Careerbuilder Survey

Careerbuilder polled 3,000 hiring managers regarding their hiring plans for the next 12 months. 23% plan to hire full-time, permanent employees in 2012, while 16% plan to cut back staff levels. These numbers are on par with 2011 predictions, but far ahead of the 2008 predictions, where just 14% of hiring managers predicted adding full time employees in the next year. Small businesses provide about half of the private-sector jobs in the US, and 16% of companies with 50 or fewer employees plan to bring on additional full-time staff in 2012. 20% of companies with fewer than 250 employees, and 21% of companies with less than 500 employees plan to add full time staff in 2012. According to Matt Ferguson, CEO of Careerbuilder, as the economy improves, workers will seek better job opportunities. It’s no longer taking a job to survive, it’s looking to improve upon employment opportunities for job seekers. Mr. Ferguson also noted that 62% of employers plan to ramp up efforts to keep their current employees by increasing compensation in 2012. Additionally, 38% of employers will provide workers with increased on-the-job training, in an effort to close the skills gap for employees.

What about Temp Jobs?

Those on a quest to find a new job this year may want to start by seeking a temporay position. According to a new survey conducted by the American Staffing Association and Careerbuilder, a full 36% of employers planned to hire contract and temporary workers in 2012. Until a full economic recovery takes place, employers are relying on temp/contract workers to support leaner staffs, and in many cases will transition those workers to permanent roles in the future. Richard Wahlquist, CEO of ASA states “candidates who accept temporary jobs will find good pay, flexibility, opportunities to change careers, valuable skills training and a bridge to permanent employment.” So what are the hot areas for temp employment in 2012? In Healthcare, the hot areas are Occupational or Physical Therapy, as well as Speech Language Pathology. For Industrial, it’s Mainteance technicians and Computer Numerical Control (CNC) machinists. For IT, the hot areas are Java and .NET Developers, as well as Network Engineers. For Office/Clerical, it’s Admin Assistants and Customer Service Reps. For Professional-Managerial, hot areas include Business Analysts and Marketing Assistants.

What Makes a Good Employer?

Employers have had the upper hand in the employment marketplace over the past several years. Now that the economy is experiencing recovery, the tables have turned towards favoring job seekers. Regardless of the situation, job seekers should consider the following when evaluating potential employers:

1) What is the working environment? Salary is an important factor when considering employment, but will you look forward to going to work everyday, and interacting with your fellow employees? If the workplace is stressful, or you may not fit into the culture of the company, then it shouldn’t matter how much compensation is being offered.

2) What are the company values? Aligning your values with the company’s can be a very important factor. Do you want to associate yourself with a company that has a less than stellar reputation in business? Are there deceitful practices that go on at the company? What is their rating with the BBB? In other words, would you feel comfortable going to work everyday and representing this company?

3) What about growth potential? Those with aspirations for climbing the corporate ladder may want to examine the opportunities during a job interview. What is the corporate structure, and what are the policies for promotion to the next level? If the potential employer is run by a number of family members, there may not be the potential for rising above a certain level in that organization. It’s fine if your aspirations are to remain in the current postition for an extended period, but it’s helpful to know these things before joining a new organization.

4) Job Security? Is this day and age, is there really ever true job security? Gone may be the days of hiring on with a company out of school, and staying with them until you receive a gold watch at retirement. There is a certain comfort in knowing that if you perform well at a postition, than unless the company falters, you will have a job. Ask questions about how long people have been with the organization, and about the plans for the company’s future. Things can change in a hurry, but it might be nice to know that employees tend to stay with an employer for an extended period of time.

Top 10 Places to Work in 2012

According to Glassdoor

1) Bain & Company

2) McKinsey & Company

3) Facebook

4) MITRE

5) Google

6) Careerbuilder

7) Slalom Consulting

8) REI

9) Trader Joe’s

10) Apple

About Prosperity Funding, Inc.

Prosperity Funding, a North Carolina based company, is a leading provider of payroll and working capital funding, exclusively for temporary and contract staffing companies in the US. Founded in 2006, Prosperity’s executive team has over 30 years of combined experience in the ownership and operations of temporary staffing and funding companies. Prosperity provides funding with or without back office business processing services.

Prosperity Funding, Inc. 308-D West Millbrook Rd, Suite 200, Raleigh, NC 27609

(919) 954-0232 (Corp HQ) (985) 641-8817 (Sales) www.prosperityfunding.com

Dale Busbee, VP Business Development dale@prosperityfunding.com

Prosperity Funding recently sent out a staffing industry survey to over 3,000 industry professionals, and we have tabulated the responses, and wanted to share our findings with you.  The survey was 10 questions surrounding company specialty areas, service areas, revenue and bill rates, biggest challenges in 2012, vendor expectations, and what one might change about the industry.  Approximately 200 staffing professionals responded, and we have given a sample of the open-ended responses at the bottom of the survey.  Please let us know your thoughts. 

Survey Results:

 1)  Of the respondents, 31% were from IT staffing, 10% Medical/Healthcare, 3% Admin/Clerical, 9% Light Industrial, and 45% “Other” Specialty areas.

 2)  19% place candidates locally, 44% Regionally, and 37% Statewide.

 3)  71% of the respondents reported increased revenue for their company in the last 12 months, while 13% reported decreased revenue, with 16% remaining about the same.

 4)  38% of the respondents reported increased client bill rates over the past 12 months, while 25% reported decreased bill rates, and 37% remained relatively the same.

 5) 66% of respondents reported increased gross profits over the last 12 months, while 19% reported lower gross profits, and 15% remained constant.

 6) Regarding 2012 business, 85% of respondents expected an increase in overall revenue, while 12% expected to maintain the same in sales, with only 3% predicting a decrease in revenue.

 7)  60% expect client bill rates to increase in 2012, 37% predict the same bill rates, and 3% expected decreased client bill rates.

 8)  When asked what was the #1 largest challenge to overcome in business for 2012, we received a variety of answers.  Some are listed here:

 · Working with internal recruiters who do not understand recruitment / talent   acquisition

 ·Finding the discipline to work diligently on the million job orders I have.

 ·Ability to invest in the growth of the business and keeping up with growth of rest of industry.

 ·finding the right candidates

 ·Expand client base. Companies are hesitant to outsource recruitment or utilize leased employees with slow economy.

 ·Filling the pipeline with quality, documented workers.

 ·survival

 ·Business for the past 3 years since 2008 has been relatively the same in the market place. I see this trend to continue for the next two years until the economy picks up by 2014.

 · finding good internal staff

 · Managing expenses such as insurance and advertising.

