The Structure
How a $280K Staffing Payroll Funding Facility Is Structured
There is no capital stack here, and there does not need to be one. A staffing agency's balance sheet problem is a single, specific gap: payroll goes out weekly, client invoices come back on net-60, and the faster the agency grows the wider that gap opens. The receivable is the asset. Financing it directly is the whole structure.
The agency was not short on money. It was short on money it had already earned
Representative structure
Larger facilities scale with receivables volume, client credit quality, and revenue.
The Transaction
What the Agency Was Carrying
Bobby Friel
Founder, Basecamp Funding
Every staffing owner knows this arithmetic, and most of them are living inside it right now.
A staffing agency was covering payroll every week while its commercial clients paid on net-60. Factoring its outstanding receivables turned $280K of those unpaid invoices into immediate cash — funded in 3 days, with no interruption to a single placement.
Underwriting
How Payroll Funding for Staffing Companies Actually Works
A bank underwrites the staffing agency. Payroll funding underwrites the agency's clients — and that inversion is why a growing agency can be denied by a bank while its receivables are perfectly financeable.
The Bank
What a bank sees.
A service business with no inventory, no equipment, no real estate, and payroll obligations that exceed its cash position every single week. Nothing to secure a loan against, and a balance sheet that looks worse the faster the agency grows.
This Structure
What this structure saw.
$280K of invoices owed by creditworthy commercial clients for work already performed and already delivered. The asset was never missing — it was just sixty days out.
Why Growing Makes a Staffing Agency's Cash Position Worse
This is the part that surprises owners the first time it happens. Win a large placement order and payroll rises immediately — new consultants get paid on the next cycle regardless of when the client pays. Revenue rises too, but sixty days later. The gap between those two events scales with growth, which means the better the agency performs, the more cash it needs and the less it has. A bank reading that balance sheet sees deterioration. An operator sees a full pipeline. Both are looking at the same numbers.
Payroll Factoring vs. a Line of Credit
A line of credit is approved at a fixed amount against the agency's own financials, and that amount stops growing the moment the credit box is full. A/R financing scales with the receivables themselves — place more consultants, invoice more, and the facility grows with the invoices rather than capping at whatever a committee approved last year. For a business whose funding need is directly proportional to its success, that difference decides whether growth is fundable or self-limiting.
Whose Credit Actually Gets Underwritten
The question that changes most staffing files: the facility is underwritten primarily against the credit quality of the companies that owe the invoices, not the agency holding them. A young agency placing consultants at established commercial clients is financing strong receivables regardless of how thin its own operating history reads. That is the opposite of how a bank approaches it, and it is why agencies that have been declined for a term loan are routinely fundable here.
Why Three Days Matters More Than the Rate
Payroll has a date. It does not move, it does not negotiate, and missing it once costs an agency consultants it spent months recruiting. A funding decision that takes three weeks is not a slower version of one that takes three days — it is a different outcome entirely, because the payroll run it was meant to cover has already happened. Speed is not a convenience in this business. It is the product.
What It Costs to Solve This the Wrong Way
The alternatives operators reach for first are more expensive than they look. Slowing hiring caps revenue at the exact moment demand is available. Paying consultants late costs recruits and reputation in a market where both are hard to rebuild. And a merchant cash advance against a service business with no card volume is a structure that does not fit the cash flow it is repaid from. Financing the receivable is the option that matches the shape of the problem.
The Products
The Products That Funded This Transaction
| Product | Role here |
|---|---|
| Accounts Receivable Financing → | Outstanding client invoices converted to cash |
| Working Capital → | The widening gap as placement volume grows |
The Result
What Changed After Close
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Related
Similar Structures
Representative scenarios — illustrative, anonymized figures, not specific client transactions.
FAQ
Payroll Funding for Staffing Companies — Questions, Answered
How do staffing agencies fund payroll when clients pay net-60?
By financing the receivable instead of waiting on it. A payroll funding or A/R facility advances against invoices for work already performed and delivered, which converts a sixty-day wait into cash within days. The agency covers its payroll cycle on schedule, and the facility is repaid when the client pays on its own terms. Nothing about the client relationship changes.
What is payroll factoring and how is it different from a loan?
Payroll factoring advances cash against outstanding invoices rather than lending against the agency's balance sheet. That matters for a staffing business, because a service company has little a traditional lender can secure a loan against — no inventory, no equipment, no real estate. The invoices are the asset, and they are financeable on their own terms.
Do lenders look at my agency's credit or my clients' credit?
Primarily the clients'. The facility is underwritten against the credit quality of the companies that owe the invoices, because those are the businesses that will actually pay. A newer agency placing consultants at established commercial clients is financing strong receivables regardless of its own operating history — which is why agencies declined for a conventional term loan are frequently approved here.
Why does a growing staffing agency run out of cash?
Because payroll and revenue arrive on different schedules and the gap between them scales with growth. A large new placement order raises payroll on the next cycle and raises revenue sixty days later. The more the agency wins, the wider that window opens. It is a timing problem rather than a profitability problem, and financing the receivable is what closes it.
How fast can a staffing agency get funded against invoices?
Days rather than weeks when the file is ready. This facility funded in three. Payroll has a fixed date, so speed is the point — a funding decision that arrives after the payroll run it was meant to cover has not solved anything. What moves fastest is a clean invoice ledger, aging that reflects reality, and clients whose credit stands on its own.
Can a staffing agency use a line of credit instead?
It can, and for some agencies that is the right tool. The trade-off is ceiling: a line is approved at a fixed amount against the agency's financials and stops there. An A/R facility scales with the receivables, so it grows as placement volume grows. For an agency whose funding need rises in direct proportion to its success, that difference often decides whether growth is fundable at all.
