During the 2008/2009 recession, staffing companies providing skilled labor to businesses on open credit terms were left with significant loss in bad debt. Given the industry’s thin profit margins, a company with a profit margin of 2% to 5% margin would have to generate new revenue of up to 50 times the amount of any bad debt just to break even. “There were situations where staffing companies, including our own, lost money even when accounts receivable was only 20 days old,” said Stacey Duggan, COO of The Staffing Edge. “We needed to find a way to prevent this from happening in the future.”
The Staffing Edge, a back office service provider dedicated to the temporary and contract staffing industry, not only wanted to identify credit risk solutions for itself, it also wanted to offer them to its 150 member companies. The staffing industry carries two major loss risks: non-payment and worker’s compensation claims. By offering member companies a credit insurance policy, The Staffing Edge would be able to remove one of these loss factors and help them to secure their accounts receivable.