Payroll Funding

What is Payroll Funding?

Payroll financing allows a company to sell its invoices to get immediate cash to fulfill its payroll needs. Payroll funding works by providing capital to pay employees or temporary staff before its client pays that company. It is giving companies the ability to meet payroll requirements every week.

Payroll Funding, Payroll Financing

Reasons to Use Payroll Funding Solutions for Small Business

What are the Benefits of Payroll Financing?

Recruiting and retaining talented staff is one of the top challenges a business face. However, irregular payments to staff will drive them away from a firm. Timely payments to employees are the prerequisite to keep employees happy and satisfied. With payroll financing, a startup staffing company can sell their invoices to a factoring company and receive weekly advances to pay temporary employees. Same is true for any small business and startup; invoice factoring provides the company with immediate funds to cover payroll, pay for business expenses, and grow.

Transactions are fairly simple. Once the startup staffing company sets up a financing account with the payroll funding company, they submit an invoice along with a copy of the time cards (detailing due dates for payments). Once they have the invoices, the payroll finance company advances up to 90% of the invoices and deposits the funds in the bank account of the staffing company. The funds can then be used to cover payroll.

How does Payroll Funding Work?

  1. The staffing company delivers and invoices for services.
  2. Staffing company sells its accounts receivables to a payroll funding company to keep the cash flow and meet payroll.
  3. The payroll finance company advances up to 90% of the invoice or invoices which can be used to cover payroll.
  4. Once your customers pay in full, the payroll funding company settles the transaction by depositing the remaining balance of the invoice, less a small fee, into your company bank account.

How Fast is the Money Available for Payroll Funding?

The Release of Payroll Funding would depend on the Factor. Usually, factors offer exact same-day 100% Payroll Funding.

How Much does Payroll Funding Cost?

Generally, the cost of funding varies between 1.25% – 2.5% per month. However, factors offer the discount fee as low as 1% based on the sales volume, the credit quality of the end customer and how quickly they will pay the invoices.

What Are The Advantages of Payroll Funding?

  • No cash flow issues: The factoring company would ensure that there is always consistent cash inflow. You do not need to worry about how to meet weekly and fortnightly payroll.
  • Same day payroll funding: Once an account is established and the factoring company receives fax or an electronically generated copy of the invoice with any backup documentation by 10-11am, funds will typically be wired to your account by 4 pm that day. That’s money sent to you within 24 hours.
  • Competitive rate structure: A market discount rate is between 1.25% to 2.5% per month. However, there are factoring companies offering rates of 1% a month.
  • No hidden charges: There are no hidden charges involved. Unlike traditional financing options, Factoring companies are straightforward. Choose factors that have been in business for a long time and can offer you the best advice for finance related solutions.
  • Choice of best payroll processor: Many factoring companies may want the staffing company to place their payroll processing with them. However, there are factoring companies that allow the staffing companies to choose the best payroll processor for their industry and expertly handles the funding of payroll.
  • Best customer service: Work with factoring companies that have been around for quite some time. These factoring companies have built a reputation by offering the best customer service possible. All executives expertly handle funding procedures.
  • Enables you to grow your business: With lesser worries at hand, a company can concentrate on taking up a new project/orders. Payroll funding gives them the confidence to hire new staff to fulfill new client orders and not lose your talented human resource due to lack of funds.
  • Easy to obtain: Payroll funding, through factoring invoices, are easy to get. Bank loans application is a lengthy and complicated process. Small business and startup benefit most from this as most of the times they are unable to meet all requirement for a bank loan and gets stuck due to lack of funds. With factoring services, you only need creditworthy clients.
  • Does not add debt to your balance sheet: Bank loan adds debt to your balance sheet and always appear as a liability. Instead, it is a sale of your assets (receivables). Hence, it is debt-free financing. This structure is lucrative to large companies for funding.
  • Allows you to offer competitive terms to the clients: Commercial clients like to pay in 30-60 days. It becomes hard to accept this norm as a startup or small business because you have employees to pay every week or 15 days. However, with payroll funding through invoice factoring, you can offer this competitive term to your clients. It allows you to add more clients to your business.
  • Flexible: Your financing option grows as you grow. As you get new orders, you can get more funding through factoring. As long as you add creditworthy clients to your business, you can be confident not to face any cash flow problems.
  • Opens the way to conventional financing solution: Many companies have found factoring to be a stepping stone to transit to a more cost-effective financing resource like ‘Line of Credit.’ Factoring allows you to build a track record to qualify for an alternative financing option.
  • No long-term contracts: There are no long-term contracts compared to other funding options.
  • Fast cash: Unlike other financial solutions invoice factoring is a quick fix. Paragon offers same day 100% payroll financing.

Which Industries Can Use Payroll Funding?

All industries use payroll, allowing any industry to use payroll funding. Any business that extends credit or expects payment in return for providing goods or services qualifies as a possible client.

Paragon offers invoice factoring payroll funding to:

  • Small businesses
  • Start-ups
  • Non-bankable companies
  • Staffing companies
  • Janitorial
  • Healthcare staffing
  • IT staffing
  • Security guard company
  • Retail
  • Utilities
  • Financial Services
  • Government
  • Education, and
  • Commercial

What are the Steps to Follow to Qualify For Payroll Financing?

  1. Contact a payroll financing company and share which invoices you would like to factor.
  2. The financing company runs a credit check on those clients to ascertain their credit-worthiness.
  3. The financing company will be able to confirm their approval within a few minutes or hours.
  4. Fax or send an electronically generated copy of the invoice with any backup documentation.
  5. The financing company then assigns an account executive to you as a single point of contact.
  6. Then factors credit the percentage of the invoice value. Generally, financing companies offer up to 90% of the invoice value on the same day through wire transfer.

What are Additional Benefits of Payroll Funding Without Overhead Cost?

  • Before granting or extending the credit, there is a need to evaluate the creditworthiness of customers.
  • You save money on the overhead cost of keeping accounts receivable or billing personnel.
  • Relieve yourself of having computer backups, or the security of data in place related to Accounts Receivable.
  • Save your valuable time, which otherwise is consumed in printing and mailing statements to your customers.
  • Enhance and Improve collection practices and monitoring of receivables.
  • Allows you to have centralized processing of payments with lockbox services.
  • Eliminates the need to send employees to the bank to make deposits.

Paragon has built its reputation by offering the best customer service possible coupled with competitive rate structure has helped Paragon become one of the premiere factors. If you sell a product or provide a service for creditworthy customers, there is no need to wait 30-90 days to get paid.

We can advance funds to you the same day you invoice your customer and follow through on those invoices. Aside from that, we’ll also verify acceptance, do credit approvals, collections and enhance your ability to operate your small business without worrying about working capital, payroll, or past due obligations.

Get great rates and no minimums for payroll funding for your small businesses, staffing companies, healthcare staffing, IT staffing, or security guard company. Payroll loans for small business can be difficult to acquire. You need a Payroll Financing Solution from a dedicated payroll funding company.

NEED FAST 100% PAYROLL FUNDING?

Apply Securely! Call 888-400-5931 ext 1 or Email us.

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