Renee Jackson — SVP, National Sales Director
Kyle A. Rich — VP, Business Development Officer
Emily Lebron — Senior Underwriter
Renee (Host): Thank you very much for joining us today. As we approach the latter part of the third quarter, and the continuous demand for financing staffing transactions, we’ve decided a prudent topic for our quarterly webinar would be to discuss why staffing agencies opt for AR financing. Prior to handing the floor over to Kyle and Emily, I’ll give you a high-level overview of who we are and what we do here at LSQ.
Founded in 1996 by a gentleman by the name of Max Elisque, currently, we are one of the largest working capital finance companies here in the US. Within our national footprint we have funded over 25 billion to small to medium-sized businesses. In 2020, we funded just north of 4 billion. And staffing does make up about the largest element within our portfolio, a little bit greater than, I’d say we’re roughly around 53%.
Introducing to you today’s speakers, my name is Renee Jackson. I lead the sales team here at LSQ. We also have Kyle Rich joining us. With extensive experience in the temp staffing space, Kyle has provided solutions for companies nationwide. Having funded the most staffing specific deals on our team, he’s worked with a variety of businesses ranging from startups to companies with revenues exceeding 30 million annually. Originally from Cincinnati, Ohio, Kyle has lived in Chile where he played pro basketball and now lives in Orlando, where he recently celebrated 11 years with us at LSQ.
Emily Lebron, who is our senior underwriter. Emily has been in the lending industry for over 15 years in a variety of sectors, including bank lending, merchant cash advance, and factoring. She’s received her bachelor’s of science in economics from Boston University, where she became an avid Red Sox fan. She also has an MBA with a concentration in finance, from Nova Southeastern University. In her free time you’ll find Emily traveling and spending quality time with family and friends. Welcome Kyle and Emily.
Just to touch on today’s agenda. We’ll go through, we’ll spend some time on operational priorities and challenges for staffing agencies. Like we mentioned earlier, why agencies opt for AR financing, and then just run through some real-world scenarios and success stories, run through our platform, and how the accounts receivable financing works through LSQ. And then, open it up at the end for Q&A. And now Kyle, I’ll hand the floor over to you.
Kyle: Thank you, Renee, I appreciate that. So, as we talked about today’s themes, specifically to this industry, the main priorities as we’ve seen them in our history for 25 years for Staffing is basically meeting the payroll needs. Obviously that’s a major criteria. And that helps in conjunction with meeting the growth of your company to meet those payroll needs, and the dynamics they represent as a company. The challenge is, of course, various customers have net terms that extend out for a while, or they can be delayed, and those delays can cause headaches to you as a business owner. And the challenge overall to attain the obvious, the long-term goal of getting bank financing.
There’s many options you can look into in this industry for financing. The first one, we typically call it friends and family, your own cash. And that gets you started and takes you a certain level, but it helps, it hinders, or it doesn’t help you in your growth cycles that you want to get into. The bank line, as we mentioned, is the optimal place to go but it’s very difficult, these days especially, to obtain bank financing.
To be able to grow your business better with a bank… it’s cheaper, but you often don’t get the amounts that you need. So there’s a struggle with that. The solution we bring to the table with accounts receivable financing works very well in this industry. We can grow faster, or we can help you attain what you want to get to. We’re a little bit more expensive than a bank, but we’re usually more adaptable to the needs of the company to help you grow.
So why do staffing agencies get AR financing? Right? Good question. Real good question. So basically, how it works for you, if you’re unfamiliar with it is you provide your workers in a field, and you invoice for the previous week for your customer. You submit that invoice to us, we typically advance you up to 90% of it right away. Your client will pay the invoice when it comes in, you get the balance, the remaining 10%, less my fee. So we’re providing you the capital to make your payroll needs. That’s why it works well.
Now, what do you get with that? So we get you same day funding. And what that means is if you give me an invoice this morning, you’ll get your money today. If you get the invoice in the afternoon, you’ll get it tomorrow. The same day, 24 hour funding to meet your payroll needs, because that can be a very tight circle.
We can finance your unbilled invoices, which we’ll talk about a little bit later on, which is a growing part of the industry. The biggest part is we can meet your growth. That’s a big part of what you’re doing. You need to know that if you accept the contract out there, you have the funds to service the contract, and that’s where we come into play. We bring you some really good technology. We’ve had relationships with the banks for our 25 years, so our technology is on a par with them. So we bring that to you. We’ll provide you with a portal, a website you can utilize, which we’ll go into a little bit later on. But in that portal allows you to get customer credit information.
So if you’re working with someone, or trying to work with someone, you can make sure that they’re creditworthy. That’s a big part of what we do. And we’re pretty fast. You’ll find out overall, 7 to 10 business days, we can get you funded up and running. And it’s a pretty easy, pretty painless process, so we can walk you through and we may highlight that a little later on.
So what are the benefits of AR financing you’ll find? As I said earlier, the biggest part is we can help you grow, meet your growth potential. And that’s a big part of your industry. You need to know that you can go out there and earn larger contracts, or many contracts, and have the funding behind them to support it. Which is probably the biggest benefit we bring to you.