 · This we could talk about for hours. I think hiring and training new consultants in a very competitive market and keeping them will be the test to grow. Our company has been in this market for 33 years and still need to compete with international talent cutting rates on contract dollars. We still have client paying 30% but most are at 20%. So adding staff and looking to new markets to generate more will be the challenge.

 ·Labor shortages

 ·FIND NEW CLIENTS

 · Hiring internal employees

 ·finding good internal sales people.

 · Cash flow

 · Finding talented recruiters to hire and talented technology professionals to place.

 · corporate recruiters

 · Finding Talent

 · The uncertainty that is causing companies to hold back and stay in a wait-and-see mode.

 · Increase customer base

 · Internal growth

 · Finding the right talent to execute on our growth goals.

 · adding multiple employees

 9)  When asked what was the #1 expectation from a new vendor relationship, some of the responses were:

 · Stronger partnership and the exchange of information

 · Cooperative relationship with the hiring authority.

 · depends on product or service being purchased

 · we don’t use vendors

 · Understanding of business model

 · When Business Vendors wake up and make pricing market a little bit fair out here. Right now the attitude must change.

 · pricing in line with results

 · Pricing and service.

 · Better Service which will take a understanding of all the others mentioned here.

 · communication and service support coupled with competitive pricing

 · Quick payment

 · understanding their business model and what it will take for a candidate (new hire ) to be successful.

 · Understanding the business model

 · better rate and top of the line electronic services.

 · increased productivity

 10)  When asked if one could change ANYTHING about the industry as a whole, we received some very interesting answers:

 ·  Eliminate the internal recruiting arm in corporate America.

 · PR on why Bounty Job sites are a fraud.

 · number of competitors in my demand area

 · get rid of the idiots

 · The US governments allowance of the H1-B program, very disruptive to the industry and it negatively affects clients view of the industry as a whole, lowers rates paid by making skilled resources a commodity and saturates the industry with skilled and/or experienced resources causing higher unemployment of us labor.

 · Over-zealous compliance issues

 · get out of it

 · Being more upfront with the candidates out here. So many candidates are desperate for work, and some of my colleagues don’t take the common courtesy to tell them the company has look over them and to somebody else after they have had a face to face interview. That’s cruel and unusual punishment to the candidate.

 · increased integrity/ethics

 · Insurance companies do not understand it nor do their loss control people.

 · Stop the mass mailings of resumes and work with the hiring managers. Whatever happened to cycle plans, presentation to hiring manager, send out building the match and of course say what you need to say to who you need to say it to enough times. God I miss that!

 · The posers that compete on price only.

 · MORE POSITIVE NATIONAL MARKETPLACE AWARENESS OF THE VALUE OF USING A RECRUITING FIRM

 · That HR would be regulated by the Fed Govt. to have a minimum IQ. Wait, but that would mean the fed govt. would have to have a higher IQ than HR. oh well.

 · nothing.

 · commoditization of our services by VMSs and MSPs.

 · 7 day payment terms for all.

 · Get rid of the firms that undercut rates and throw paper/emails at clients.

 · More need for my services!

 · the interview process, it needs to be shortened

 · the professionalism or lack thereof.

 · Follower mentality. Most wait for the customer to come up with new ideas rather than bringing them to the customer.

 · Having more clients realize there is more than one way to skin a cat!

 · The potential on how Health Care Reform could affect our business.

 · The insensitivity/lack of common courtesy to candidates.

Carolyn Pearce uses a piece of equipment at the Lawrence Berkeley National Laboratory to study mineral samples from a nuclear reprocessing site. The data collected will be used for a better understanding of nuclear waste

By Jon Swartz, USA TODAY

The view from the Berkeley foothills offers breathtaking vistas of downtown San Francisco and the bay in between. But from this 200-acre parcel of eucalyptus and oak trees, you can also see the fuzzy outlines of the future.

From dozens of low-slung buildings and state-of-the art complexes, more than 2,700 scientists, researchers, faculty and students at the Lawrence Berkeley National Laboratory (LBL) are concocting the latest in renewable energy, nanomaterials and supercomputers.

LBL, one of 17 national laboratories, may be the most pre-eminent lab in a country built on the creation of the telephone, TV, microprocessor, nuclear power and the Internet. But tens of thousands of the brightest minds and deepest thinkers are tinkering and plotting at government-funded labs, tech companies, private incubators and, yes, garages, in the USA to come up with technology that will change the way Americans live, travel, communicate and are entertained.

It’s here, where LBL is working on creating artificial photosynthesis (fuel from sunlight), longer battery life for electric cars and nanotechnology that lets homes adjust internal temperatures based on the weather, among other things.

“The possibilities are limitless,” says invention legend Nolan Bushnell, founder of Atari and Chuck E. Cheese’s Pizza-Time Theater chain.

“This should be the best time ever for innovation in the U.S.,” says Curt Carlson, CEO of SRI International, a non-profit research institute. “We have an abundance of opportunity in energy, health care, IT, media ? all of which are all in transition.”

Yet, spurring even more innovation is at the heart of President Obama’s $447 billion jobs plan, and a major undercurrent in legislation for immigration and trademarks.

Political progressives bemoan the lack of infrastructure that Big Works, such as the race to the moon or the interstate highway system in the U.S., create, claiming that the Industrial Revolution and the American Century are in history’s rear-view mirror. Patent wars have stifled innovation for some tech firms, and a gasping economy has led to cutbacks in research and development at cash-strapped tech companies.

Despite America’s knack for ingenuity, the forces of change face some heavy crosswinds. A wheezing economy, a dearth of college engineering students, sagging high school math and science scores, and sinking research-and-development investments have heightened concerns about the USA’s ability to compete with rising powers China and India. By Goldman Sachs’ estimate, the Chinese economy will overtake the U.S. economy by 2027 and almost double its size by 2050.

The federal government’s support for R&D, as a share of the U.S. economy, has plummeted by nearly two-thirds since the 1960s, says Rep. Rush Holt, D-N.J., who has a doctoral degree in physics. The Congressional Research Service estimates the federal government provided $147 billion for R&D last year.

The push for more innovation is tightly intertwined with the digital economy and the country’s ability to produce jobs while maintaining a competitive edge in world markets, Holt and others say. “Without large-scale funding, you don’t get large telescopes, fusion-energy development and particle accelerators,” Holt says.

Nowhere is that more telling than NASA. The space shuttle Discovery flew its last mission, and two final shuttle missions planned for this year were scrubbed. NASA faces “major challenges,” space agency Inspector General Paul Martin told Congress in February.

