top of page
  • Writer's pictureNick Andriacchi

Contract Staffing - Is Your Company Ready to Reap the Rewards?

Updated: May 23, 2021

Returning to Normal

As a staffing community, we made a lot of adaptations in order to conduct business over the past year. But as of today, the light at the end of the tunnel is getting brighter in terms of returning to a more normal work environment.

With 8.1 million jobs available and over 7 million people still not back in the workforce, is your staffing company financially and operationally prepared to handle the higher payrolls and the processing time that comes with it?

The bottom line? Put your business in a position to succeed to its fullest potential.

Having experienced past recessions (and slowdowns) while working in the staffing industry (beginning with the early 1990’s), well-run independent staffing companies tend to weather these slowdowns much better than the established national chains. The characteristics of these surviving, thriving staffing companies are very similar. They all tend to have:

1. Low fixed overhead

2. Stable financing source

3. Ability to focus on contract placement

Keep fixed cost low

Let’s face it, when times are good companies tend to be looser with their budget dollars. Rewarding employees and increasing monetary awards are fine. After all, one way of retaining good employees is with monetary rewards. However, adding unnecessary fixed costs like non-revenue generating items (bloated internal staff, too many internal functions, overly luxurious office space etc.) becomes very problematic when the economy slows and profits shrink.

One recommendation is to swap fixed for variable costs whenever possible. Outsourcing payroll, billing and technology to a full-service funder (like my employer) is a great way to expand your business when the economy is good and a hedge against an economic downturn. Since the funding fee is variable based on labor billed, if billings decrease so does your cost. Cutting employees, benefits and perks is really difficult to do and lowers morale for those employees who still work at the firm. All of that can easily be avoided.

Stable Financing Source

Staffing companies need a financing source that will grow with them. Traditional lenders are not traditional for staffing companies that need capital quickly to fill orders. Banks typically do not offer large enough lines-of-credit. A funding company will give you an unlimited to opportunity to grow your business without any artificial caps on how much a staffing company can borrow.

And when the economy slows, traditional lenders become very reluctant to lend money to staffing companies. I have seen traditional lenders leave the staffing industry entirely during tougher economic times. Funders that are focused on the staffing industry stay in the market during any economic time – period.

Contract Placements as a Key Offering

Contract placements should be part of every staffing company’s offering no matter the economic cycle. Up until recently, both direct hire and contract placement were in very high demand and it is very tempting to focus more on direct hire because it is perceived as a “cleaner” placement. However, now that the economic future is a little uncertain, direct hire demand usually softens but demand for contract labor is stable. Plus, contract labor increases when the economy starts to fully recover.

The best way to thrive in today’s uncertain economy is by running mean and lean while growing the contract side of the business. These three steps also increase the value of your company when you decide the time is right to exit the business.

Don’t miss out on growing your business. We can provide unlimited payroll financing to grow your business and handle many of your back-office functions without you having to layout large amounts of cash.

If you are interested, please respond to this email to schedule a time to learn more. You won’t regret it

19 views0 comments

Recent Posts

See All


Post: Blog2_Post
bottom of page