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Staffing buyers paying more slowly

February 05 2009

Staffing buyers' rate of payments to staffing firms slowed in January, but remained quicker than a year ago, according to the Capital TempFunds credit index.

In January, the index's reading was 107, down from 113 in December. A year ago January, the index was at 96. The higher the index number, the quicker buyers are paying.

"While still above our baseline, the pace of collections has slowed in each of the last three months, but most dramatically in January," said Jim Rothman, president of Capital TempFunds. "This may be the start of the cash preservation trend that had been expected in last quarter. While payment activity is still positive, the trend is suggesting tougher collections performance to come. We encourage staffing companies to remain vigilant in their credit department, both in terms of collecting from existing accounts and opening new ones."

Many pundits are also saying bankruptcy risk remains elevated, Rothman said. "Staffing companies need to be aware of the risk of preference claims in the event of a customer bankruptcy."

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