While most expenses are important to cover for a business, there’s perhaps few bills that need to be paid that are more important than paying employees. Employees will work hard and often tackle many challenges on the job, but if a company manages to miss making payroll, it’s one thing that many employees won’t stand for. This is why if a business is facing a lack of cash and has a hard time making payroll, there are some things that may need to be considered to make making payroll easier.
There many things that a business can do to help make payroll, such as liquidating assets or taking out a short-term loan. The problem is that if difficulty making payroll has become a common occurrence for a business, these options are only short-term stopgaps. A business can’t liquidate assets every month and they would be ill advised to take out a small business loan every month just to make payroll. The real issue is finding out why making payroll is so difficult and rectifying the situation.
Identifying the Problem
There are many reasons for businesses facing financial turmoil and one of the most common issues are businesses that have outstanding invoices. This can represent a great deal of cash the business could use for operational costs and when customers don’t pay, it puts the business in a bad way.
Factoring to Help a Business Make Payroll
If this is the reason why a particular company is having difficulty making payroll, then an option, such as factoring for payroll, may be something to consider. This is where a lender or a factor will pay a business a certain percentage of outstanding invoices plus fees and interest in return for immediate cash. This can help a business make payroll without having to worry about temporary stopgap methods that are unsustainable and expensive.
The good thing is that factoring can be a commonplace financial transaction for your business, especially if your business routinely has customers that don’t pay invoices on time. In fact, it is so common, many businesses build in the expense of factoring into the price for their products or services.