready to explore a funding partnership that supports your business growth, contact us today.