What is Payroll Funding or Recruitment Factoring
Payroll funding referred to as Recruitment Finance helps businesses to supply temporary contractors to meet their salary bill at the end of each week or month. It is suitable for recruitment companies, cleaning contractors and security companies that use lots of labour, with little materials.
There are a number of different payroll funding components available. Different funders offer either all or parts of these components and we can help you find what you need eg., if you are a new start company it may suit you to outsource your payroll function that could be a major time-saver for you.
Components of Payroll Funding
1. Payroll Funding – the payroll company will pay your salary bill (via a loan) for approximately 2 months – after which time the loan needs to be repaid with interest. This operates on a rolling basis and as your customers pay the loan gets reduced. Included in this service will be the maintenance of employee records, running the payroll and issuing pay-slips.
2. Invoicing – based on the timesheets your contractors submit, invoices can be produced and sent to your customers.
3. Credit Control – includes chasing your customers for payment by telephone and mailing statements.
4. Factoring – once the invoice to your customer is raised you can draw down up to 100% of the invoice value, giving you access to your profit without having to wait until your customer actually pays.
5. Bad Debt Protection (credit insurance) – insures you against the risk of your customers going into administration or liquidation, giving you peace of mind.
Advantages of Payroll Funding
Gives Consistent Cash Flow
Without payroll funding, it can be difficult to know when payment will arrive. Wipe out the stress and have the confidence in knowing that payroll will be met each week.
Spares You Time
Some factoring companies offer services to help your staffing agency streamline your invoicing and collection processes.
Enables You to Grow
Payroll funding makes it easier to accept new contracts, because the financing from your factoring company grows as your agency grows.
Does Not Add Debt to Your Balance Sheet
Unlike bank loans, payroll funding does not create debt on your balance sheet. Instead, it’s debt-free financing that grows as you grow- up to £20 million month to month.
Helps Pay Your Bills on Time
Since you won’t be waiting for customer payment, paying down bills is less of a struggle. Even creating a rainy-day fund is possible when you can count on your consistent cash flow.
Your clients need to know that you have the financial capacity to take them on. With payroll funding, your financing amount grows as you grow, giving you greater stability and enhancing your brand.
Gives Your Staffing Agency Financial Security
Payroll funding gives you the confidence that you’ll have enough working capital to pay your employees, bills and even grow your staffing agency. The fear of a negative cash-flow statement due to slow-paying customers is alleviated, because you’ll be paid on your invoices immediately.
If you are looking for Payroll Funding or any type of funding please view our website we are happy to help you.