How Blue-Collar Staffing Companies Grow Using a PEO

Owners and managers of blue-collar staffing companies juggle a ton of different responsibilities every day. Between finding qualified warehouse, manufacturing, and construction workers and meeting with prospective clients, it can be difficult to find the time to handle administrative tasks related to human resources. Let’s also not forget about implementing safety procedures to ensure employee safety on job sites. A PEO (professional employer organization) is a company that specializes in payroll, human resources, workers compensation, employee benefits, risk management, and administrative support for businesses.  A PEO is a single vendor solution that simplifies employee management in a variety of industries. That’s why blue-collar staffing companies and PEOs are such a perfect match to help your company succeed. 

As organizations that provide outsourced services themselves, blue-collar staffing companies have a unique understanding of the value a PEO can provide, making the relationship especially beneficial for both parties.

There are a number of reasons why PEOs and blue-collar staffing companies make great partners:

• PEOs save staffing companies time and money. Blue-collar staffing companies are focused on maintaining and growing their businesses and managing their margins and time spent on non-revenue producing activities like compliance and risk management can mean losing out on financial opportunities. By outsourcing tasks to a PEO, the blue-collar staffing company can pay attention to what’s really important -– recruiting, accounts receivables, business development, and taking care of their team members.

• PEOs can help with insurance. Imagine you own a blue-collar staffing company in one state and you land a big contract in another state. Suddenly, among everything else like setting up your new SUTA account, you find yourself having to find insurance to cover you in the new location – something that’s become even more challenging in the Covid-19 era. If you work with a PEO that is already licensed and has coverage in other states, the process can be seamless. This gives business owners the freedom to grow and expand into other states and other markets with the full support of the PEO behind them from a licensing, regulation and compliance standpoint. Additionally, PEOs can help minimize the cost of workers’ compensation insurance and there are no deposits or audits with convenient pay-as-you-go policies.

• PEOs can support cash flow. Here’s a common scenario if you own a staffing company: you land a contract with a manufacturing client and the supervisor says he needs 10 people to start work immediately. You go ahead and put 10 people to work, they work all week and the supervisor comes back to you and says they want to keep them on for another six weeks. As the staffing company owner, you have to cover the payroll burden long before you ever invoice your client. Because, as you know, most manufacturing contracts are a net 30 or even a net 45 so you’ll be waiting to invoice them until after the work is done and they don’t have to compensate you for 30 days (and that’s assuming they pay on time). That means you’re not collecting any profit until you get that payment. With the PEO being a per-pay-cycle type of contract, you can maintain a positive, steady, and reliable cash flow. Plus, a PEO can help you source and partner with a funding company to help you cover your payroll expenses until you get paid – a common practice for blue-collar staffing companies – you can ensure you have enough money to cover your bills.

• PEOs can assist with managing unemployment claims. Once those 10 people you’ve placed at the manufacturing site finish their six-week project and come off the payroll, there can be an employment gap as your recruiters try to line up something new for them. Those employees are now eligible to collect unemployment. Then, two weeks later, they find another job, and the clock begins again. Managing this cycle of “on the payroll, off the payroll” can consume a lot of time and money. By hiring a PEO, the staffing company can shift a portion of that responsibility and they’ll enjoy the peace of mind in knowing that the task is being handled by professionals.