As a business owner if your employee notice your are struggling to make payroll you are in trouble. The mindset and performance of your employees mirrors your creditably to do what
you say and follow thru….and they rely on getting their paychecks on time without excuses. Miss one payroll could be the worst single act as a successful business owner!.
Making payroll can be frustrating business owners.
You figure your have 30% gross margin but have not money in the bank to make payroll and your 941 payroll taxes are in arrears. How can that be? If your customers are paying
slowly balancing the availablitiy of your cash in and cash out is challenging to many companies.
Always make sure your bank account specifically+ your payroll bank account has enough money on the right date to cover all these obligations.
How is your cash flow?
Hopefully your clustomers pay their invoices immediately after you submit them. Typically the larger the client the slower they pay although every industry and client vary.
The main concenrn is that you have no control over when they pay ie things happen…maybe they are waiting for their clients to pay them? If you need to know you will have
suffient funds in your account to meet payroll you could consider engaging in a factoring relationship to avoid these potential pitfalls. We can all hope for the best, but need
to plan for the worst with your livelyhood on the line.
Factoring enables you to obtain an immediate funds not having to wait for your invocies to pay to fund payroll. . Why wait days for payment if you can get the funded now. The cost is
very affordable esppecially when compared to the potentianl exposure of not meeting your obligations on time.
How does invoice factoring work?
Setting up an account with a factoring company takes a few days and funding typically in less than a week. Once your account is set up you we have immediate access
to funding based on you creditworthy custoerms. If you dont need funds you are not obligated to factor your invoices or take an advance.
Most factoring companies, based on your industry advance 80% of the gross invoices amounts. Typically you will get fund the same day you submit your invoices.
The remaining 20% is retained to cover any invoice underpayments, offsets, or dedications less the fee. Fees are based on the credit strength of your clients and the spreed of risk
distributed over your quality of clients .
Once your client pays the invoice in full, the factor rebates the remaining reserves less a small affordable fee for their funding service.
Improve your cash flow timing!!
While most companies factor their invoices regularly, many use this financial tool only to finance their payroll; then they can focus on their core business
while controling their cash flow needs. There is peace of mind when having funds in the bank and meeting your commitments timely; sure helps add a good night sleep
when you are already busting at seams growing your company …you don’t need any more issues when managing when payments they say are “in the mail”.
Unlike a commercial bank loan factoring lines can be used to grow your company and will automatically increases as your sales improve from your creditworthy clients. This
structure offers comfort assuring your future success knowing that your cash flow– – your payroll is covered!
Marathon is a licensed direct lender of factoring lines of credit to any industries with quality creditworthy clients.