What Is Payroll Financing?
Payroll financing turns your unpaid invoices into cash. Use payroll financing when you have slow paying customers on your hands, but need cash today. As a small business owner, cash available to use for your company can be extremely tight. Payroll financing helps alleviate that stress, allowing you to pay your employees on time, meet seasonal demands, and scale your finances. Having extra cash on hand provides you with the means to take advantages of new opportunities.
Payroll financing companies purchase unpaid invoices and advance the company the cash within 24 hours, if not sooner. The company being advanced the cash will pay a service fee and any other surcharges that come with the transaction. The company can then use this cash advance in whichever way they like, from paying employees to taking on new business opportunities. When the slow-to-pay customer obtains the money to pay off their outstanding invoice(s), they first pay the factor in the transaction. The remaining cash (minus the fees) is then returned to the company waiting for payment. Unlike with bank lending, funding payroll with a factoring company creates zero debt.
There are no minimum volume requirements with payroll financing. Any size business can use payroll financing. Although most of the companies lie within the small- to mid-sized range, many start-ups rely on this method to help jumpstart their business. The amount of working capital grows hand-in-hand with the business. In other words, payroll financing is customizable and flexible to your specific business needs. Have you been turned down by a bank? There’s no need to be worried about being turned down for payroll financing.
Payroll Financing vs. Line of Credit
|Payroll Financing||Business Line of Credit|
|· Qualify based on your clients’ credit||· Qualify based on the credit of your business|
|· 3-5 day application process||· 1-2 month application process|
|· Cash within 24 hours||· Funding in 1-2 months|
|· Does not create debt||· Creates debt|
|· Minimal paperwork||· Extensive paperwork|
With more than a decade of proven success and 75+ years of combined experience, Hitachi Business Finance knows a thing or two about financing company payroll. Over the years, we have helped companies:
- Improve their cash flow
- Receive money faster from slow-to-pay clients
- Make payroll, pay taxes, take on new projects, etc.
- Meet seasonal demands
Hitachi Business Finance offers payroll financing lines starting at $20,000. Want us to finance your company’s next round of payroll, or just want to chat about our other financing solutions? Contact us at (248) 658-1100 or follow us on Twitter and LinkedIn.