The venture capital scene is much the same. After the 2000 dot-com meltdown, many venture capitalists now shy from early investments and insist on seeing commercial products before making later-stage investments. “Kind of discourages start-ups from pursuing bold ideas,” says Paul Pluschkell, CEO of Spigit, a crowd-sourcing firm.

Lopsided ratio

How can the U.S. maintain its edge, or keep pace, when India and China graduate nearly 1 million engineering students annually, compared with 120,000 in the U.S.?

“Attracting the talents of the best and brightest from other countries can help prospects for American workers, because in an innovation economy, jobs often beget jobs,” says Brad Smith, Microsoft executive vice president for legal and corporate affairs.

Many great minds in American innovation came from overseas. Immigrants such as Albert Einstein, who won a Nobel Prize; Alexander Graham Bell; Edward Teller, who invented the hydrogen bomb and was an early member of the Manhattan Project team; and the co-founders of Google, Yahoo and Tesla.

“The U.S. is the only country that has consistently attracted people with intellectual horsepower from around the world, and incorporated them,” says India-born Arun Majumdar, director of the Advanced Research Projects Agency for the Department of Energy. “If we don’t pursue that, we’re shooting ourselves in the foot.”

Globalization has put even greater pressure on lawmakers to ease restrictions for H1-B visas, which allow U.S. companies to hire foreign tech workers. The cap on such hires annually is 65,000, with an additional 20,000 for H-1Bs with advanced degrees.

“There is a global brain race, and the U.S. has been unilaterally disarming for years,” says Paul Saffo, a longtime technology forecaster and part-time professor at Stanford University.

“Why are we keeping the smartest people in the world out of the U.S.?” Carlson asks, pointing out that half of Silicon Valley CEOs came from outside the U.S. And 40% of founders of the Fortune 500 are immigrants or the children of immigrants.

Where’s Next Big Thing?

A festering innovation crisis is especially troubling in a country that became the world’s top superpower because it was at the center of so many paradigm-shifting creations.

“Technology is a key element of our international competitiveness,” says Justin Rattner, Intel’s chief technology officer. “Global markets will be fought over who has the best technology and who is driving innovation the fastest and the hardest.”

The idea men and women at Berkeley, Intel, Google, Facebook and elsewhere are a living testament that the USA is still a hotbed for innovation.

Many are loath to write off American ingenuity as dead. They argue it is alive and well. “We don’t have big tech monuments because the revolutions are getting smaller,” futurist Saffo says. “A new processor chip may cost $1 billion to build, but you may need a magnifying glass to see it.

“Seventy years ago, you had to drive to Hoover Dam to see a minor miracle,” Saffo says. “Now, you take your iPhone out of your pocket.”

Pocket miracles abound in tech labs from Berkeley to Boston, and in the minds of engineers and scientists. Expect these confections within the next few years:

?Batteries in electronic devices will get smaller, lighter and last 10 times longer than they do today. The range of electric cars will extend up to 300 miles from the current 100, based on research at LBL.

?A miniaturized version of Hewlett-Packard’s flexible displays will fit on the wrist pads of soldiers so they can view maps and field manuals. The devices would also act as GPS for missing or injured soldiers.

?Intel’s fireball, a stainless steel, baseball-size sphere, is being tested by firefighters in New York and Boston to determine the air quality of blazes and chemical spills. The sphere is shot into burning buildings to gauge what first responders can expect before they rush in.

?In five years, sensors in your phone, car, wallet and even your tweets will collect data that give scientists a real-time picture of your environment. A whole class of “citizen scientists” will emerge, using simple sensors that already exist to create massive data sets for research.

“The U.S. is still the cradle for innovation; most of it takes place here,” Secretary of Energy Stephen Chu says.

Solutions on the horizon

The hand-wringing about the Next Big Thing(s) extends to longing for major public works projects that would be next to impossible to build today, given the limitations of government and the public’s leery attitude about ambitious government projects, says PayPal co-founder Max Levchin and Facebook investor and board member Peter Thiel. “They would be considered crazy today,” says Thiel, an investor in Seasteading, which proposes to create permanent dwellings at sea. Thiel’s foundation recently announced that 20 entrepreneurs under 20 years old were awarded grants of $100,000 to help advance innovative scientific and technical ideas that can’t wait until college graduation.

Last month, the National Science Foundation created Innovation Corps, an incubator for 100 of its top teams of scientists to foster a “start-up culture.”

Non-profit ConvergeUS, which aims to tackle childhood education and reading proficiency, is spearheaded by Twitter co-founder Biz Stone and Rey Ramsey, CEO of TechNet, a bipartisan political organization. “We need to portray life in tech as rewarding and fun,” Stone says. “Young entrepreneurs have raised its visibility, but not enough.”

Paradigm-shifting technology is all around us, argues Bill Gross, who has helped start 100 tech companies in the past 30 years. He says the emergence of tablet computers, while hardly earth-shattering, is an extension of mobile devices that ? combined with cloud computing ? has fundamentally changed the way people consume content, learn and communicate.

“It is not as visible as putting a man on the moon, but just as significant,” Gross says.

In the 1960s and ’70s, a push for product quality in Japan put America at a competitive disadvantage, SRI’s Carlson says. But the U.S. adapted to the market and better trained its workforce.

The same applies to the current economic climate, Obama said. “The economy is more (digitally) linked, with more opportunity,” he said last month at a town hall meeting.

But unless America better trains its workforce, builds infrastructure, and invests in basic research and education, he said, it cannot effectively compete with China, India and others.

“This is not about winning some race but improving people’s quality of life,” Holt says, “as it has been throughout this country’s history.”

Copyright 2011 USA TODAY

To follow is an excerpt from the July 2011 Federal Beige Book, as summarized by Bruce Steinberg, a recognized consultant to the staffing industry.  The report focuses on the activities for the 12 districts in the US, with an emphasis on staffing trends.

A full report can be viewed on Bruce’s website at: http://www.brucesteinberg.net/Summation_July_2011_Fed_Beige_Book.htm

First District — Boston (CT, MA, ME, NH, RI & VT)

… Headcounts remain largely unchanged or up only slightly, except for advertising and consulting firms, which continue to hire. Outlooks are generally positive, but most contacts express concern about current and future negative effects of increased uncertainty, attributable in part to failure to resolve the U.S. debt ceiling dispute promptly and the associated unclear future course of federal expenditures and taxes.

Manufacturing and Related Services

… Hiring and investment at contacted firms continues to be limited because of uncertainty about demand and a desire to keep costs low. Manufacturers investing domestically say they are mainly spending to upgrade IT and related systems, although a couple of firms report relatively modest expenditures to slightly increase plant capacity. Employment at the vast majority of contacted firms is stagnant. Much of the ongoing hiring is to keep up with worker attrition, although a few firms are increasing their headcount slightly, with one company “finally” converting some of its temporary help to permanent employees.

