A business owner is always able to count on three things -- death, taxes and payroll. Payroll is an expense that is common to all businesses and its due date is practically set in stone.

When cash gets tight, you probably have a little bit of flexibility when it comes to paying vendors and the timing of other expenses, but that isn’t the case with payroll. Your employees aren’t going to be very happy if you tell them that you don’t have the cash to pay them right now.

This is where strategic financing is a big benefit for your business. Financing gives you the flexibility you need when a customer pays late and cash gets tight.

There are an array of financial products in the market that could be used for payroll financing, but most are not really suited for the job. You need financing that is quick, flexible and cost-effective.

Financing Needs To Be Quick
When it comes to the point in your business where you’re not sure how to make payroll, you don’t have the weeks or months it takes to get a traditional bank loan.

Most banks have an extensive underwriting process that takes time to complete. Unless you are planning your payroll financing months in advance, a traditional bank is not quick enough to meet your needs.

The bank may also require expenses related to the due diligence process to be paid up front. This is the last thing you need when you’re struggling to find the cash to pay your employees.

Financing Needs To Be Flexible
This is true with any type of business funding, but is especially important when trying to figure how to make payroll. You need flexibility to get funding when it’s needed most without paying for funds that you don’t need.

Flexibility is one of factoring’s strongest points. You are able to pick and choose which customers and even which invoices you want to factor. You may choose to factor every invoice so that you have a consistent stream of cash coming in, or just submit an invoice or two to cover payroll.

Financing Needs To Be Cost Effective
As with any expense in your business, the cost needs to be justified. When looking at your payroll financing options, make sure the benefits exceed the cost.

Be wary of fixed monthly expenses associated with many types of financing. The interest rate on the loan may be low, but you may end up paying hundreds or thousands each month in account maintenance fees, collateral management fees, field exam fees and monthly minimum fees.

Factoring Is An Easy Answer For Payroll Financing
Factoring is one of the few forms of payroll financing that is quick, flexible and cost-effective. Once you are set up with a factor, you typically receive funding in less than 24 hours. It allows you to factor invoices when cash gets tight and then keep everything in house when you don’t need additional funding.

Don’t stress about how you are going to make payroll in two weeks. Get a good financing facility in place and give your business the flexibility it needs.

Fast A/R Funding specializes in helping small businesses bridge the cash flow gap with factoring. Schedule a demo below, or call 888.833.2286 to speak with one of our small business finance consultants.