Sales and profitability are key indicators of success in the staffing industry. However, cash flow constraints often limit growth, forcing companies to slow hiring or restrict client acquisition.
With unlimited funding, staffing firms can scale without financial roadblocks – expanding contracts, increasing placements, and driving higher profitability.
The Impact of Financing on Growth
Consider a staffing company generating $2 million in revenue at a 17% profit margin, yielding $340,000 in profit. With unlimited funding, let’s say the company scales to $10 million in revenue, even at a slightly lower 15% margin, resulting in $1.5 million in profit—more than four times the original amount.
Comparison: Limited vs. Unlimited Financing
Financing Type: Limited (Self or Bank) Unlimited (Staffing-Specific Lender)
The cost of financing is covered by increased revenue and profit, making it a self-sustaining growth strategy
Managing Cash Flow & Reducing Risk
Delayed invoice payments can severely impact cash flow. A staffing company billing $10 million annually with a 35-day DSO (Days Sales Outstanding) has $1 million tied up in accounts receivable. If DSO extends to 42 days, the outstanding receivables increase to $1.4 million, creating a $400,000 cash gap. Without sufficient cash reserves, this can strain operations and limit growth.
Comparison: Cash Flow Impact
Financing Type: Limited (Self or Bank) Unlimited (Staffing-Specific Lender)
Madison Resources, a staffing specific lender, is the solution for both scenarios.
Invest in what you do best
Outsourcing back-office functions can be just as beneficial, even if a staffing company doesn’t need financing. And in more ways than just cost savings.
Case Study: Monday Temporaries
In the mid-2000s, John Monday, the owner of Monday Temporaries, was preparing to sell his staffing business. He didn’t need financing but a needed to make a major investment in infrastructure to maintain operations.
Instead of spending heavily on software, hardware, firewalls, and personnel, he outsourced these functions to a staffing specific outsourcing company like Madison Resources.
The Results?
Cost Savings – Eliminated large infrastructure investments.
Simplified Sale – The purchasing company valued the secure data, streamlined operations, reduced employee redundancies, and less layoffs and severance packages.
By leveraging smart financial solutions, Monday Temporaries not only saved money but also made the sale process smoother and more attractive to buyers.
Unlock your staffing company’s full potential with the right financial strategy. Click www.madisonresources.com or call …. To find out more.
Alaska Legislative Update- Paid Sick Leave
Alaska voters approved Ballot Measure 1 (according to unofficial election results), which provides for paid sick leave for all employees working in Alaska. This new, paid sick leave requirement becomes effective July 1, 2025.
The new law applies to all employers and employees in Alaska. There are limited exceptions for apprentices, employees working in work therapy programs, prison inmates, and employees subject to the federal Railroad Unemployment Insurance Act, amount other narrow exceptions.
What does this mean for you?
All employees are entitled to accrue a minimum of one hour of paid sick leave for every 30 hours worked up to a capped maximum. Employers with 15 or more employees may cap accrual and usage at 56 hours of paid sick leave per year; employers with fewer than 15 employees may cap accrual and usage at 40 hours of paid sick leave per year. Employers may set higher accrual rates, accrual limits, and usage limits should they choose to do so. Exempt employees are assumed to work 40 hours per workweek for accrual purposes unless their normal workweek is fewer than 40 hours.
Employees will begin to accrue paid sick leave on July 1, 2025, or at the commencement of employment, whichever is later.
Paid sick leave carries over to the following year, but it does not affect the amount of leave an employee may use in any given year.
Employees may use paid sick leave as it is accrued. It may be used for the following:
An employee’s mental or physical illness, including diagnosis, care, treatment, and preventative care.
Care of or assistance to an employee’s family member for the same reasons. “Family member” means an immediate family member under Alaska Statue Section 39.42.960(11), a domestic partner, foster child, a legal ward, a person to whom an employee stands in loco parentis, a foster parent, an adoptive parent, a legal guardian, a person who stood in loco parentis when the employee was a minor child, or any other individual related by blood to the employee or whose association to the employee is the equivalent of a family relationship.
Absences due to domestic violence, sexual assault, or stalking to allow the employee of their family member to obtain medical or psychological attention, receive services from a victim’s aid organization, get relocation assistance or complete the steps to secure an existing home, use legal services, or participate in any investigation or civil or criminal proceeding.
Employees are required to give employers notice if their need for paid sick leave is foreseeable, and they must schedule their foreseeable leave in a manner that does not unduly disrupt the employer’s operations.
For paid sick leave use of more than three consecutive workdays, an employer may require reasonable documentation that the paid sick leave was used for a covered reason.
Paid sick leave may be used in the smaller of hourly increments or the smallest increment the employer’s payroll system uses to account for other absences or uses of time.
Employers are not required to pay employees on termination for accrued, unused paid sick leave.
