Making payroll for your company is one of the most important jobs as a business owner. If you can’t make payroll, you risk losing employees, stifling growth and potentially going out of business.
Having enough cash on hand to make payroll is a problem that many businesses struggle with, even if they have stable customers who pay their bills on time.
Unfortunately, “on time” can mean 30-90 days after an invoice is submitted, leaving the business owner behind schedule and in a cash crunch all too often. Although your business will eventually collect on those invoices, you don’t have time to wait because you need to pay your employees now. While there are traditional options for acquiring funding for a small and/or growing business (i.e. bank loans or investments) many companies do not have the assets to borrow against, the credit score or the operating history to make those viable options. That’s where payroll funding becomes your best option.
Payroll funding is the act of selling your receivables for cash up front. It is a form of financing specifically designed to help staffing companies make payroll before they collect from their customers. When you submit an invoice to a customer, the payroll funding provider purchases that invoice from you and gives you the cash that day. Once your customer pays the invoice, the provider sends you the rest of the money, minus their fee. With that cash in hand, you can achieve steady and sustainable growth.