The Benefits of Payroll Financing for Your Business
Businesses go through ups and downs. Every day brings a new adventure. Every day also brings a new high and a new low for your business. Some weeks, business is booming. Other weeks, you can count the number of transactions for your business on the one hand.
When you add issues into the mix, such as a COVID economy, you could have some lows that make you worry about how you may make payroll at the end of the week. First, do not panic. Even the most successful businesses had tough times within their first few years.
There is help for your business during these downtimes. You do not have to lay off your employees or close the doors because of a temporary problem. Instead, you can consider payroll financing to help you get through the tough times until you have a steadier cash flow.
Read on to learn about the benefits of payroll financing and how it can help your business get through a tough time.
Payroll Financing Can Help You Get by While Waiting for Customer Payments
Many times, your payroll is dependent on your accounts receivables getting paid. However, in some businesses, customers are slow to pay. While you may have more than enough money on the street to cover payroll and other expenses, the income is not available in your bank account to make payroll.
Payroll financing can help you get over the hurdle of slow customer payments. Instead of making your employees suffer or rush customers who may not have the money on hand, you have an option to borrow the money needed to get your valuable employees paid on time. You can charge appropriate late fees to your customers to help cover the fees of payroll financing, making sure you do not lose money in the process.
Payroll Financing Can Help You Stay Open During the Hard Times
Sometimes, business is just slow. When you first start your business, it may have slow weeks. When a worldwide pandemic shuts down the world, you can see a direct impact on your ability to make payroll.
Payroll financing is a cost-effective way to make payroll during these tough times in your business that will not last forever. Instead of laying off your employees or closing your doors, payroll financing is a great temporary solution to a temporary problem.
Payroll Financing Is More Affordable and Obtainable Than a Bank Loan
Many businesses may think the best way to fund payroll and other expenses is through a bank loan. A bank loan is a great idea for companies with money looking to expand their business offerings.
However, banks do not lend money when you need it to make ends meet. Banks want to ensure you have the capital to repay the loan. Many bank loans are only offered to businesses with plenty of capital. Furthermore, the interest on the loans can be very high, especially for a small business.
Payroll financing is a more obtainable and affordable option for small businesses. You can borrow money for a short period at a lower interest rate than a bank would offer.