The symbiotic relationship between employers and employees is too important to ignore. Your staff depends on you for their livelihood while you need them to build a robust and profitable business. But, here’s the kicker! For unavoidable circumstances, you may not be in a position to pay them on time.
According to an American Payroll Association survey, approximately 74% of employees in America experience financial difficulty if their paycheck delays. This affects their morale and your business negatively. The good news is, this is where payroll funding for staffing companies comes to the rescue. You’ll discover everything you need to know about payroll funding in this guide.
What is Payroll Funding?
Payroll funding, also known as invoice factoring, is working capital for financing temporary staffing. Running a business can be tasking, especially managing human resource and ensuring everyone is paid on time.
For whatever reason, you may run out of cash to remain afloat, affecting your productivity and bottom line. Overall, payroll funding allows your business to access up to 95% of your account receivable to remain liquid.
So, whether your clients pay you after a week or months, you’ll always have enough cash to run your business stress-free.
Benefits of Payroll Funding
Quick access to payroll cash is only one of the benefits of payroll funding for your business. There are a ton more pros of payroll funding, as you’ll discover below.
- Mutual business collaboration and partnership: Many payroll funding companies go the extra mile of funding to offer accounting services. That’s the type of partnership you want to take your business a notch.
- Run your business debt-free: Too much debt can cripple your business. And when the debt is unsustainable, you may have to close down. Fortunately, you don’t have to get into unnecessary debts when you can turn to invoice factoring.
- Grow a scalable business: Scaling a business without adequate human resource can be daunting. You’ll, therefore, need to hire temporary staff on a need basis depending on your workflow. The best part is that you can always scale hassle-free with payroll funding.
What to Consider Choosing a Payroll Funding Company
There are plenty of payroll funding companies to turn to. However, choosing the right one for your business can be a struggle. So, how do you ensure you only work with the right company? Below are the things to consider when choosing a payroll funding company.
- Turnaround time: This is how fast you can get the funding after being approved. It’ll be best to only work with payroll companies that offer fast funding. Same-day or next-day is what you want to aim for. That way, you don’t have to wait a lifetime to get funds to run your business.
- Advanced rate: Invoice factoring companies hold up to 20% in reserve and pay out the rest. While some companies only pay 80% in advance, others pay 95%. As a rule of thumb, it’s best to go with a company that holds a smaller percentage of the invoice in reserve.
- Collaboration fees: Believe it or not, some invoice factoring companies will charge you some fees to approve your request. Others will also require you to pay a monthly fee to access their services. Only work with these companies if you’re comfortable with the minimums.
How to Qualify for Payroll Funding
Qualifying for payroll funding isn’t hard as you may want to believe. Many invoice factoring companies are straightforward to work with. However, the invoice should be good, your client should have a good credit score and credit history, and you need to run a valid and legal business.
If you’d like to get started today with payroll funding, that’s where Crown Financial, L.L.C comes into play. Don’t hesitate to contact us here.
