Factoring for Your Recruitment Company

The word on the grapevine is that yet another of the high profile companies that offer both back office and “factoring” is about to collapse leaving many of it’s client companies in the lurch.
Factoring and the Recruitment Company
Whilst I can understand the appeal of outsourcing the payroll administration I am very dubious of some of the back office companies that also offer a funding package as they seem to be obtaining the neecessary funds by “back to back” factoring. This can be very dangerous as if the back office company’s funding is reduced by their factoring company through problems unconnected with yourself, you will still feel the backlash.

There are a variety of ways to achieve both payroll administration and funding including using a payroll bureau in conjunction with a factoring company or using a factoring company that has their own payroll facilities but in my opinion using a payroll bureau for both administration and funding is the most fraught with potential problems and should be avoided where safer alternatives are available.

What do you think?