Businesses can fail for many reasons. Lack of capital and growing debt are common causes in general. Staffing and recruiting agencies face particular business challenges. Here are four key areas to watch for in this industry.
1. Not finding the right people
Staffing companies work to put “round pegs into round holes” and ensure that the right candidate is presented to the client for the right job. Their clients don’t want to have to waste their time and manpower looking for suitable recruits. If the staffing agency is not meeting this mandate and often missing the mark, it could be because:
- They have possibly not spread their net wide enough to begin with. Having more potential candidates means having a better chance of narrowing it down to the right one.
- They may not have ensured that the candidate is qualified or fits in with the corporate culture.. This includes matching their skills and their personality to the available position.
- Agencies have not ensured that references and qualifications are verified. Even people in very high positions have been known to embellish their accomplishments and conjure up references.
2. Lack of compliance with industry laws and regulations
A second reason staffing agencies can fail is through not keeping up and complying with the many laws and regulations that control the employment industry. Current employment and service agreements and policies relating to health and safety, workplace harassment, and other issues need to be reviewed by human resources attorneys.
3. Honesty is the best policy
Many staffing companies fail simply through lack of transparency. Telling prospective clients they can supply their every recruitment requirement when the proper candidates are not available to the agency, is not good business practice. Agencies should be honest about their expertise and candidate availability from the outset. This is how happy client/agency relationships are built.
4. Not paying employees on time
Many staffing agencies encounter cash flow challenges when their customers wait 30, 60 or even 90 days to pay. If they are not keeping up with payroll and are unable to pay their greatest asset, their own employees, on time, the company will fail.
What’s the answer for this last challenge?
Factoring. An invoice factoring company that specializes in cash flow solutions for staffing and recruitment agencies can pay them upfront on their invoices. Then they don’t have to wait to get paid for work that has been completed and can stay ahead of payroll. Factoring is a trusted way to have working capital when it’s needed, without borrowing or incurring debt.
Contact Interstate Capital for an instant factoring rate quote today.