Factoring for Staffing Agencies
in Switzerland
Swiss staffing agencies often have to pre-finance wages, social security contributions and running costs, while client invoices are paid at a later date. Factoring provides earlier access to liquidity and financial flexibility for growth, planning security and on-time payments.
Staffing agencies in Switzerland: an industry characterised by high upfront investment
Swiss staffing agencies bear a particular financial responsibility: staff must be paid on time, even if client invoices remain outstanding. In the temporary staffing and agency work sectors in particular, wages, social security contributions and running costs are incurred on a regular basis, whilst payments are often not received until weeks later. This time lag becomes particularly noticeable when new contracts are taken on, the volume of assignments increases or clients make use of longer payment terms. Whilst the company grows on paper, the amount that needs to be pre-financed also rises at the same time.
The scale of the Swiss staffing sector highlights just how crucial predictable cash flow is for the industry (Source: swissstaffing.ch):
- 413,437 temporary workers were employed in Switzerland in 2024.
- They worked around 207 million hours.
- The total wage bill for the temporary employment sector stood at around 8 billion CHF.
- The sector’s turnover amounted to around 11.1 billion CHF.
This means that, in mathematical terms, around 72 per cent of the sector’s turnover is attributable to the reported total wage bill. This illustrates just how labour-intensive the Swiss temporary staffing sector is. This poses a particular challenge for individual companies: whilst wages are due on a regular basis, clients often do not pay their invoices until weeks later. The more the volume of assignments grows, the more liquidity must be pre-financed.
Factoring addresses precisely this liquidity gap. Outstanding receivables are converted into liquidity more quickly, enabling current obligations to be met more reliably and growth to be better financed.
Factoring in 4 steps
How does factoring work for Swiss staffing agencies?
Factoring involves a recruitment agency selling outstanding receivables from services already rendered to a factoring partner. This turns outstanding invoices into cash more quickly. This is particularly helpful when wages and social security contributions need to be paid before customer invoices are received.
1. Provide your service
You provide staff or carry out an agreed service for your client.
2. Issue an invoice
Once the service has been provided, you should invoice your customer as usual.
3. Sell a debt
The outstanding invoice is forwarded to A.B.S. Factoring AG, our factoring partner, and converted into cash.
4. Receive liquidity
You will receive the majority of the invoice amount paid out at short notice, giving you greater financial flexibility.
Why A.B.S. Factoring AG Switzerland is the right partner
for recruitment agencies
A.B.S. Factoring AG Switzerland supports Swiss staffing companies with factoring solutions tailored to their business model, receivables structure and growth prospects. For staffing agencies, it is particularly important that financing is not only available quickly, but also reliable, straightforward and tailored to recurring invoicing processes.
The focus is not on a standard solution, but on how factoring specifically fits your business, your clients and your growth objectives.
What A.B.S. Factoring AG Switzerland offers:
- Over 20 years’ experience inthe Swiss factoring market
- Experience with staffing agencies and temporary employment firms
- Membership of swissstaffing, the Association of Swiss Personnel Service Providers
- personalised advice for Swiss companies
- Relief in accounts receivable management
- Protection against bad debts through full-service factoring
What benefits does factoring offer to staffing agencies?
Factoring can help Swiss staffing agencies convert outstanding receivables into cash more quickly and meet their financial obligations in a more predictable manner.
The key benefits at a glance:
- Faster access to cash: Outstanding customer invoices are not paid only after the payment deadline has passed, but are converted into available cash at short notice.
- Greater planning certainty: Incoming payments become more predictable, as recruitment agencies are less dependent on the payment behaviour of individual clients.
- Financing wages on time: Ongoing obligations such as wages, social security contributions and operating costs can be met more reliably.
- Easier financing of growth: New contracts, additional staff or increasing volumes of work increase financing requirements. Factoring can better cushion these needs.
- Receivables management: Depending on the factoring model, the factoring partner takes on tasks relating to incoming payments, dunning procedures and receivables management.
