October 10, 2011 (Powerhomebiz.com) Even as the unemployment figures remain historically low, one of the industries that is growing in Australia is temporary staffing, which is also known as ther “labour hire” industry. This category continues to grow in Australia due to lifestyle choices. Most Australians these days prefer not to be locked into a full-time job. Temporary staffing enables greater flexibility so that they may pursue other interests. And one added bonus: select contractors know they can make in nine months what they might earn in a full year under a permanent employment contract.
Labour hire companies have targeted the hot spots in the Australian economy, such asoil, gas and mining, and often the contractors only wish to travel to the remote areas where these contracts exist. They are helping these companies bring on the staff required to complete projects that have started to fall behind.
One of the biggest challenges facing these labour hire companies is in the cash flow management of contracts. The contractors expect to be paid fortnightly or weekly, whilst the labour hire company will only be paid by the customer in thirty or sometimes even sixty days. There is a need to bridge this cash flow gap. Factoring companies who can use the invoices as a source of security to provide the line of credit that frees up cash flow to pay the contractors so that they can keep generating income for themselves and the labour hire firm for which they work.
Factoring companies are great supporters of the labour hire industry because it is very solid risk. Most temporary workers will have a daily timesheet that is signed by the contracting company each day (or week). This becomes a very solid proof that the work was delivered as per the invoice and is therefore very unlikely that it will not ultimately be paid by the contracting company.
The labour hire company can provide the invoices and timesheets that support the hours/days worked to the factoring company. Factoring companies will then verify with the contracting company that the work has in fact been delivered to their satisfaction and then will advance a percentage (up to 90 percent) of the invoice to the labour hire company. These funds can then be paid to the contractors which keeps them happy and productive.
At thetime when the invoice is due for payment, the customer will pay the invoice directly to the factoring company who will then do a calculation of the fee based on the number of days that the invoice was outstanding. The factoring company retains the fee and then returns the remainder of the invoice back to the labour hire company .
For more information about factoring companies serving the labour hire industry, simply go online and search for “factoirng companies in Australia.”
About the Author:
Kristin Gabriel works with The Interface Financial Group, a company providing short-term financial resources including construction factoring and serves clients. IFG offers expertise in factoring, accounting, financing, law, marketing and banking. http://www.ifgnetwork.com