8-min read Feb 24, 2022

Managing Cash Flow By Hiring Staffing Agencies – There Is A Better Way

Managing Cash Flow By Hiring Staffing Agencies – There Is A Better Way

One of the benefits of staffing agencies are that businesses can scale quickly without overextending their payroll costs. In fact, many companies turn to temp agencies and staffing companies when they need to add more employees and manage cash flow issues at the same time. This is often a viable option, as temporary employment agencies grant businesses special repayment terms, enabling the business to delay payroll payments while still benefiting from a larger workforce. Since these workers are employed by the staffing agency, they always get paid on time — creating a potentially lucrative scenario for the workers, the staffing agency, and the business in need of more employees.

However, hiring a staffing agency comes with both benefits and drawbacks — especially if you are trying to manage poor cash flow. In today’s post, we will examine some of the most important pros and cons of using a staffing agency when managing cash flow issues. Additionally, we will examine how Payro Finance offers an alternative solution to cover your growing payroll expenses.

Pros Of Hiring Staffing Agencies To Manage Cash Flow

Cash flow issues can make it extremely difficult to scale your company at a healthy rate. Moreover, if you have already begun to take on new hires, you might be experiencing cash flow problems due to growth. Unfortunately, poor cash flow is not always an issue that you can solve with the output of a larger workforce. Even if you are driving more sales than ever, you may still have to deal with delayed payments or slow billing cycles.

For this reason, staffing agencies offer a reliable way to scale your business without experiencing a serious cash crunch. There are numerous reasons to hire a staffing agency to deal with poor cash flow, including:

When you are trying to juggle the growth of your business with cash flow problems, staffing agencies can give you some pretty enticing incentives to work together. In essence, staffing agencies offer your business delayed payment terms so that you will not have to begin making any payments for 30 days, 60 days, 90 days, or even longer. At the same time, you can benefit from new employees who are always being paid on time by the staffing agency. This gives you more time to reap the rewards of your new staff before you actually need to pay the bill.

One of the main issues with scaling a company is finding quality talent and integrating them into your organization in a timely fashion. By hiring a staffing agency, you literally outsource the entire process so that you can get new workers as soon as possible — without taking anything away from your working budget. The agency provides you with long-term staff, contract employees, and/or temporary workers who are ready to join your company within days. Alternatively, it could take weeks or even months to find the right candidates using your own internal hiring processes, wasting valuable resources and putting even more stress on your cash flow.

Whether you are looking for long-term additions to your team or temps to help with a fast project, staffing agencies give you the ability to pick and choose the kind of employee contracts you want. This is due to the fact that agencies generally have access to a much larger pool of talent than most other businesses do. Consequently, a staffing agency gives you the flexibility to hire based on your company’s specific needs and timeline. When you are dealing with poor cash flow, you’ll likely want to hire employees on a temporary basis (with fewer benefits), which may make it harder to find the right candidates. The flexible contracts provided through an agency eliminate this problem, allowing you to negotiate contract terms that do not overextend your available resources.

Staffing agencies greatly speed up the hiring process, but they can also help save you money at the onset. If you have to spend the time and money to scout, interview, and hire new employees on your own, it might take years to “break even” with the value they add to your organization. Needless to say, this can lead to a cash flow nightmare. Therefore, a staffing agency can save on the upfront costs of hiring new staff, giving you greater agency to manage your cash flow and invest in other parts of your business. In fact, this is one of the main reasons businesses choose to acquire employees through agencies; it simply helps save on hiring costs when your business needs new employees but lacks the cash to acquire them.

Cons Of Hiring Staffing Agencies To Manage Cash Flow

While there are certainly many reasons to consider hiring staffing agencies to manage your cash flow, there are also some issues to think about before making a final decision. In fact, while staffing agencies can save you some money upfront, they can also exacerbate your small business cash flow problems over time. It all comes down to your specific needs and budgetary considerations.

If you are in need of new employees and you don’t have time to go through the standard hiring process, staffing agencies may be one of your only options. However, hiring a staffing agency also comes with some financial drawbacks that often outweigh the benefits. So, let us take a look at a few of the most important cons of hiring staffing agencies to manage your cash flow:

As previously mentioned, hiring a staffing agency essentially means that you outsource your hiring. While this can take a huge weight off the shoulders of your business, it also means you have a lot less control over the hiring process. If a staffing agency provides lackluster results, you may end up having to find new employees on your own anyway — potentially doubling the costs of hiring. So, even though you want a staffing agency to help you free up cash, it could end up having the opposite effect.

Staffing agencies make money through built-in costs like salary markups and fees. You may not have to pay much (if anything) at the start, but these fees and interest will accrue over time. Additionally, you may have to pay more in salary markups than you would if you handled the hiring on your own. These salary markups can reach 30-40% of the salary. Consequently, hiring a staffing agency can lead to even more cash flow problems once it is time to pay them for their services.

When you give up control of your hiring process, you also have to make certain concessions when it comes to the employees and temporary workers you get. While some agencies may provide only the best staff, others may provide lackluster “talent.” Additionally, employees acquired from staffing agencies still have to be trained in the ways of your company. If you get underwhelming talent from your staffing agency, you may end up paying for it with excessive training costs. If you are already struggling to balance incoming and outgoing payments, extra training costs won’t do you any favors.

The Small Business Loan For Payroll Solution

Managing cash flow issues by hiring staffing agencies is an option — but it is not always the best option. You have to consider the long-term costs of staffing agencies and potentially underwhelming results. Staffing agencies can be extremely useful, but when it comes to managing cash flow, they are often a solution taken out of sheer desperation, as they rarely offer long-term financial stability.

Alternatively, payroll funding can be achieved for a fraction of the cost with a payroll financing company. When you apply for payroll financing, you essentially get one or more small business loans to cover payroll costs. This way, you can retain control of the hiring process, finding the best people to fit your company’s specific requirements. Moreover, the costs that come with payroll financing are far less than those you would pay with the fees, and marked-up salaries of staffing agencies. In short, you can greatly improve your cash flow while growing your business as you see fit.

This is why companies like Payro Finance offer a legitimate and cost-effective alternative to help your business manage cash flow and hiring simultaneously. With a low-cost repayment plan, you can ensure that your employees (new and old) always get paid on time. Not only will this keep your growing workforce happy, but it will also help you manage your bottom line.

We hope you found this guide on managing cash flow by hiring staffing agencies useful! If you are interested in learning more about the advantages of payroll funding, feel free to reach out to Payro Finance today!

Morris Reichman


Morris Reichman is the founder and CEO of Payro Finance. Former Vice President at Infinity Capital Funding an alternative finance company, Morris possesses a versatile background in the finance industry. Having spent 7+ years working across global macro operations and start up corporate finance Morris's expertise is in business accounting, risk management and investment analysis. Morris founded Payro Finance to support business owners and ensure their business continuity.

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