Paragon Financial said that as the economy continues to gradually improve, staffing firms are seeing greater demand for their services. Paragon said it has experienced an increased interest in factoring services from staffing companies in recent months. Staffing employment was up 2.4% in March versus a year earlier, according to a report from the American Staffing Association. And further increases in staffing employment are anticipated throughout the year.

The new demand is coming from a wide range of areas, including IT, healthcare, security personnel and other sectors.

Paragon said that as demand continues to grow, staffing companies will need to focus more on their core activities of working with client companies; identifying the best, most talented temp personnel for their clients and deploying this staff into the field. Further, they will want to grow their bottom line more rapidly, as they pull further away from the less-profitable periods of recent years that occurred in the aftermath of the financial crisis. To help them in their effort to increase profitability, many staffing firms outsource their payroll function for a variety of reasons.

According to Paragon Financial’s president, Michael Rossi, “Outsourcing payroll can help to significantly reduce a staffing firm’s costs. Payroll companies are specialists, and can handle the firm’s payroll more quickly and efficiently than an in-house bookkeeper or other back-office personnel. Indeed, the cost of payroll outsourcing is typically much lower than having in-house people do the job.”

Rossi continued by stating payroll firms keep themselves up-to-date on tax laws, and state and federal regulations, and help staffing firms comply more fully and completely with tax and legal requirements. A staffing firm’s in-house personnel may not be as fully current on the tax and regulatory environment as is the payroll firm. This can cost the firm dollars and cents. For example, in some cases, if the wrong paperwork is filed, or if filing deadlines are not met, fines and penalties can run into the thousands of dollars.