Payroll Funding: If Cash is Coming Late

2007-03-08 10:33:40

( Financial )



WHEN CASH IS DELAYED

More often than not your monthly cash flow does not come on time to meet your regular expenses. In fact, most businesses deal with cash flow issues every pay day.

A businessman who truly knows his business is aware that being able to pay your workers on time is crucial to the survival of the company. However, the truth is that even the most lucrative and successful businesses do not always have the available cash to pay their employees’ salary every two weeks.

That is why a lot of businesses avail of payroll funding to make sure that employees receive their pay checks on time as they should. Payroll funding is a form of financial service that your business takes out against your company’s account receivables in order to fund your worker’s regular salary.

CASH ADVANCE PLAN

Payroll funding acts more like a credit line that you can take out every payment cycle if your business happens to be short on cash at that time. This credit line depends on the value of your company’s account receivables. Technically payroll funding is not considered a loan, but more like a cash advance arrangement.

Under a cash advance arrangement, you have post-dated checks and other receivables. In payroll funding you exchange your receivables for cash in order to fund your employees’ paychecks.

Paycheck advances and paycheck loans are very similar to payroll funding, except that they operate on a much lesser scale. Paycheck advances and paycheck loans can also be in the form of cash advances. If you are cash-strapped, all you have to do is present your employment certification and your latest pay slip and you will be approved for paycheck loan. The accounts receivable in this case will be your pay slip.

Payroll funding, paycheck advances, paycheck loans – all of them work on the guarantee that there is money coming but just not on time.


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