When looking at whether to use an MSP or VMS, staffing firms should make sure to assess the financial strength of the firm, the American Staffing Association wrote in an issue paper titled “Managing Risks in MSP and VMS Arrangements.” MSP and VMS providers can bring significant value to staffing buyers and staffing firms, but there can be financial risk if the MSP or VMS provider is unsound, according to the organization. In its issue paper, ASA provides a list of warning signs that an MSP or VMS provider may go bankrupt and tips on mitigating financial risk.

The industry was rocked in 2008 when VMS provider Ensemble Chimes’ parent company filed for bankruptcy, according to the History of the Staffing Industry report by SIA.

“The surprise announcement left many staffing suppliers out of pocket and scrambling to pay temporary workers, and with staffing customers wondering how to keep their contingent programs functioning,” according to the report. “Chimes had 42 active clients in the United States as of the fourth quarter of 2006 with 42,000 temporaries running through its system.”