- Reducing default risks: With full-service factoring, bad debts can be hedged, meaning that payment defaults have less of an impact on cash flow planning.
- Preserving credit lines: Factoring can complement traditional bank financing and take the pressure off existing credit lines.
Which staffing agencies can benefit from factoring?
Factoring is particularly beneficial for Swiss staffing agencies that regularly have outstanding receivables from business clients and need to pre-finance running costs. The decisive factor is not so much the size of the company as such, but rather whether a liquidity gap arises between the provision of services, invoicing and receipt of payment.
Factoring is particularly useful if you:
- need to pre-finance wages, social security contributions and running costs
- regularly issue invoices to B2B clients
- wish to bridge payment terms of several weeks
- wish to finance growth, new orders or additional projects
- wish to make your incoming payments more predictable
- wish to ease the burden on your accounts receivable management
- wish to reduce bad debts
- wish to preserve or supplement existing credit lines
Factoring is less suitable if services have not yet been fully rendered, receivables are heavily dependent on individual customers, or contracts exclude the assignment of receivables.
For companies in the temporary staffing sector, it is also important to note that this activity requires a licence in Switzerland. SECO defines temporary staffing as the commercial provision of workers to clients for work assignments; within Switzerland, a cantonal licence is required for this. (Source: SECO).
Is factoring right for your staffing agency?
Take the free assessment and see whether factoring is suitable for your current financing situation.
often arises precisely when business is going particularly well. More contracts automatically mean more staff on assignment and, consequently, higher wage payments, long before the
relevant client invoices have been settled. It is therefore crucial to have financing that automatically scales with the volume of business.”
Marc Meier
Managing Director, A.B.S. Factoring AG
Frequently asked questions about factoring for recruitment agencies and temporary employment agencies
For recruitment agencies, factoring involves selling outstanding client invoices for services already rendered to a factoring partner. This provides recruitment agencies with faster access to cash and means they do not have to wait for clients to settle their invoices once the payment term has expired.
The costs of factoring depend, amongst other things, on turnover, invoice volume, customer structure, payment terms and the desired scope of services. The terms and conditions are therefore assessed on a case-by-case basis. The key factor is whether factoring makes financial sense in terms of the increase in liquidity, planning certainty and the reduction in workload.
Typical requirements include B2B business with commercial customers, services that have been fully rendered, regular invoices and traceable receivables. Furthermore, payment terms and the customer structure should be compatible with the factoring model. Whether factoring is actually possible is assessed on a case-by-case basis.
With full-service factoring, the factoring partner can take charge of accounts receivable management, payment reminders and protection against bad debts. This takes the pressure off internal resources and makes it easier to plan for incoming payments.
Staffing agencies can pre-finance wages through factoring by selling outstanding customer invoices for services already rendered to a factoring partner. This makes cash flow available sooner, even if customers do not pay their invoices until 30 or 60 days later.
For temporary employment agencies, a financing solution that takes into account regular wage payments, long payment terms and recurring client invoices is ideal. Factoring can be a useful option here, as it deals directly with outstanding receivables and makes it easier to plan for incoming payments.
An overdraft facility provides a traditional line of credit. Factoring, on the other hand, draws on existing receivables and converts outstanding invoices into cash more quickly. Factoring can be particularly attractive for recruitment agencies when they need to finance growth, wages and long payment terms without placing an additional burden on existing lines of credit.
Growth in the temporary staffing sector often increases short-term financing requirements, as more staff need to be deployed and wages need to be pre-funded. Factoring can help to meet these requirements by converting outstanding invoices into cash more quickly.
Yes. Factoring can help bridge payment terms of 30 or 60 days. Staffing agencies receive funds sooner and do not have to wait for clients’ invoices to be settled in the usual way.
Factoring may be suitable for recruitment agencies if invoices are regularly issued to business clients and the services have already been provided. Whether factoring is the right solution in a particular case depends on the business model, the structure of receivables, payment terms and the client base.
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