We help you mitigate risk because we’re looking at your customers and their credit worthiness, and we let you know about them. Because what you don’t want to do is enter a contract with someone and have them fail as a business. Because that hurts everybody. And we do these things. We check those throughout the life of a relationship. We’re constantly looking online at our credit tools to make sure people are good. So we bring that to the table for you. And again, the biggest part is we’re unlocking your growth, helping you meet what you want to do and helping you. As long as your customers are creditworthy, basically the sky’s the limit, as far as being able to fund you and help you get there. So now I’ll pass it off to Emily.
Emily: Thank you, Kyle. So why don’t we just talk a little bit about some of the benefits. One of the specific benefits that LSQ can provide, which is financing on unbilled receivables. Let’s explain a little bit about what an unbilled receivable is, which is basically accumulated time, not yet invoiced. So for example, weekly time that’s accumulated, and then you’re doing payroll on that weekly timeframe as well, yet you are billing your customer on a monthly basis. We help sort of fulfill that gap. And how does LSQ do that?
You as the client would go ahead and create a proforma invoice, which you would then send to LSQ. LSQ will purchase that receivable, advance 85% on that receivable, which will help you with your payroll needs. Ultimately, once you go ahead and invoice your customer, let’s say in this example, at the end of the month, you would submit that invoice to LSQ, where we would then utilize 90% of that invoice to reconcile and clear up your unbilled account. So that way we’re able to fulfill that gap and you’re able to meet your weekly payroll need while still billing your customer on a monthly basis. Now, let’s go ahead and run through some real-world examples of where LSQ has been able to provide some benefits for our clients.
Kyle: Thanks, Emily. So this one is a real exciting one that we had that’s a small staffing company who was four or five months old and growing, but had the opportunity to gain some significant clients. So when they came on board with us, they were probably billing about a hundred thousand a month, which is nice growth for a brand new company. But what happened was with our backing, and the approval that we gave them for the clients that we’re looking at, they were able to obtain a couple of large contracts and they hit a million dollars a month within five months of coming on board with us.
And then shortly after that, they climbed up to over 2 million a month. So you can see the power of what we can bring to a customer when they’re looking for some of these large contracts, and these are net 60 customers. So you can just imagine the stress the business owner has waiting two months with all this money. It’s a very difficult thing to do, but without us, they had no way of accepting these deals. And they’re growing and expanding to other areas as well. So this is a really, really nice success story to understand the power of how AR financing can really help. Em, do you have a couple of examples for us?
Emily: Yes, I do. I have actually a really great example where we were able to provide some financing to help complete a management buyout. Recently, we had a recent staffing company, professional services, engineers, consulting. They were in business for over 15 years. The president slash CEO wanted to actually buy out the current managers. So what we went ahead and provided was a $5 million line to assist in the completion of that buyout, and also be able to provide continued payroll and working capital needs. One of the benefits here is that in addition to that buyout completion, we were actually also able to operationally assist. Due to the changes in management, there were also some continued habits, I guess, that had been moving on from the beginning that we needed to sort of clear up. And over the past few months, LSQ has been able to provide some assistance, not only in billing, being able to provide better tracking, along with collection services and cash posting, which is helping the company now track into a better trend.
Another really great example that we were able to provide some benefits here was growth. We have plenty of staffing customers or clients who currently have reached their capacity with their current lending company. So what they’re engaging LSQ to do is to provide larger lines in order to assist in that growth. So within the past, I would say six months, we had a call center staffing company. They also had been in business for about 15 plus years. So where LSQ, was able to provide some assistance is that we were able to provide a $15 million line in comparison to their, at the time, eight— along with being able to provide financing on that unbilled component, which we had mentioned earlier. So not only were we able to give them that larger line, but that has given them the opportunity to bring on additional customers, larger contracts, to help their trend in growth and hopefully get a larger line within the next few months.
Kyle: That’s a great question, Renee. So there’s a lot of reasons. We, again, we have a lot of experience. 25 years means something and we’ve done a lot with it. We’re pretty fast. We move pretty well with people. Like I said, we usually come on 7 to 10 days. We’re pretty flexible with some of the structures. As you heard some of the examples that Emily brought on, they’re different and the structure matters and they help the clients. So we kind of catered it to what their needs were. And you’ll find out that we’re pretty flexible in what we do. We’re not a real hardline decision-making company. We try to work with our clients and see what they need, and we work with them to do that. One of the ways is when you come on board with us, we actually assign you a dedicated relationship manager. You have their number, you call them directly.
You’re not calling into an 800 number where you get somebody who looks up your account. You develop these relationships over time. They get to learn you, you get to learn them. We get to learn your customers. And there’s this relationship that stays. We have many clients who’ve been with us here for double digit years. And that’s based on, I believe, the relationship managers we have who are really qualified, good people. We provide you a great deal of support. We can help you do things. As I mentioned, you can look up customer credits on your, on the dashboard that we provide you. And we communicate back and forth. And again, the dashboard that we mentioned, the portal, it’s a really exciting tool. And actually it’s very well received in your industry. And I’ll actually go over that in the next slide for you.
