Hello, I'm Paul DeLuca, founder of Meritus Capital. Today we're discussing payroll funding. What exactly do I mean by payroll funding?
It is a term that is used most of the time by accounts receivable finance companies, specifically, for the industry of temporary staffing. Temporary staffing needs are quite unique. When you think about a temporary staffing company, there's really not a lot of assets that are required to be able to enter into that business. You need a good desk, a good phone and some good software to kind of get going, but not a lot of really big capital needs. But so many staffing companies are able to be very profitable and also are able to be very successful quickly.
People are really buying into the people that run the business and when they really enjoy working with them, they can see orders increase very quickly. So here's the challenge, if you're a temporary staffing company and all of a sudden you have 100 new orders for new personnel, how are you going to pay the payroll this week? See, that's the key. Almost all of your clients are going to demand to be paid on terms, 30 to 60 days. That's where payroll funding comes in. A payroll funding company will provide the capital every single week to fund the payroll, to fund the taxes, and to be able to take care of any of your other expenses and will wait to be paid when your client pays in 30 to 60 days. Well, that's what payroll funding is.
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