Invoice Factoring for Staffing Companies: What Is it and How Does it Work?

Last Updated October 9, 2025

Staffing agencies often depend on prompt client payments to meet payroll obligations. If invoice payments are drawn out or not paid on-time, it can have far-reaching impacts on cash flow and operations. For this reason, many agency owners turn to staffing invoice factoring.

If you’re not an experienced business owner, you might not have heard of invoice factoring. But staffing for factoring companies is a financing solution that you should be familiar with if you want to optimize cash flow and working capital.

In this article, we will discuss how staffing factoring works, more of its benefits, and why so many staffing agency owners choose to utilize this financing solution.

What Is Invoice Factoring for Staffing Companies?

Invoice factoring for staffing companies (frequently referred to as payroll funding) is a process in which your business sells its unpaid invoices to a factoring company in exchange for a cash advance.

The staffing factoring process is relatively simple and can be achieved in essentially five easy steps.

1. A staffing agency signs a factoring contract with a third-party invoice factoring company, who agrees to buy their unpaid client invoices at a discounted rate.
2. Moving forward, debtors are to submit invoice payment to the factoring company, who assumes collection responsibilities for these invoices.
3. Once the staffing agency invoices a client, that invoice is also sent to the factor. The factor then immediately advances 80-90% of the value of the invoice to the staffing agency (typically within 24 hours).
4. The client submits payment to the factor when they are ready to pay.
5. The factor releases the remaining value of the invoice (10-20%) to the staffing agency, minus the small factoring fees.

Just like that, the factoring process has helped the staffing agency immediately improve working capital (thanks to the cash advance) while also helping create a more predictable cash flow.

Staffing Businesses We Fund and Finance

altLINE’s staffing factoring services provide cash advances to various businesses in the sector. Here are some examples of staffing industries we serve:

• Light industrial staffing
• Administrative staffing
• IT staffing
• Security staffing
• Nurse staffing
• Healthcare and medical staffing
• Teacher staffing
• Temp agencies
• Temp-to-hire agencies

If you don’t see your industry on this list, there’s still a chance you could qualify for staffing factoring with altLINE.

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Staffing Factoring Rates and Fees

Even the top factoring companies for staffing agencies will charge invoice factoring fees on every invoice submitted, though fees vary based on how much you plan to factor, the creditworthiness of your customers, and how long your clients take to pay. Factoring larger amounts and getting customers to pay faster usually gives you lower rates. Factoring companies may also consider other criteria like your years in business, customer base diversity, and again, overall customer credit quality.

Most staffing factoring companies like altLINE charge two fees:

• Initial fee: This fee pays for your invoice processing expenses for a set duration (usually the first 30 days).
• Incremental fees: These periodic fees cover all processing expenses past the initial time period. These fees are typically tiered and increase the longer your invoices are outstanding.

In total, these staffing agency factoring fees will add up to anywhere from 1-5% of the face value of each invoice you factor. Exact figures depend on a few elements, such as:

• Customer credit score and payment habits
• Amount of your ledger you plan to factor
• Age of your business

Generally, the better your customers’ payment habits are, the lower the fees will be. Additionally, the more of your ledger you plan to factor, the better chance you’ll have of fees being slightly reduced.

Why Work With altLINE?

altLINE is a top-rated factoring provider with significant expertise in the staffing industry. Additionally, altLINE is a branch of the Southern Bank Company, meaning it is federally regulated and offers greater transparency than independent factoring companies. See the full list of benefits of working with altLINE below:

• A+ rated by the BBB
• A team of staffing industry experts
• 88 years of experience serving customers
• Transparent rates
• Direct bank funding, resulting in some of the lowest rates in the market
• An FDIC regulated lender
• Work with an onboarding specialist for a smooth transition to factoring
• You receive a dedicated account manager who supports all of your funding needs
• Confidence in the marketplace by working with a bank
• Customized staffing factoring solutions to best meet your needs
• Flexible and quick invoice factoring options

If you are interested in learning more about how altLINE’s staffing agency invoice factoring services can help you access the funding you need, please give us a call at +1 (205) 607-0811 or fill out our factoring quote form. Our representatives would be happy to speak with you about our lending program and how we can help you grow.

Benefits of Invoice Factoring for Staffing Agencies

To run a successful staffing agency, you need to have reliable capital to make payroll, take on new contracts, and pay operating costs, such as rent and marketing expenses. Staffing factoring can help you meet these financial obligations and grow your company.