Employers may not retaliate against employees for using paid sick leave, interfere with employees’ use of paid sick leave, require employees to find replacement workers to cover the time during which they use paid sick leave, or use an absence-control policy that counts paid sick leave in a way that could lead to any adverse action.
Employers are required to give employees written notice of their entitlement to paid sick leave, the amount of paid sick leave they accrue, and the prohibition against retaliation. This notice must be given at the commencement of employment or within 30 days of the new law’s effective date of July 1, 2025.
Employers may adopt policies that provide more generous accrual rates, accrual caps, usage caps, and other terms, provided those policies comply with the statute.
How can we help?
For purposes of tracking and paying out this paid leave, please use the SICK pay code. Madison Resources’ systems will accrue this earned leave as directed in the legislation for employees working in the state of Alaska. Additionally, you may view available paid sick leave for your employees in our online reporting system, MOS. For questions on the reporting, please reach out to your payroll specialist.
As always, we recommend speaking with your attorney, CPA, or industry professional for further guidance.
Alaska Department of Labor & Workforce Development PO Box 111149 Juneau, AK 99811 Call: (907) 269-4900 Email: labor.webmaster@alaska.gov
Positive Sign for Contract Staffing
As I reviewed the February Employment Report, one number really stuck out. The U6 unemployment rate, which includes discouraged workers and those working part-time for economic reasons, jumped .5% to 8.0%. Still on the low side and it is only one month. But I got to thinking – is there a correlation between the U6 rate and contract (temporary) staffing?
My findings? Yes, there is a clear parallel between a rise in the U6 unemployment rate and an increase in contract (temporary) employment. The U6 rate tends to spike during economic downturns and periods of uncertainty. Historically, as the U6 rises, businesses become more hesitant to commit to full-time hires and instead turn to temporary staffing to maintain flexibility while managing costs.
For example, during the Great Recession (2007–2009), the U6 unemployment rate surged from around 8% in 2007 to over 17% by 2009. In response, temporary staffing saw a sharp increase, as companies sought to scale their workforce according to fluctuating demand. Similarly, during the COVID-19 pandemic, the U6 rate skyrocketed from 7% in early 2020 to over 22% in April 2020. Again, businesses moved towards contract workers as they navigated uncertainty.
This pattern underscores a broader trend: when economic confidence wanes, businesses prioritize flexibility, making temporary staffing a key strategy. Companies avoid long-term labor commitments due to fears of prolonged downturns or sluggish recoveries. Plus, talent is more open to accepting a contract position – something that they are reluctant to do when permanent jobs are more plentiful.
I will be keeping an eye on the U6 rate and temporary help in the months to come.
For those experiencing increased demand for staffing, no need to turn business away. With an unlimited funding program, you can easily add new clients, increase placements, and driving profits without financial roadblocks.
Please contact me for more details.
Nick Andriacchi – Chief Revenue Officer
Madison Resources
(c) 312-933-7712
Staying Focused on Selling: Avoiding the Sales Rabbit Hole
In sales, it’s easy to get sidetracked by non-essential tasks, especially if there are no hard deadlines for lead generation. We all do it. However, every day lost to distractions is a day you can’t reclaim. Here are five tips to help you and your sales team stay focused and avoid falling into a sales rabbit hole:
1. Prioritize: Sales is the lifeblood of any company. Lead generation must be on top on the daily to-do-list for any company to scale. Treat these activities as must-dos every day.
2. Set Clear, Achievable Goals: Establish daily, weekly, and monthly sales activities. Break these down into manageable tasks and prioritize them. Having specific goals gives you a clear direction and sense of urgency, making it harder to blow off lead-generating activities. Use tools like to-do lists (I still hand write a priority list at the end of each day for the next day) or digital planners to track your progress and keep yourself accountable.
3. Time Blocking: Allocate dedicated time slots in your schedule for lead generation and sales activities. Treat these blocks as non-negotiable appointments. By committing to specific times for prospecting, follow-ups, and client meetings, you create a structured routine that minimizes the temptation to engage in less critical tasks. Stick to these time blocks religiously to build a disciplined work habit.
4. Minimize Distractions: Identify common distractions and find ways to eliminate or minimize them. This might include turning off non-essential notifications, setting up a quiet workspace, or using apps designed to block distracting websites. If working from home, communicate your work hours to family members to reduce interruptions. Keeping your work environment focused and free from distractions is key to maintaining productivity.
5. Regular Reflection and Adjustment: At the end of each day, take a few minutes to reflect on your achievements and areas where you might have been sidetracked. Ask yourself: “Did I advance a sale today?” Adjust your strategy accordingly. If you notice certain patterns or tasks consistently pulling you away from sales activities, find ways to delegate, automate, or defer them. Regular self-assessment helps you stay aligned with your primary goals and continuously improve your focus.
