Payroll Funding
It should go without saying that paying your employees on time is key to keeping them engaged and motivated. If employees can’t trust that you’ll provide them with consistent paychecks, they may stop working at their best and some may even leave your organization altogether. The challenge is that organizations may not always have the cash flow they need to pay their employees on time. This is where payroll funding comes in. It allows organizations to process payroll even when they don’t have the liquid cash to do so.
What is payroll funding?
Payroll funding, also known as payroll financing, is a way that organizations can receive capital in order to pay their employees. This is useful for businesses that receive customer payments at longer intervals than when they pay their employees. Let’s say your organization offers invoice payment terms of 30 or 60 days. Your clients will only be providing you with cash at the end of each month or the end of every second month. When it comes time to process payroll, you may not have the cash necessary to pay your employees. Payroll funding eliminates this issue.
What are the benefits of payroll funding?
Payroll funding can be especially beneficial if you’re a small business or startup looking to grow and thrive in your industry. Here’s how:
1) Improves employee retention
With payroll funding, you can pay your employees on time without having to wait for customer payments. This commitment from your organization keeps your employees engaged, happy, and motivated, and they will be more likely to stick with your organization for a long time. As employees gain more hands-on experience and knowledge about the industry, you’ll be able to create better business strategies based on their feedback.
2) Gives your clients more flexibility
Clients expect their vendors to offer net 30 and net 60 payment terms because this gives them more time to arrange the funds necessary to pay the invoice. Providing this flexibility can make your organization more competitive and greatly expand your customer base.
3) Makes payroll a breeze
Unlike other loan options, payroll funding can be completed in no time. If your organization is creditworthy, receiving the cash advance will be simple. An added benefit of payroll funding over other loans is that payroll funding is not considered a debt on your organization’s balance sheet.