As we transition out of the COVID-19 pandemic, temporary staffing companies are likely to see a rapid uptick in demand that will bring with it new challenges—particularly in managing cash flow.
Early in the pandemic, in April 2020, the U.S. unemployment rate reached 14.8%, the highest rate since data collection began in 1948. By May 2021, the unemployment rate had dropped to 5.8%, which is still far higher than the pre-recession (February 2020) rate of 3.5%.
What those figures show is that thousands of people are returning to work, leading the country in the direction of pre-COVID unemployment rates. That trend is expected to continue as disease risk declines, extended unemployment benefits end, and wages rise—leading to increased demand for temporary staffing companies.
Cash flow management is always a challenge for staffing companies, largely because of the continuing need to bridge the gap between when services are delivered and when invoices are paid. Additional challenges include understanding actual cash flow, developing accurate forecasts, keeping staffing costs down, and automating as many services as possible.
During periods like this one in which demand is expected to rise, staffing companies face an additional challenge of high upfront costs. Recruiting a deep pool of high-quality talent is expensive, as is paying highly qualified staff members and accurately estimating how many staff are needed today and will be needed in the months ahead.
If your staffing company still relies on Excel or other spreadsheet-based software to manage your cash flow, you may struggle to handle the rising demand that’s expected in the months ahead. Spreadsheets require hours of manual data entry, which is costly and can lead to errors. In addition, spreadsheets don’t provide rapid visibility into complex finances, which is essential in developing accurate forecasts.
For many staffing companies, a better alternative is a cloud-based accounting and financial management solution like Sage Intacct, which automates critical processes like cash flow management and provides visibility into real-time business performance. At a glance, Sage Intacct tells you where cash is coming from and where it’s going, across all locations and entities.
Sage Intacct automatically imports and reconciles statements from all your financial institutions and accounts, making it easier to maintain accurate cash balances. You can quickly print checks and transfer funds across accounts. And, with deep visibility across your business, you can quickly pinpoint areas of financial concern and base your next decision on accurate, real-time information.
Contact FSS Group today to learn about the wide range of strategic accounting solutions we offer to temporary staffing companies and other businesses of all sizes. Whether you need help with cash flow management or other concerns, our experts are available to provide the financial and IT consulting services you need.