By setting clear goals, time blocking, minimizing distractions, and regularly reflecting on your performance, you can stay focused on selling and avoid the pitfalls of the sales rabbit hole. Every day is an opportunity to move closer to your targets, so make each one count.
2025 Federal Unemployment Tax Act (FUTA) Credit Reductions
At Madison Resources, it is our hope that we are perceived as a true partner to your staffing firm. To that end, we are always looking to assist you in providing necessary information, to promote accuracy and efficiencies, and make helpful resources available to you.
The U.S. Department of Labor (DOL) identified three states and one territory that will be subject to the FUTA credit reduction.
As you know, employers pay FUTA and State Unemployment Insurance (UI) on wages paid to their employees. The FUTA tax rate is currently 6.0%, with employers receiving an offsetting credit of 5.4% for payment of state UI taxes. Therefore, the effective FUTA tax rate is a net of 0.6%, which applies to wages paid up to a limit of $7,000.00 per worker, or the equivalent of $42.00 per employee, per year. However, when state unemployment funds are depleted, the state will draw from a designated federal loan account. If these loans are not repaid within two years, part of the 5.4% FUTA tax credit is incrementally reduced each year as a credit reduction. When this credit reduction applies, the FUTA tax rate increases by 0.3% per year. This increase is payable in January of the following calendar year with the Form 940 FUTA Tax return. This credit is further reduced each year by 0.3% until the federal loans are repaid.
Beyond the standard credit reduction, states with prolonged outstanding federal loans may also be subject to the Benefit Cost Rate (BCT) Add-On. This additional reduction is calculated based on the state’s average unemployment compensation outlays relative to its taxable wages, minus the state’s average unemployment tax rate. The BCR add-on aims to accelerate loan repayment and encourage states to maintain adequate unemployment reserves.
What does this mean for you? As of January 2025, the following states and territories have outstanding federal unemployment loan balances and are subject to FUTA credit reductions:
California: Employers face a potential credit reduction of 1.2% for 2025.
New York: Employers face a potential credit reduction of 1.2% for 2025.
Connecticut: Employers face a potential credit reduction of 1.2% for 2025.
US Virgin Islands: Employers face a potential credit reduction of 4.5% for 2025.
This may seem like a small amount, but it can add up quickly, especially for larger employers that have many employees. In addition, some states also pass the cost of federal unemployment loan interest on to employers in the form of an assessment or surcharge.
States potentially subject to the BCR Add-On in 2025:
California: Potential BCR add-on of 3.7%.
New York: Potential BCR add-on of 1.1%.
Connecticut: Potential BCR add-on of 0.8%.
The combined effect of the credit reduction and the BCR add-on increases the net FUTA tax rate for employers in the affected states. For Example, in California, the total FUTA tax rate for 2025 could be 4.9%, resulting in an additional tax of $301 per employee.
We recommend the following actions:
1. Stay Informed: Regularly monitor updates from your state’s labor department and the U.S. Department of Labor regarding loan repayments and potential tax implications.
2. Financial Planning: Adjust your budgeting and payroll process to account for the increased FUTA tax rates in 2025. When negotiating pricing with your customers, consider the additional cost to your business.
3. Consult Professionals: Engage with your industry professionals to ensure compliance and to explore strategies for mitigating the impact of these tax increases.
As always, we recommend speaking with your attorney, CPA, or industry professional for further guidance.
For more information, we recommend accessing the following link:
Contact Information To speak with a representative from the U.S Department of Labor: Call the Employment and Training Administration (ETA) Line: 1-877-US-2JOBS (1-877-872-5627) If you have questions or desire further information, you may email representatives at the Division of Fiscal and Actuarial Services:
Kevin Stapleton Stapleton: Kevin@dol.gov Dyana Cornell Cornell: Dyana@dol.gov
February 2025 Jobs Report
The Highlights:
The unemployment rate ticked up to 4.1% in February from 4% in January. Meanwhile, average hourly earnings increased by 0.3% month-over-month, as anticipated.
Federal government employment declined by 10,000 in February though government payrolls overall (including state and local) rose by 11,000.
The number of job openings rose from December’s downwardly revised total (7.51 million) to 7.74 million.
Is economic uncertainty taking a toll on a job market that started slowing late last year? Will tariffs spur more American investment in manufacturing, energy, services, etc. creating more new jobs? Or will it simply add to inflation and slow the economy down?
There are a few indicators that point to the possibility of weakness coming to the labor market. One area of concern is the U6 rate, which is the broadest measure of unemployment and includes workers who are working part-time and seeking full-time hours. In February, the U6 rate jumped 0.5% to 8.0%, the highest level since October 2021. The U6 / U3 (the more commonly cited unemployment rate) spread jumped to 3.9% which is the highest since June 2021. This could mean that there is slack in the labor market where talent exists but is not in demand by employers.