Selected Business Services
… All advertising and consulting respondents have increased employment recently and plan to continue to do so in the near future, with most planned increases close to 5 percent. Several contacts note difficulty in finding qualified employees, which some firms say is constraining their sales growth.

Second District — New York (CT, NJ & NY)

The pace of activity in the Second District’s economy slowed somewhat since the last report. Business contacts across a variety of sectors indicate that activity has flattened out in recent weeks and that hiring has tapered off.

Other Business Activity
Reports from business contacts point to some leveling off in the labor market. A major New York City employment agency reports that recruitment activity has been steady but lackluster since Memorial Day. Hiring in the legal industry has continued to improve from very depressed levels, with large firms hiring once again. Financial sector hiring has been spotty. Still, the flow of applicants for office jobs has declined somewhat. More broadly, contacts in both the manufacturing sector and other industries report some tapering off in hiring activity since the last report, though employment levels are still expected to increase moderately over the second half of 2011.

Third District — Philadelphia (DE, PA & NJ)

Since the last Beige Book, Third District economic activity has continued to grow at a very slow rate. Overall, manufacturing growth has leveled off at a low rate since the last Beige Book. … Slight increases in activity were reported by service-sector firms, dampened somewhat by a hiring slump among customers. … Manufacturers forecast a modest rise in shipments and orders during the next six months. … Service-sector companies also expect continued slow growth.

Services
Reports from Third District service-sector firms were slightly positive overall, but firms described various challenges. A recurring theme was a recent slowdown in hiring, especially from small and medium-sized businesses. One staffing agency described “almost a stop to new [excludes replacement] hiring orders in the last three weeks.” Other firms cited projects delayed due to ongoing economic uncertainties, including government-related projects contingent on budget negotiations. The most positive firms recognized that the “easy year-over-year comps are over” in this recovery and that continued growth will be slow. Despite these challenges, most service-sector firms expect growth to be somewhat better over the next six months.

Prices and Wages
Since the previous Beige Book, the percent of manufacturers reporting increases in prices paid for inputs dropped from more than one-half to one-third. …Rising commodity prices continue to pressure retailers, service-sector firms, and home builders to pass through costs when they can and to lower the price-point of their offerings. There are a few reports of a little upward pressure on rents in selected local markets for apartments and some retail space. Meanwhile, there is little evidence of pressure on wages.

Fourth District — Cleveland (KY, OH, PA & WV)

Business activity in the Fourth District continued to expand at a modest pace, albeit at a slower rate since our last report. Manufacturers reported a slight rise in production and new orders, while freight transport volume continued to grow. …

Rising payrolls were mainly limited to the manufacturing and energy sectors. Staffing-firm representatives noted moderate growth in the number of new job openings, with vacancies concentrated in manufacturing and professional business services. Wage pressures are largely contained.

Fifth District — Richmond (MD, NC, SC, VA & WV)

Business activity in the Fifth District was unchanged or slightly improved in most sectors since our last assessment. In the service sector, retail activity on balance remained soft during the last month, while non-retail services firms reported flat or slightly increasing demand. … The manufacturing sector slowed over the last month, with several contacts citing softer demand. Finally, employment agencies specializing in temporary workers noted modest improvements in demand, with several adding that recent uncertainty about the direction of sales was causing their clients to postpone hiring full-time employees.

Services
Service sector activity was flat to slightly stronger in recent weeks. Revenues strengthened moderately, according to polled contacts, particularly in telecommunications. A number of builders and construction-related firms in the D.C. area also reported a pickup in business during the past month. Most contacts we surveyed at restaurants and hotels said revenues accelerated since the start of summer. However, advertising agencies indicated that business was flat, and healthcare services providers reported little change. Non-retail services providers’ prices rose at a slightly quicker pace over the last month, according to our recent survey.

Labor Markets
Fifth District labor market activity, especially among temporary employment agencies, improved slightly in recent weeks. Most contacts at temp agencies characterized demand as at least somewhat better in recent weeks, although a few agents cited weakness in demand for workers. However, virtually all agents indicated that demand was still stronger than a year ago. Several employment agents cited uncertainty about the economy as the primary factor behind hiring temporary help rather than full-time employees. For example, a Hagerstown agent said that many of his clients were still very uncertain about their future orders. As a result, they were using contingent labor more than they might if they felt that business volume would continue to increase. Increased demand for temporary workers was reported for a diverse set of skills, including light manufacturing assemblers, machine operators, forklift operators and quality inspectors. Respondents to our latest manufacturing survey indicated that employment demand, while fairly robust in June, was little changed in July. Retail hiring rose slightly, according to our recent survey, and hiring was little changed at non-retail services providers. A slight majority of both retail and non-retail respondents indicated that they were increasing wages.

Sixth District — Atlanta (AL, FL, GA, LA, MS & TN)

Sixth District business contacts described economic activity as little-changed in June through mid-July. … Manufacturing contacts indicated that production and new orders increased but at a slower pace than experienced earlier in the year. Credit availability for entrepreneurs and real estate developers remained tight, although loan availability for some commercial projects increased. Most business contacts indicated that their hiring plans remained modest.

Manufacturing and Transportation
Manufacturing contacts indicated that production and new orders increased, but at a slower pace than reported earlier in the year. Producers of healthcare equipment and electrical components in particular noted stronger orders, and a producer of freight trucks is significantly increasing output. Many manufacturers reported increased investment in technology equipment in efforts to increase efficiency.

Employment and Prices
Most business contacts indicated that their hiring plans remained modest. Uncertainty regarding future demand and the regulatory environment were the most commonly cited reasons for the muted hiring outlook. Of those that reported plans to increase employment, many pointed to having reached maximum productivity with existing staff. Staffing agency contacts continued to experience high demand for temporary or contract workers. According to reports, demand for qualified, higher skilled candidates is robust, especially in the technology sector. Most contacts said that they did not experience significant upward wage pressure, and characterized annual increases and bonuses as modest.
Seventh District — Chicago (IA, IL, IN, MI & WI)

Economic activity in the Seventh District continued to expand slowly in June and early July. Contacts expressed heightened uncertainty about the economic outlook given recent weaker-than-expected demand as well as the ongoing fiscal issues in the U.S. and Europe. …Manufacturing production continued to expand at a steady pace while construction remained flat.

