Staffing has a structural cash problem that no amount of careful bookkeeping fixes: your temps are paid weekly — biweekly at most — while your clients pay invoices on net-30, net-45 or net-60 terms (Advance Partners; Bay Street Lending; Ascen). Every week of growth makes the hole deeper before it makes you richer. Factoring — sold to this industry as payroll funding, the same product under its staffing name — converts each week’s billing into cash the same week. This page does the arithmetic nobody else shows: what the gap actually costs in float, and what factoring takes out of each invoice to close it.
General information, not financial advice. The dollar example below is an illustration built from the sourced payment cycles; rates and advances are attributed ranges from the named sources, and vendor-published figures are labelled as that vendor’s own terms.
Run one steady week of business. Your agency bills $40,000 a week in payroll, and your clients pay on net-45 terms. Payday comes every Friday; client money arrives a month and a half behind it. Before the first client payment lands, you have funded roughly six to seven weekly payrolls — about $260,000 out of your own pocket — and even at steady state that float never comes back while you operate; growth stretches it further with every new placement.
Now factor each week’s invoice instead, at a 90% advance and a 2% per-30-days fee, with the client paying on day 45:
Model your own numbers in the invoice factoring calculator using staffing defaults: weekly invoices, an advance around 90%, and your clients’ real payment days.
The gap also explains why growing agencies feel poorer than shrinking ones. Every new placement adds billings immediately but adds cash only after the client’s first payment cycle completes — so each win widens the float before it contributes a dollar. Double the book in the example above and the unfunded float roughly doubles with it, to around half a million dollars, before the payment rhythm catches up. Factoring breaks the trap’s mechanism rather than its symptom: the float never forms, so growth is funded by the new client’s own invoices from the first week, at the fee percentage instead of out of reserves.
Staffing factoring runs on a weekly cycle that mirrors payroll:
Notification is standard in staffing (Ascen): your clients are told to pay the factor, and most established clients have seen the arrangement before. Treat any “your clients will never know” pitch for this industry with suspicion — the choosing guide explains what non-notification usually costs.
The product definition itself is on the invoice financing hub and in what is invoice factoring; this page owns only the staffing arithmetic.
What is payroll funding for a staffing agency? It is the staffing industry’s name for invoice factoring: you sell each week’s client invoices to a factor and receive an advance against them in time to meet payroll, instead of waiting out net-30 to net-60 client terms. Providers like Advance Partners use “payroll funding” and “factoring” interchangeably for the same product.
How does factoring help a staffing agency make payroll? It collapses the timing gap. Rather than funding six or seven weekly payrolls — roughly $260,000 of float on $40,000 a week billed at net-45 — before client payments reach a rhythm, you convert each approved-timesheet invoice into about 80–95% of its value the same week, and the float never builds.
How much does staffing factoring cost? Quoted fees run 1–5% of invoice value per 30-day period (Universal Funding; Ascen), so a client who pays at day 45 costs about 1.5 periods of fee. Advance Partners publishes 1–3% as its own rate. On the worked example above, a 2% rate at day 45 costs $1,200 on a $40,000 invoice — 3.00% of face.
Will my clients know I’m factoring? Almost certainly, yes. Notification is the standard structure in staffing: clients are instructed to pay the factor, commonly into a monitored lockbox (Ascen; Advance Partners). Most established clients have paid factors for other agencies before; the practical risk to manage is administrative, not reputational — make sure remittance instructions are right the first time.
General information, not financial advice. Sources: Advance Partners (payment cycles; lockbox; published advance and rate terms — vendor figures); Bay Street Lending (staffing working-capital guide); Ascen (staffing factoring explainer; notification; guarantees and UCC liens); Universal Funding (fee range); FundingCompass (advance range; software integrations). Currency verified 2026-10-23.