Historically, uncertainty ultimately turns out to be a good thing for contract staffing.
Digging in a little, Leasure and Hospitality was down mostly because food service and drinking establishments lost -27,500 jobs. Government hiring came in at one of the lowest levels in some time mostly because the federal government shed -11,000 jobs.
ADP noted a slowdown in small business hiring.
Select Industry Breakdown
For a deeper dive….
A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons remained at 8.0%.
Prime age labor force participation rate (ages 25-54) stayed even at 83.5%.
The overall labor force participation held was down .2% to 62.4%. This is still .8% below the level of February 2020.
In February, average hourly earnings for all employees on private nonfarm payrolls rose by 10 cents, or 0.3 percent, to $35.93. Over the past 12 months, average hourly earnings have increased by 4.0 percent. In February, average hourly earnings of private-sector production and nonsupervisory employees rose by 9 cents, or 0.3 percent, to $30.89.
In February, the average workweek for all employees on private nonfarm payrolls was unchanged at 34.1 hours. In manufacturing, the average workweek remained at 40.1 hours, and overtime edged up by 0.1 hour to 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls was unchanged at 33.6 hours.
APD reported that 77,000 jobs were added in February.
The number of job openings was little changed at 7.7 million in January, the U.S. Bureau of Labor Statistics reported today. Hires held at 5.4 million, and total separations changed little at 5.3 million. Within separations, quits (3.3 million) and layoffs and discharges (1.6 million) changed little.
This release includes estimates of the number and rate of job openings, hires, and separations for the total nonfarm sector, by industry, and by establishment size class. This release also includes 2024 annual estimates for job openings, hires, and separations. Job openings include all positions that are open on the last business day of the month. Hires and separations include all changes to the payroll during the entire month.
Job Openings
The number of job openings was little changed at 7.7 million in January but was down by 728,000 over the year. The job openings rate, at 4.6 percent, changed little over the month. The number of job openings increased in real estate and rental and leasing (+46,000).
Hires
In January, the number and rate of hires were unchanged at 5.4 million and 3.4 percent, respectively. Hires decreased in mining and logging (-6,000).
Separations
Total separations include quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations include separations due to retirement, death, disability, and transfers to other locations of the same firm.
The number and rate of total separations in January were little changed at 5.3 million and 3.3 percent, respectively. In January, the number and rate of quits were little changed at 3.3 million and 2.1 percent, respectively. Quits increased in construction (+53,000) and in mining and logging (+6,000).
In January, the number and rate of layoffs and discharges changed little at 1.6 million and 1.0 percent, respectively. Layoffs and discharges decreased in mining and logging (-8,000).
The number of other separations changed little at 350,000 in January.
Establishment Size Class
In January, the quits rate increased for establishments with 1 to 9 employees, while the job openings, hires, layoffs and discharges, and total separations rates showed little change. For establishments with 5,000 or more employees, all rates showed little or no change.
December 2024 Revisions
The number of job openings for December was revised down by 92,000 to 7.5 million, the number of hires was revised down by 88,000 to 5.4 million, and the number of total separations was revised down by 187,000 to 5.1 million. Within separations, the number of quits was revised down by 102,000 to 3.1 million, and the number of layoffs and discharges was revised down by 102,000 to 1.7 million. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)
Annual Levels and Rates
Consistent with BLS practice, annual estimates are published for not seasonally adjusted data each year with the January news release. For details about how these estimates are calculated, see the technical note.
In 2024, the annual average job openings level was 7.8 million, a decrease of 1.5 million from 2023. The annual average job openings rate was 4.7 percent in 2024, compared to 5.6 percent in 2023.
In 2024, the annual hires level was 65.3 million, a decrease of 5.1 million from 2023. Annual total separations decreased by 4.6 million in 2024 to 63.2 million. Annual quits decreased by 5.0 million in 2024 to 39.2 million and accounted for 62.0 percent of total separations. Annual layoffs and discharges increased by 402,000 in 2024 to 20.2 million and accounted for 31.9 percent of total separations. Annual other separations decreased by 5,000 in 2024 to 3.8 million and accounted for 6.1 percent of total separations.
The annual average hires rate for 2024 was 3.4 percent, down from 3.8 percent in 2023. The annual average total separations rate for 2024 was 3.3 percent, compared to 3.6 percent in 2023. The 2024 annual average rates for the components of total separations were 2.1 percent for quits, 1.1 percent for layoffs and discharges, and 0.2 percent for other separations.
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The Job Openings and Labor Turnover Survey estimates for February 2025 are scheduled to be released on Tuesday, April 1, 2025, at 10:00 a.m. (ET).