Business Spending
Business spending also edged up from the previous reporting period. Inventory investment decreased, but expenditures for equipment and structures increased. Several manufacturers reported plans to expand capacity, with a number of projects set to break ground in the District this fall. Renovation of retail facilities picked up further. In addition, contacts reported an increase in spending on research and development. Hiring continued at a slow pace, with many manufacturers reiterating the difficulty in finding appropriately skilled workers. On balance, however, labor market conditions weakened, as a number of private and public sector layoffs were reported and unemployment ticked up in the District. Furthermore, a large staffing firm reported a decline in billable hours.

Eighth District — St. Louis (AR, KY, IL, IN, MO, MS & TN)

Economic activity in the Eighth District has continued to increase at a modest pace since our previous report. Manufacturing activity has continued to increase since the previous report. Activity in the services sector also has increased.

Manufacturing and Other Business Activity
Manufacturing activity has continued to increase since our previous report. Several manufacturers reported plans to open plants and expand operations in the near future, while a smaller number of contacts reported plans to close plants or reduce operations. Firms in the wood, organic dye, automobile parts, lime, and hygiene product manufacturing industries reported plans to expand operations and hire new workers. Furthermore, a major firm in the automobile manufacturing industry announced plans to hire a significant number of new workers. In contrast, firms in the ice cream, air conditioner, and wrapping paper manufacturing industries announced plans to close plants and lay off employees.

Activity in the District’s services sector has increased since our previous report. Firms in the business support, human resources administration, entertainment, hotel, and tire wholesale industries announced plans to expand operations and hire new workers. In contrast, contacts in the government, newspaper publishing, restaurant, and education industries reported plans to decrease operations in the District and lay off employees. General retailers report that sales have slowed in recent weeks. Auto dealers report inventory shortages of quality used cars as well as new car models that contain parts supplied by Japan.

Ninth District — Minneapolis (MI, MN, MT, ND, SD & WI)

The Ninth District economy grew modestly, but activity was disrupted by widespread flooding and a temporary Minnesota state government shutdown that started on July 1. Increased activity was noted in consumer spending, residential construction, commercial and residential real estate, services, manufacturing, energy and mining. Mixed activity was noted in tourism and agriculture, while commercial construction was steady. Private sector hiring grew modestly, and wage increases continued to be moderate. Overall price increases were moderate, although pressure remains on a number of input prices.

Services
Professional business services firms reported increased activity over the past three months. Results of a mid-July Minneapolis Fed ad hoc survey of 55 professional services firms indicated that 47 percent of the respondents saw increased sales, while 29 percent saw decreased sales. Respondents noted that profits and employment also increased. The respondents expected this trend to continue over the next three months. However, a few contacts commented that the Minnesota state government shutdown negatively affected their business.

Employment, Wages, and Prices
While private sector hiring grew modestly, the Minnesota government shutdown resulted in 22,000 temporary layoffs of state government employees. In Minnesota, a company recently announced plans to build a data center that is expected to provide more than 100 jobs, and a steel producer will add 60 jobs this year. According to a survey by an employment services firm, 20 percent of respondents in Minneapolis-St. Paul expect to increase staffing levels during the third quarter, while 3 percent expect to decrease staff. Businesses in eastern Montana and western North Dakota continued to have difficulty finding workers due to strong oil drilling activity in the region.
Tenth District — Kansas City (CO, NM, MO, NE, OK & WY)

The Tenth District economy expanded at a moderate pace in the June and early July survey period.

Manufacturing and Other Business Activity
Tenth District manufacturing activity rebounded from weakness in the prior survey period, while high-tech and transportation activity expanded further. Factory operators reported that both production and shipments bounced back following weakness in May. The outlook among manufacturers remained positive as new orders and backlogs similarly rebounded. Inventories of finished goods were stable. Factory employment increased in June for the eighth consecutive month and the average workweek expanded slightly. … Several trucking contacts cited continued difficulty attracting qualified over-the-road drivers. Sales growth was strong at high-tech firms despite some downward price pressure. High-tech firms remained optimistic about future sales gains and planned to increase capital spending in coming months.

Wages and Prices
District contacts reported only limited wage pressures but noted additional upward pressure on input prices. Labor shortages and wage pressures were reported in the retail sector and for select occupations in the high-tech, energy, and transportation sectors. In addition, several contacts expected future non-wage employment costs to rise as a result of increased state unemployment insurance premiums. Manufacturers reported continued upward pressure on input costs; slightly fewer manufacturers reported increased finished product prices. Builders reported higher overall prices for construction materials, and transportation contacts remained concerned about the impact of high fuel costs on profit margins.

Eleventh District — Dallas (LA, NM & TX)

The Eleventh District economy expanded at a moderate pace over the past six weeks. …Reports from manufacturers were mixed but mostly positive, although some construction-related producers were less optimistic than they were six weeks ago. Nonfinancial services activity rose, with strong demand for staffing services. The single-family housing sector remained weak, but the commercial real estate sector continued to improve. Financial services respondents said overall loan demand was flat during the reporting period, and contacts in the agricultural sector noted drought conditions worsened.

Labor Market
Employment levels held steady at most responding firms, although there were several reports of hiring. Staffing firms reported continued strong demand for their services. In addition, there were some mentions of moderate employment increases from automobile dealers, transportation service firms and manufacturers of primary and fabricated metals, transportation equipment, lumber and food. Legal firms noted solid demand for talented attorneys, and added that start dates for some new hires had been moved up from January 2012 to fall 2011. In contrast, one construction-related manufacturer reported a new round of layoffs, and one retail firm was considering reducing staff levels next year. Wage pressures remained minimal, although some contacts noted that they were giving modest pay raises.

Manufacturing
… Respondents in high-tech manufacturing reported that growth in orders remained at a moderate pace since the last Beige Book. One respondent with greater-exposure-than-average to Japanese production said second-quarter sales were well below pre-earthquake expectations, but that growth in June was strong enough to finish the quarter slightly above their expectations.

Non-financial Services
Staffing firms reported continued strong demand for their services. Temp-to-hire activity has been a bright spot, with long assignment lengths and several conversions to permanent hires. Outlooks are cautiously optimistic, with most respondents expecting continued strength in demand through year-end. Accounting firms noted a seasonal slowdown in demand for their services. Legal firms reported mostly steady demand, with continued growth in transactional services.

Twelfth District — San Francisco (AK, AZ, CA, HI, ID, NV, OR, UT, & WA)

Economic activity in the Twelfth District grew modestly during the reporting period of June through mid-July. …District manufacturing activity strengthened slightly.

Wages and Prices
Upward price pressures were limited during the reporting period. …

Contacts reported that upward wage pressures were very modest overall, although some pointed to notable increases in the costs of employee benefits. Compensation gains in most regions and sectors of the District continued to be held down by high unemployment and limited hiring activity. However, upward wage pressures remained pronounced in various sectors for workers with specialized skills in the application of information technology.

