4 Keys to Structuring "The Right Deal"
For many staffing firms, landing a “big deal” with multiple positions to fill is the key catalyst for growth. These deals can generate the cash flow needed to expand infrastructure, open additional locations, and hire more internal staff. But the real opportunity comes only if it’s the right deal.
So how do you know if a big deal is truly the right one? Here are four critical factors to evaluate:
1. Pricing
Winning a large account often requires some flexibility on margins. That’s fine—so long as the margin isn’t so thin that it doesn’t leave enough profit to support other areas of your business. For example, if ABC Staffing typically operates on a 15% gross margin, a $200,000 weekly billing account might require a margin drop to just 1.5% to secure the deal. That would yield only $3,000 in weekly gross profit—likely insufficient to cover the costs of servicing the account. But when pricing makes sense, it’s a strong green light to move forward.
2. Payment Terms
Even if margins look good, consider how quickly you’ll get paid. Using the same $200,000 weekly example, 120-day payment terms would require $3.4 million in funding before receiving the first payment. That could strain cash flow and slow growth on other accounts. Make sure payment terms are manageable for your business before moving ahead.
3. Credit Risk
Payment terms tie directly to credit risk. Any client taking on a large staffing account should have the financial stability to handle the credit extended. Remember, unsecured credit means your staffing company is among the last to be paid if the client runs into trouble. Beyond finances, workplace safety matters too—injury histories at client sites can affect workers’ comp rates for your entire payroll. Once credit and safety checks are satisfactory, you’re ready for the final step.
4. Servicing the Customer
This is the X factor. Assess the operational impact of the deal—whether your current staff and technology can meet the client’s needs. Key considerations include:
Wages & Safety: As my colleagues Brian Leptich (Quality Labor Services) and Ray Garrison (UpstateMFG) often say, pay and safety go hand-in-hand. If rates are too low, recruiting becomes harder, quality suffers, and turnover—and injuries—rise.
Billing Requirements: How complex is the client’s invoicing process?
VMS/MSP: If a Vendor Management System is involved, evaluate the platform’s financial stability, usability, and fees.
Once all these boxes are checked, it’s time to go for it.
The right account should generate the cash flow to fuel further growth, helping you build a diversified portfolio of profitable, creditworthy clients. And with a full-service funder, like Madison Resources, you can offload payroll funding, payroll processing, tax filings, invoicing, and collections—so you can focus on seizing the opportunities that really move your business forward.
Ready to start your funding journey? Partner with Madison Resources today [apply here]
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