Payroll factoring can be the perfect solution to completing payroll for a business. Payroll is typically one of the largest expenses that a business encounters, and it occurs on an ongoing basis occurs every one to two weeks. It is often one of the most challenging obligations for many of our small business clients.
Without cash flow to make those weekly or bi-weekly payroll commitments, businesses can find it difficult to keep top employees. It can also make it virtually impossible to hire additional staff to take on large projects or to handle a new customer or contract.
Business to business (B2B) sales tend to occur on a 30, 60 or 90-day term. For a small business, this means having to wait for one to three months for payment from your customer. It can also mean spending time in calling and following up on invoices, increasing the time that spent away from the daily demands of running a business.
This gap between when you have to provide services and products and when you receive payment can create a problem. For small businesses and entrepreneurs, the best way to work through this is to obtain payroll financing in the form of factoring.
Factoring in a Nutshell
Factoring allows a small business owner to sell accounts receivable to a factoring firm, United Capital, and obtain a percentage of the value of the invoice or invoices. The percentage is typically 80%, and it is available in just a day or two after approval of an application.
We will buy the accounts receivable and will then assume all responsibility of collecting from your customer. We typically hold 20% of the value until final payment of the invoice by the customer. At this time, we deduct the fees for the service and provide your business with the balance.
Factoring provides a valuable alternative to a business loan, which can take weeks to approve. Factoring is not a loan, and there is no interest and no repayment, making it a risk-free funding option. In addition, if you choose to have us handle all your accounts receivables, you can avoid the cost of hiring accountants, helping to reduce your cost of doing business.
Payroll factoring can be perfect for a business owner who would rather focus on business activities than accounting or constantly worry about funding. Payroll factoring will allow you to make your payroll on time every payday, ensuring your employees are paid on schedule and helping with staff retention for your small business.
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