Retail Trade and Services
…Demand for business and consumer services increased on balance. Sales continued to expand for providers of technology services, in particular for digital media services used for Internet-capable mobile devices. By contrast, demand for transportation services remained largely flat, as did demand for professional services. Suppliers of energy services reported further growth in deliveries to households and businesses, although the pace of growth slowed. Providers of health-care services reported that demand for their services remained weak. Restaurants and other food-service providers saw demand soften slightly. However, conditions continued to improve in the travel and tourism industry, with further demand growth reported in both the business and tourism segments of the market.

Manufacturing
District manufacturing activity strengthened a bit further during the reporting period of June through mid-July. Production rates remained near capacity for makers of commercial aircraft and parts. Demand improved modestly for manufacturers of semiconductors and other technology products, with reports pointing to high levels of capacity utilization, continued growth in sales, and inventories that were at or near desired levels given the pace of sales. Production activity and sales improved somewhat for metal fabricators, with gains in foreign demand more than offsetting weak domestic demand. Similarly, capacity utilization rates remained largely stable for petroleum refiners, as export growth for gasoline and distillate products helped to reduce inventories. Demand continued to be especially weak for wood product manufacturers, with the exception of the pulp and paper sector, which has seen sustained increases in orders.

About Prosperity Funding

Payroll and Working Capital Funding source exlusively for temporary/contract staffing and IT consulting companies in the US.  Prosperity provides funding, with or without back office business administrative services.  Dale Busbee, VP of Business Development may be reached via email at dale@prosperityfunding.com or directly at (985) 641-8817

Why healthcare reform poses serious threats to staffing

By George Reardon

President Obama and the previous Congress have put in place a comprehensive health insurance law that will roll out over four years and beyond, with its most dramatic features taking effect at the beginning of 2014. There will be winners and losers depending on where you are in the staffing landscape. Attorney George Reardon explains the implications and how staffing firms can prepare for what lies ahead.

In 2010, the U.S. Congress passed what is commonly referred to as healthcare reform. The legislation, called the Patient Protection and Affordable Care Act (PPACA), has penalty and non-discrimination features that can pose serious risks to staffing firms.

Play or Pay

In short, the legislation mandates that companies over a certain size either offer qualifying coverage for their employees or pay a penalty, starting in 2014. Many staffing executives do not yet appreciate the size of the penalties that PPACA will impose on their firms if the “monthly measurement” language of the PPACA statute is followed without mitigation by regulations.

Here’s how to estimate (roughly) the annual before-tax equivalent of the penalties for a typical office/clerical/industrial non-day-labor temporary staffing firm that does not offer comprehensive health coverage to all employees:

1. To estimate the number of full-time assigned employees (those averaging at least 30 hours a week): Take 60 percent of the number of workers assigned for any length of time during a typical month. (For professional lines, use at least 75 percent).
2. Add the number of your full-time, in-house staff (even if they are insured).
3. Subtract 30.
4. Multiply the result by $2,000. This is your estimated total after-tax cash penalty for 2014, assuming your current level of business.
5. To calculate your before-tax penalty, “gross up” the total after-tax cash penalty according to your tax situation: The gross-up factor depends on your firm’s marginal (highest) corporate income tax rate: Gross-up factor = 1/(1-marginal tax rate). So, for a firm paying a marginal rate of 38 percent: the Gross-up factor = 1/(1-0.38) = 1.613. For that firm, the before-tax equivalent would be 61.3 percent higher than the cash penalty, and the before-tax equivalent of the annual penalty would be $3,226 per full-time employee for 2014.

The before-tax equivalent of the penalty is what matters the most, since that is the amount of additional gross margin that you must earn in order to just break even on paying the nondeductible penalties.

The before-tax hourly cost of the PPACA penalty for a full-time employee ranges from about $1.00 per hour (for a 40-hour-per-week employee of a non-taxpaying staffing firm) to about $2.00 per hour for a 30-hour-per week employee of a large taxpaying staffing firm.)

For the largest staffing firms, penalties for 2014, under the unaltered monthly calculation method prescribed by the statute applied to their current employment and assignment patterns, would each
be tens of millions of dollars or more. (For an example of a midsize company’s potential penalty, see sidebar at end of story.)

Remedies

The American Staffing Association, in cooperation with other groups, is advocating for PPACA regulations that would partially mitigate the penalty calculations. One possibility would be to impose a minimum initial work period before assigned workers could be counted as full-time employees. Along similar lines, the Treasury Department and IRS have solicited public comments on an elaborate “look-back/stability period safe harbor” rule that would help staffing firms avoid paying penalties for the most transient assigned workers. It is not clear how much latitude regulators will have to mitigate or waive penalty provisions that appear to be hard-wired in clear statutory language, especially when such modifications would reduce tax revenues.

A curative amendment to the law itself would also be very hard to obtain. Even if opponents of the legislation were to occupy the presidency and hold simple majorities of both houses of Congress after the 2012 elections, supporters may retain the legislative ability to block statutory amendments.

Changing the Landscape

The PPACA penalty provisions favor small staffing firms over large ones. Firms with fewer than 50 full-time employees are completely exempt from the penalties. Firms with 50 or more full-time employees are subject to the penalties but can still exclude 30 full-time employees from the penalty formula, a “carveout” worth about $90,000 per year in pre-tax dollars. These two rules can eliminate or significantly reduce penalties for a small firm, but truly large staffing firms will effectively pay the penalty on every assigned worker, because they have more than 30 staff employees, fully exhausting the “carveout” before they could attribute any of it to assigned employees.

Most staffing firms price their services with pay-to-bill markup percentages or flat bill rates. Neither of those methods automatically adjusts for burden increases. You can get the larger gross margins that you need to pay the PPACA penalties by charging customers more or by paying assigned employees less. But, without proactive changes to your normal wages or bill rates, the default source of the penalties would be your existing margins.

A staffing firm paying these penalties would have a serious competitive disadvantage against firms that can provide the same employees without paying penalties. Staffing buyers are increasingly price-driven,
as more and more customer buying decisions are made or influenced by price-driven purchasing departments and vendor management systems. If staffing firms attempt to pass the penalty costs to their customers, the non-financial reasons for using them instead of no-penalty or low-penalty firms would need to be very compelling.

If penalty-paying firms try to recoup penalty costs by lowering the assigned employees’ wages instead of raising prices, they face economic choices by their assigned employees. Staffing firms compete for employees as well as for customers. The temporary employee asked to absorb a penalty through lower-than-market wages can instead seek work at full market wages directly with the client or with a staffing firm that does not pay penalties or that does not try to recover penalties from wages.

