Which clients are worth the float
The monthly close tells you the spread each client pays; the CFO question is what each client costs to carry. Serving an account means funding its assignment payroll for weeks before its money arrives, so every client gets scored twice in our pack: margin after full burden, and the slice of your credit line the account keeps occupied. A thin-margin client on 60-day terms can tie up more cash than three good ones combined, and until both numbers sit on one page, nobody notices.
That page drives quiet, specific decisions. Shorter terms traded for a small rate concession. A credit cap on the account that keeps drifting. One client moved to weekly invoicing. Occasionally, an account handed back to the market because the desk earns more redeploying those workers elsewhere. This is the standing agenda of our Fractional CFO engagement for staffing firms.
Growth is a cash event before it is a profit event
The temp desk's working-capital math is unforgiving: pay and remittances go out weekly, receipts land 30 to 60 days behind the work. Call the lag six weeks, and the desk permanently carries about six weeks of fully loaded payroll as receivables it has already funded. Every new placement adds its own funded weeks before its first collection, which is how a profitable agency runs out of cash in its best year: the growth itself is what consumes the money.
We keep two numbers standing against that. A rolling 13-week cash forecast lines up every payroll Friday, remittance date and expected receipt, so a client whose payments start slipping shows up as a threatened payroll weeks ahead. And a growth ceiling states the assignment headcount the current facility can fund, so a big contract win triggers a financing conversation, not a scramble.
Line of credit or factoring, decided on numbers
Both facilities bridge the same gap, and staffing receivables are collateral both markets understand. They differ in price, in how they grow, and in what the lender examines.
| Bank operating line | Invoice factoring | |
|---|---|---|
| Cost | Interest on what you draw; usually the cheaper money | A fee on every invoice; the dearer money |
| How the limit grows | Renegotiated with the bank, against covenants | Automatically, with the invoices you issue |
| What gets examined | Your statements, aging and client concentration | Your clients' credit more than yours |
| Ongoing load | Monthly borrowing-base and covenant reporting | Invoice-by-invoice submission; clients pay the factor |
| Fits when | Seasoned statements and a steady book | Fast growth, a young agency, concentrated clients |
A common path is factoring first, then refinancing to a bank line once the statements can carry covenants, so the cost of money falls as the book matures. Banks price the file on reliable interims and often ask for CPA-prepared statements, which is the job of Compilation and Review Engagements. The negotiation itself is familiar ground here: Walla Assaf came to public practice from banking and corporate finance, and our Business Financing Advisory work builds the lender package around the client-margin and aging reports a credit committee actually reads.
EHT and WSIB belong in the bill rate, not in the year-end surprise
A temp bill rate is built from the pay rate up, and two Ontario costs go missing most often. Once the exemption is exhausted, Employer Health Tax takes 1.95 cents of every additional payroll dollar, yet rate cards written back when the exemption still absorbed it have a way of surviving unchanged for years. WSIB runs the other direction: your premium follows the classification of each client's business, so one blended markup overprices office placements and quietly subsidizes industrial ones, and the market makes sure you win the work that loses money.
The fix is a rate build per client class: pay rate, the statutory loadings the books already accrue on every hour, WSIB at that client's rate, EHT at the margin, then the spread you actually intend to keep. We re-run the rate cards every January, because CPP ceilings, EI premiums and WSIB class rates all reset then, and a January billing December's rates is a silent pay cut for the agency across its entire book.
A weekly business gets a weekly cadence
The engagement matches the rhythm the desk already keeps: a short weekly cash flash against the forecast, and a monthly working session covering the client-margin pack, facility headroom and the rate cards. It runs on whatever books exist, though it is fastest where End-to-End Accounting already produces the desk-level numbers weekly. For agencies in Mississauga and across the GTA we scope the work in writing after a free 15-minute discovery call; most start heavier while the facility and the forecast get built, then settle into the monthly rhythm.
