A temp agency is a low-margin business. That means you’re going to need a lot of temps in the field to remain profitable. And you are going to have insurance coverage for the risks every one of those temps exposes you to. To further complicate matters, different clients are going to want different types of insurance and to remain competitive you have to match or have better insurance than the big players in the industry. As a smaller temp staffing agency, you won’t enjoy the bulk purchasing power that larger temp agencies have. That means you’ll be paying higher rates for the various policies you need to purchase. So, how do you get all of the insurance you need without bankrupting your business?
Meeting Client Demands
Some clients are going to expect you to provide insurance that far exceeds the normal industry levels. They may have unusually expensive equipment or merchandise. Or, the nature of their business may be more costly or hazardous than usual. Whatever the reason, they’re going to expect you to provide whatever level of insurance it takes to make them feel comfortable. If you want them as clients, that’s exactly what you’re going to have to do.
Insuring Against Theft
Let’s face it—when your temp first arrives at a business, they do so as a complete stranger. They may be the most honest person in the world, and they may have worked without issues at dozens of other clients. However, until they prove themselves to the current client, they do represent an unknown factor. For many clients, that creates an uncomfortable situation. The client may expect you to insure the temp against possible theft of equipment, materials, and even information. Since those things could leave the insurer on the hook for a lot of money, the insurance is predictably high.
Insuring Against Damage
In every business, things occasionally get broken. If one of your temps breaks a stapler or drops a coffee pot, the client will probably just write it off. What if they damage a forklift? Or knock over a pallet of fragile merchandise? With a damage total running into the thousands of dollars, you’re going to hear about it from the client. If your temps are working around expensive equipment and merchandise, the client is going to expect a higher level of insurance. And that’s going to cost you more in premiums.
So, how do you afford the insurance you need to land the high-end clients? A large temp agency may purchase thousands of policies a year, allowing them to negotiate a lower rate from the insurer. As a smaller temp agency, you may not have that kind of bargaining power. Of course, you don’t want to give up on those big clients either, do you?
When the recession hit a few years back, many companies closed their doors leaving their staffing provider with unpaid invoices. Insurance on the receivables would have paid up to 85% of the invoice giving the staffing provider back much of what they financed in payroll and government fees. Receivables Insurance is extremely costly and has many rules and processes that must be followed to get a company covered under its umbrella. Most small staffing firms can’t afford the coverage and don’t want to spend the time to administer the program. But when faced with a large unpaid invoice because the client went belly up, the costs and time seems to outweigh the loss.
A back office service provider like The Staffing Edge can help you afford the insurance you need to land those big contracts and ensure the invoices for the ones you do have are covered. Since they work with dozens of temp staffing agencies, they have the same negotiating power as the large agencies. Going through them, you’ll be able to get all the coverage you need to satisfy even the most demanding clients, while enjoying the low premiums usually reserved for the biggest agencies. And with receivables insurance as part of your back office provider package, you’ll sleep easier knowing that you are covered for hard financial times too.