Opportunities

The current legislation does provide ways for staffing firms to reduce or minimize their penalties, which we are in the process of researching for implementation after the related regulations are finalized.

The legislation also presents staffing firms with opportunities for helping their customers solve penalty and discrimination problems under the law by payrolling currently uninsured segments of customer workforces, thus leaving the customer with a fully insured workforce that will be relatively penalty-free. This kind of sale will require an understanding of how PPACA will affect customers and the ability to craft and communicate staffing solutions for them.

The labor costs of PPACA fall more heavily on staffing firms than they do on most staffing customers, a fact that is likely to suppress aggregate demand industry-wide by narrowing the cost advantage of using temporary employees. Staffing firms will need to identify new cost savings and other reasons for using temporary employees to compensate for this effect.

Customer Contracts

Staffing firms should be deciding now whether, to what extent, and how (administratively) they will pass PPACA penalty costs on to customers.

Staffing firms that plan to pass any PPACA penalty costs on to customers should be addressing how to do that in all contracts or proposals that will be effective on or after Jan. 1, 2014. Because many such contracts are already being negotiated, this is an issue for which staffing firms should already be proposing effective contract language. No matter how the financial issue is resolved, it is most important to avoid bitter disputes with customers over this issue. Addressing this problem well in advance may also prevent customer accounts from being put out to bid as 2014 approaches.

Many existing staffing contracts require customers to absorb newly imposed or increased burden costs that are directly related to their assigned employees. The exact wording of those contracts may or may not work to pass along PPACA penalties. Worse, as many staffing firms have discovered with increased unemployment insurance costs, customers presented with mid-contract rate increases may simply refuse to pay them or stop using the services, because most staffing contracts are not exclusive and do not commit the customers to do any minimum amount of business.

Billing the penalties for certain employees to customers could get very complicated. You will not know whether an employee will generate the penalty for a particular month until the employee has worked at least 120 or 130 hours in the month. Practically, most staffing firms will determine after the fact which employees qualified as full-time. Penalty-generating full-time employees may have to be billed in two separate pieces, with the penalty billing lagging the regular weekly billings by one to five weeks. This complication will further aggravate the accounting and invoicing problems that staffing firms already have with their customers and that are already complicated by the involvement of vendor management system firms and subcontracting relationships.

Staffing firms could avoid the administrative problem of billing customers for PPACA penalties by completely “socializing” the penalty costs — that is, by raising the bill rates for all of their full-time and part-time assigned employees by the overall average before-tax penalty equivalent. That would eliminate the need for a separate billing of PPACA penalties generated by particular temporary employees. However, economic principles make this risky, because it invites harmful price selection by customers and VMS firms.

Overall, customers and VMS firms would tend to use more of the underpriced full-timers and fewer of the overpriced part-timers, effectively reducing the staffing firms’ overall margins and launching a spiral of recalculations and increases of the socialized penalty costs. The endpoint of this pricing spiral would be selling only full-time employees who are loaded with the full penalty costs anyway.

Other administrative issues might include: how to measure the tax gross-up portion of the penalty, how to persuade clients to pay the gross-up, apportioning penalties for employees who work for multiple customers, and defining customer audit rights related to the penalties.

Non-Discrimination Rules

Staffing firms will also need to keep a close eye on regulations pertaining to non-discrimination. The new rule that non-grandfathered insured health plans may not discriminate in favor of highly-paid employees was scheduled to become effective on Jan. 1, 2011, but is awaiting implementing regulations. PPACA requires these regulations to be similar to the long-standing tax regulations for self-insured medical reimbursement plans. When those regulations appear, it is doubtful that they will permit the traditional coverage pattern of staffing firms — comprehensive, subsidized coverage for in-house staff and no coverage or self-paid mini-med plans for assigned workers. Some professional assigned workers are provided coverage, but they tend to be highly paid, so, unless the staffing firm assigns only such professional employees, discrimination in favor of the highly-paid may still be a problem.

The penalties for discriminatory insured plans will be so high ($100 per day per non-favored employee) that paying them or risking paying them will not be viable choices. Further, insurance companies will also be directly subject to these anti-discrimination regulations, so, even if staffing firms are willing to take a legal and financial risk with the traditional coverage pattern, insurance companies may refuse to underwrite such plans. Self-insured plans, though not subject to the new regulations, may be subject to heightened and even retrospective scrutiny under the long-standing regulations on self-insured plans.

The much-publicized interim exemption of many mini-med plans from the restrictions on benefit limits is helpful for maintaining some coverage for assigned employees prior to 2014 but does nothing to fix the industry’s long-term potential problem with the new anti-discrimination rule.

The American Staffing Association is seeking regulatory approval for the traditional coverage pattern of staffing firms as a reasonable and nondiscriminatory pattern that has been used without government objections for a long time in the self-insured environment. That approval may be difficult to obtain from the administration’s bureaucracy, because it would be perceived as impeding the expansion of comprehensive coverage. If the traditional pattern is not approved, staffing firms, ironically, may become practically unable to continue sponsoring group health coverage for their in-house staff employees.
 
George Reardon is special counsel and member of the Contingent Workforce Practice Group at Littler Mendelson, P.C., the largest employment and labor law firm exclusively representing management in the United States. He was formerly general counsel of Kelly Services Inc. and Adecco Group North America.

For more details on the features of PPACA, read our sister publication, Staffing Industry Report (October 2010).

[SIDEBAR]

Play or Pay Case Study

A commercial staffing firm with 50 full-time staff employees that assigns 800 different temporary employees during a typical month and that does not offer comprehensive health coverage to all of its full-time employees.

With the uptick in staffing, is your lender keeping up with your needs?

The economic recession in the US from 2007 – 2009 caused considerable havoc on the temporary staffing industry.  However, in the past 6 months or so, we have seen a considerable uptick in new staffing business across several areas of specialty.  The banks have been slow to react to the increase in business, putting in jeopardy the ability for many staffing owners to support the growth of their business.

Prosperity Funding was formed in 2006 by a team of experienced staffing professionals that believe in eliminating the red tape that is typically involved in approving companies for funding.  Most banks, and some secondary lenders, have tended to shy away from lending to staffing companies, due to the recent downturn in the industry.  It’s been quite the opposite at Prosperity Funding; we are still very bullish on the industry!  We have the experience, knowledge, ability, and willingness to help with the growth of your staffing business.

We provide a wide variety of accounts receivables lending products, with or without back office business processing services, a complete range of management reports, credit and collections assistance, marketing and sales support, and mergers & acquisition due diligence support.  We are your one-stop shop for assistance in growing your business.

