Kelly Services is up 156% this year, TrueBlue 140%, AMN Healthcare 125% and Manpower Group 111%. Commercial staffing stocks as a group are reportedly up around 80%.

Those are pretty extraordinary moves, particularly given that the jobs market itself isn’t exactly booming.

The explanation seems to be that investors are starting to price in a staffing recovery. US temporary and contract staffing employment is now 4.4% higher than a year ago, and the current uncertainty around the economy, AI and future workforce requirements may actually be helping. If employers aren’t confident enough to commit to permanent headcount, flexible labour becomes a much easier decision.

There is also some fairly serious operating leverage in these businesses after several years of cost cutting. TrueBlue’s latest results are a good example. Revenue increased 12%, SG&A fell 7%, and adjusted EBITDA went from $3m to $11m. You don’t need spectacular top-line growth for the economics to change quite quickly.

From an AR perspective, though, there’s another interesting consequence if the market has genuinely turned.

Staffing businesses have to fund growth.

Win a major new account and you might start paying hundreds or thousands of additional workers almost immediately. The customer could be paying you 30, 45 or 60 days later.

So it is entirely possible for revenue, placements and profitability to be improving while the cash requirement of the business is increasing at the same time.

This is one of the reasons we’re increasingly interested in staffing at CREST. In most industries, knocking five days off DSO is obviously desirable. In a large staffing business it can potentially release millions in working capital which can then be used to fund the next tranche of growth rather than borrowing to do it.

Perhaps that’s the slightly overlooked part of a staffing recovery.

Winning the work is one thing. Funding it while you wait to get paid is another.