Factoring your invoices with altLINE gives you the following benefits:

Get Your Invoices Paid in Days, Not Months

When partnering with a staffing agency factoring company like altLINE, you can get paid in a matter of days, rather than weeks. In fact, once you are set up in altLINE’s system, you can receive same-day funding, allowing you to access cash much faster, so you don’t have to wait 30, 45, or even 60 days to get paid for your staffing and temp agency services.

Access Capital to Grow While Maintaining Equity

Sometimes, startup staffing companies are forced to miss growth opportunities because they do not have the funds to pursue them and do not want to sell equity to receive these funds. However, invoice factoring can set them up for long-term success – factoring your staffing company’s invoices provides the quick cash needed to take on new clients, pay debts, and make payroll without sacrificing equity.

Take the Guesswork Out of Payments

Long invoice payment terms can make you feel uncertain about when your next customer payment will come in. Even worse, overdue invoices and delinquent customers can hurt your company’s finances, making it difficult to grow your staffing startup. Factoring invoices can soften the blow of uncertain and late payments for staffing agencies, making your finances healthier and more predictable.

Get Back Office Support

When you work with a staffing factoring company, you don’t just receive fast funding – you also get help collecting invoice payments. When you work with altLINE in particular, you will receive a dedicated account manager who will help you collect unpaid invoice payments from customers, giving you more time to focus on running your business.

Customer Credit Checks

Here at altLINE, we perform credit checks on your customers before we factor their invoices, meaning you can be more confident in doing business with new customers.

While a customer credit check isn’t the purpose of factoring – it’s simply a safeguarding measure for the factoring company to reduce risk – some of altLINE’s customers have actually noted that this is actually one of its most beneficial perks.

Unlock Scalable Growth Financing

One of the many benefits of factoring for staffing agencies is that your funding grows with your business. As you take on more clients, you can factor more invoices, allowing you to access more working capital. Additionally, because factoring is not a loan, you do not have to worry about taking on more debt to fund your growing business.

See the full story of how altLINE helped Wellman’s Staffing.

Staffing Factoring FAQs

Here are some common questions about staffing for factoring companies, answered:

Do you need to run a credit check before getting started factoring for staffing agencies?

altLINE runs a credit and background check on all staff agency owners that apply for factoring. However, there are no minimum credit thresholds for approval. Background checks are reviewed for financial-related crimes or felonies. In the event a borrower has a spotty background, approval with altLINE may be in question, but in the event the borrower is disqualified, altLINE will often work with the borrower to identify a staff agency factor that is willing to help.

Do you require UCC filings when factoring staffing agency invoices?

Upon executing a term sheet, altLINE will file a UCC on the client’s business. This UCC filing allows altLINE to properly secure the collateral (i.e. the invoices) it plans to advance against when the factoring facility is in place. UCC filings are an integral part of any form of lending.

Is staffing agency factoring a debt or loan?

Staffing factoring is neither debt nor a loan. Invoice factoring is the sale of your invoices to a third party. The money advanced against these invoices will be repaid by your customers. However, altLINE is a recourse factor, so you may need to pay the cash advance back if your customer fails to pay their invoice.

Do you offer non-recourse staffing agency factoring?

altLINE only offers recourse factoring for staffing companies. While you must repay the cash advance if your customer fails to pay, recourse factoring structures often allow for factors to extend lower rates and larger credit limits on your clients, whereas non-recourse factoring rates and fees are higher due to the factor taking on full responsibility for unpaid invoices.

What are the best factoring companies for staffing agencies?

The best factoring companies for staffing agencies are generally those that are backed by a bank, rather than independent factoring companies with no bank affiliation. altLINE, a branch of The Southern Bank Co., is a top-rated factoring company that is FDIC-insured and state and federally regulated, providing staffing agency owners a sense of security.

Can I still work with altLINE if I have bad credit?

Yes! One of the many benefits of factoring with altLINE is that you can qualify for factoring even if you have bad credit or a personal bankruptcy. Here at altLINE, we put more emphasis on the creditworthiness of your customers, rather than your own credit history, making it easier to qualify for than traditional lending options, such as a loan or bank line of credit.

Jim Pendergast

Jim is the General Manager of altLINE by The Southern Bank. altLINE partners with lenders nationwide to provide invoice factoring and accounts receivable financing to their small and medium-sized business customers. altLINE is a direct bank lender and a division of The Southern Bank Company, a community bank originally founded in 1936.