How much cash should a staffing agency keep?

A staffing agency pays its temporary workers every week and bills clients for their hours, often on 30 to 45 day terms. Worker pay is almost the whole cost. So the agency carries five or six weeks of payroll for its clients, and every new placement makes that bigger.

Payroll per run, all-in $ How often you run payroll Fixed bills per month (rent, loans, insurance, software) $ Days your customers take to pay, on average days Cash in the bank today $

Minimum to keep

Two payroll runs plus one month of fixed bills

Comfortable level

Covers costs while you wait for customers to pay, plus one month

Weeks your cash covers

If no customer paid you

The starting numbers are an example. Replace them with yours.

How cash moves in a staffing agency

Temp payroll goes out weekly, before clients pay.
Growth needs cash, because each new placement adds weekly payroll before the first payment.
Many agencies use invoice factoring or a payroll funding line to close the gap.
Workers' comp and payroll taxes ride on every hour paid.

Why the usual rule falls short

Two agencies each bill $300,000 a month. One bills weekly on 15-day terms. The other bills weekly on 45-day terms. The second carries about four more weeks of temp payroll, around $240,000, before clients pay.

How the calculator works

Result	Formula
Minimum to keep	2 × payroll per run + 1 month of fixed bills
Comfortable level	Monthly costs × (days to collect ÷ 30 + 1)
Weeks your cash covers	Cash ÷ weekly costs

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Also for staffing agency owners, see the staffing agency monthly financial report.