Payroll funding is a term used by working capital finance or accounts receivable factoring companies. The term specifically refers to providing the capital it takes to pay the employees of temporary staffing companies.
The key benefit of using a payroll funding company to finance your temporary staffing company is making sure you can always fill the job orders from your clients. Your employees are always paid on time each payroll period even if your clients take 10 to 90 days to pay your invoices.
How payroll funding works
In a typical scenario you submit your invoices and timecards for the prior week to the payroll funding company. Then a payroll funding company (Often known as an invoice factoring company) will finance those invoices for a small discount so you are able to have 90-95% of the value of those invoices in your bank account the same or the next day so you can meet your obligations for that week while the rest is held in reserve until the client pays.
Once your client pays then you receive the rest of the value of your invoices less the small fee the payroll funding company will take for providing the service. This ranges from company to company based primarily on how long it takes your client to pay. Typical fees range from 1 to 3% of the invoice value.
Benefits of a payroll funding agreement when it comes to CREDIT
A payroll funding company also provides tremendous value in helping you in monitor your client’s credit. Before funding an invoice, payroll funding companies will do credit checks and analysis to make sure that your clients are likely to pay in a timely manner or at all. Along with that, these finance companies will often provide credit protection in case your customer goes bankrupt. This is often referred to as non-recourse factoring. These two elements can greatly increase the likelihood of you not running into the problem of a customer not paying as it provides the insights into making good decisions on whom to choose as your customers and the added protection if your client goes out of business.
Many payroll funding companies will also provide online reporting that will help you stay organized and aware of how your clients are paying and the accuracy of those payments.
Why Meritus Capital?
Meritus has provided billions in funding to our temporary staffing clients over the past 19 years in the United States and Canada. Combined with our experience comes great service, the lowest rates and an easy to use online onboarding process.
Here are a few details of our payroll funding program and why we could be the right fit for you.
Payroll Funding Lines
- 90-95% Advanced Rates
- Discount rates starting from 0.30-0.59%
- Funding startups to $25MM lines
The Meritus Capital Difference
- Easy online application
- Great personal service
- No requirement to fund all your invoices
- Creativity to get the tough ones done
- 19 Years factoring temporary staffing
- Over 1 Billion funded in Staffing alone
- Provided funding lines for companies large and small
- Advised in over 1 Billion in staffing and M&A