Call today for a no-cost, obligation free consultation, or if you may know someone that we should speak with, please give me a call today at (985) 641-8817 or send me an e-mail to dale@prosperityfunding.com.

The Internal Revenue Service has recently rolled out a three-year audit initiative targeting 6,000 businesses randomly nationwide, also known as the Employment Tax National Research Project (NRP).

Remember playing Duck, Duck, Goose as a child?  There you were, sitting in a circle on the playground with your friends, the leader circling around tapping each child on the head until he or she picked “the one”… then the chase was on.  Secretly inside, you were hoping to be picked, as it was fun to chase your friend around the circle to become “it”.  Starting in 2010, about 2,000 firms in the US received audit letters from the IRS, and I can only imagine that those companies were not happy to be the “chosen one.”  The NRP is the first the IRS has undertaken in 25 years, and is designed to take a snapshot of a given taxpayer population in order to determine compliance with tax regulations within that population.

According to the IRS, the two main goals of this employment tax NRP are 1) To secure statistically valid information for computing the Employment Tax Gap, and 2) To determine compliance characteristics so the IRS can focus on the most non-compliant employment tax areas.  In 2006, the IRS estimated a gap of $290 billion for the year 2001… the bulk of the gap was due to under-reporting income.  The IRS is looking to close that gap, i.e., go after the non-compliant businesses by focusing on A) Worker Classification (whether to treat an “employee” as an independent contractor or W2 employee), B) Executive Compensation (i.e. loans to officers, travel, deferred comp), C) Fringe Benefits (use of company aircraft or cars, club dues, housing), and D) Payroll Taxes (examining Forms 941, the Employer’s Quarterly Federal Tax Return, and Form 1099/W-2 compliance).

The issue of whether to classify a worker as an independent contractor vs. a W2 employee comes up quite frequently in the temp staffing business, particularly in the information technology and healthcare sectors.  The IRS will take a hard look at the daily workscope of workers, to determine if the relationship exhibits either Behavioral Control and/or Financial Control of that worker.  If either is present in the relationship, the IRS will tend to lean towards classifying a worker as W2.  Even if a company has an independent contractor sign an agreement up front saying that they agree that they will be treated as an independent contractor, and that they will comply with the attendent tax and other reporting requirements and that proper Forms 1099 were issued to each of the workers, they may still be in danger of worker misclassification.

The real danger to a company is in the hiring of both independent contractors and W2 employees in the same tax year, especially if the workers are performing the same or similar job functions for the company.  You might as well raise your hand to request an IRS audit, or just wait for your audit notice to hit your mailbox.  In other words, Duck, Duck, Goose… you’re it!

When an owner of a temporary staffing company is searching for funding for their business, its purpose is typically to cover working capital expenses, the majority of which are payroll and payroll related expenses for their employees.  Temp staffing companies provide outsourced labor for their clients in a variety of specialty areas, including healthcare, information technology, accounting/finance, administrative/clerical, light industrial, and heavy industrial.  Companies hire temp or contract staffing firms to source and employ workers at their client locations.   These temporary or contract laborers are employees of the temp staffing company, placing the burden of payroll and payroll related expenses on the temporary staffing company.  These employees receive a paycheck from the staffing company either weekly or bi-weekly, yet payments for services rendered are typically received after a period of 30 – 45+ days.  Essentially the staffing company will have to “carry” the payroll burden for these employees until their clients pay their invoice.  A staffing owner who is not prepared to carry this burden can severely limit their growth potential or risk missing payroll, if not sufficiently funded.

An easy solution for bridging the gap from the time employee payroll is due, to the time when client invoices are paid, is to factor the client accounts receivables.  Essentially, secondary lenders, including factors and asset-based lenders, can convert future invoice payments immediately into cash, at a small discounted rate, so that a staffing owner has the ability to pay for working capital costs, including payroll, payroll taxes, and other expenses.  No longer will they have to limit the growth of their company by using personal funds, credit cards, or rely on personal or business bank lines of credit.  Secondary lenders (factoring companies) will assess the creditworthiness of the clients of the staffing company, the average turnaround time on receivables, and the volume of invoices funded to determine funding rates.  Receivables factoring does not create a liability for the staffing company on their balance sheet, rather it turns a current asset (accounts receivable) into a more liquid current asset, which is cash. 

Having the ability to recognize a temporary staffing company that has the need and ability to enter into a funding arrangement is paramount to your success as a cash flow broker or lender.  First of all, if a staffing company is currently funding their business, they have most likely signed a funding agreement with their lender for a specified time period.  The length of contracts can vary, from a month-to-month arrangement, to a 1 – 5 year contract.  Average contracts range from 18 – 36 months.  When speaking with a prospect, one of the first questions to ask is whether or not they are under contract with their lender, and when their contract is up for renewal.  Then find out when they would have to give formal notice to terminate their contract, as most of them auto-renew if the staffing company does not properly notify their lender.  Also, most lenders will charge an early termination fee to a staffing company if they terminate their contract prematurely.

Where is the best place to find staffing professionals?  A good number of staffing companies belong to the American Staffing Association (ASA) and a list of member companies, by state, can be found on the ASA website (www.americanstaffing.net).  Most states also maintain a state staffing association, a list can be found on the ASA site as well.  Linkedin (www.linkedin.com) is another great source for locating staffing professionals.  There are a number of staffing groups on Linkedin, including ASA, TechServe Alliance, Staffing Industry Analysts, Staffing Industry Support Network, and many more.  Run a search for “staffing” under the Groups box, and there are hundreds listed.  Each group has members associated with them, typically those who are industry professionals.  Twitter can also be a good source for leads, by entering a search for staffing in Twitter profiles.  Also, staffing companies post their jobs on Monster, Careerbuilder, and other job posting sites, and in the postings, there are typically contacts in the job description.

Ideal staffing prospects are ones with strong executive leadership, clients with excellent credit and payment histories, and ones that have a strong foothold in the markets in which they operate.  When evaluating whether a staffing prospect is a good fit for factoring, there are certain items you should explore when speaking with a prospective client owner.  Companies that have income or payroll tax liens from the IRS, business insurance non-payment issues, or accounts receivables that are consistently over 60 days can spell trouble in a lending relationship.  The IRS has the ability to seize assets of a company to recover back taxes, insurance companies can drop coverage due to non-payment of premiums, and longer-term receivables can increase the risk of non-payment.

Dale Busbee is Vice President of Business Development with Prosperity Funding, Inc., a leading direct lender/factor providing accounts receivable finance and back office business administration services for the temporary and contract staffing companies in the US.  Mr. Busbee may be reached at (985) 641-8817 or via email at dale@prosperityfunding.com.