So the dashboard was actually made, we created ourselves from input from all of our clients. And it’s evolved over the years and we’ve added things to it. I like to think of it as online banking on steroids. So as a business owner, you need to have information. You’re probably mobile, you’re doing things, you can’t stop, power up a laptop, get online, do everything you want to. You can access it from your phone. You can get on there anytime and see what your balances are. See what your numbers are. This allows you to check with your customers. You can go in deeply in some of the reports and looked and how someone pays you over a certain period of time. Lots of information at your fingertips, far more than I can talk to on an hour for you on the phone call. Suffice it to say, you use a lot of information.
You use this to help submit invoices. You literally drag your invoice, a copy over to our website, and that’s how it comes into us. You know, it’s very easy to do. If we didn’t tell you how to work it, you probably could figure it out yourself with very little interaction from us. So it’s very user-friendly. It’s very fast. It’s free, doesn’t cost anything. And it’s 24/7, it’s up to date. So you’re getting real-time information at all times. So for business people, like yourselves, the ones that we know, you’re very mobile and this fits your lifestyle pretty well. So that’s a, it’s a really exciting tool, I think, in your world.
So as we recap this, the benefits specifically in this industry, for us, is allowing you to let your business grow by letting someone like us increase your capital needs. And this isn’t debt to you. You’re not losing equity. You’re taking full control of your company. It’s very ideal. You’re an industry where you need more capital in order to get more business, and to get more business you need more capital. So there’s this constant circle that we kind of provide you. Emily talked on the unbilled part of it, which is a growing segment. And a lot of people don’t feel comfortable with that, and we do. We’re pretty good with that. The dashboard allows you to submit invoices 24/7. You get your money right away. We support you with growth.
Scaling of the business is a big part of it. If you can take someone who’s new and take them to 10 to $15 million a month, and find that’s a pretty big size of growth process that we can bring to the table. And just to let you know, we have multiple clients who are in that category of high volume like that. We’re very fast. It’s a very transparent process. We tell you what’s going on, we let you see it. We don’t spring things on you. Pretty good. And as I mentioned, the dashboard is very user-friendly. This is not something you get into where you go, “Gee, I need help.” Like I said, you probably can work it on your own. Very, very positive. It’s a very good process for you. Most people like that. That brings us back to you, Ms. Renee.
Renee: Fantastic. Thank you, Kyle and Emily. So let’s go ahead and open up for Q&A. Please remember to submit your questions via the control panel. Let me just see, it looks like we already have a few in the queue. Question one. I think this one’s for you, Kyle. So, are you nationwide and do you help businesses outside of the U.S.?
Kyle: Good question. Good question. We are domestic. So the companies we work with need to be a domestic, meaning a U.S.-based company. So that’s first and foremost. We do not fund a company that’s based and located out of the U.S. Now, not to be confused, we can do some AR, some receivables where the end customer, the debtor, is out of the country. So if you’re a staffing company in the US, and you have a client in Canada, we can work with a lot of that. We have to look at it. It’s not a hundred percent, but it’s one of those questions, well let’s look at it and see what we can do.
Renee: Perfect. Thank you. Let’s see, I think this one is for you as well, Kyle. The question is, how do you determine the amount a firm is able to borrow?
Kyle: Very good. So unlike a bank who looks at someone and determines, based on their own creditworthiness, what amount they’re comfortable loaning, our limits are based on your customers. We look at each one of your customers and set a customer limit for each one. So if we felt comfortable giving 10 of your customers a hundred thousand line of credit, that’s a million dollars. You know, you’d be hard pressed to find that from a bank. So it’s virtually based on your customers, their creditworthiness. And in theory here, it’s almost unlimited for you.
Renee: We have a third question. Emily, I’ll toss this one over to you. The question is, do you work with non-staffing businesses?
Emily: Yes, we do. Great question. We’re very much interested in a wide array of industries, but we tend to shy away from most construction and medical billing industries.
Renee: Thank you. I’ll toss this one over to you as well. What is your turnaround time for a new client?
Emily: On average, we’re looking at about 7 to 10 days, which includes underwriting and the verifications part.
Renee: Give it a moment here. See if any more questions roll in. We have one more. Kyle, I’ll hand this one over to you. What is the best way to reach out to you, and what information will I need to get started with LSQ?
Kyle: Very good. Very simple. The best way to reach out, just give me a call. Give us a call. I think there’s a slide that has a contact information and emails. Reach out. Let’s have a discussion first. See what you’re doing, see what industry you’re in, and what’s going on. And then as far as moving forward, it’s pretty simple. We can get a pricing term sheet out to you, just if we can see an AR aging report and see who your customers are. It’s a big part of our world here in understanding that. And then you can move forward. But I’d say, Renee, the best thing they can do is just reach out, pick up the phone, call me, shoot me an email. Let’s have a quick five minutes conversation.
Renee: Agreed. Well, at this time, we do not have any more questions. But first and foremost, just want to thank everyone for joining today. Thank you, Kyle and Emily as well.
Emily: Thank you.
Kyle: Thank you very much, Renee.
Renee: Have a wonderful day.