Empower Your Business Growth: Leverage Payroll Funding
Fast and easy payroll funding services keep your cash flowing and employees happy.
Is Cash Flow Disrupting Payroll or Limiting Your Growth?
Keeping your business running smooth often hinges on an important factor: cash flow. Stats show that over half struggle to maintain a healthy flow of money. And more than 1 in 4 businesses have less than one month’s operating expenses in cash reserves.
This can be a problem when it comes to payroll, which is typically the largest single expense. An income dip, or a slow payment from a client, can lead to missed or delayed paychecks and financial strain in other areas of the business.
Failing to make payroll has a ripple effect. A drop in employee morale and retention can further hinder growth, creating a frustrating cycle for small businesses.
Fortunately, there are ways to break this cycle. Even temporary dips in cash flow don’t have to disrupt critical operations like meeting payroll. Payroll funding bridges the gap between expenses and incoming revenue, ensuring a smoother flow of funds.
Maintaining a happy and stable workforce becomes less reliant on perfect cash flow timing. Valuable time and resources are freed up to focus on core business activities and client satisfaction, creating a positive environment for yourself, employees and your company.
What is Payroll Funding?
Payroll funding is a financial solution that helps businesses bridge the gap between paying employees and collecting payment from customers. It's particularly useful for companies that offer extended payment terms (like net 30 or 60 days) to clients, but need to meet payroll obligations more frequently (like weekly or bi-weekly).
Payroll funding can be a valuable tool to maintain financial stability, keep employees happy, and seize growth opportunities.
Our Payroll Funding Services Include:
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Fast Funding for Payroll
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Credit Outsourcing
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Accounts Receivable Management
Fast Funding for Payroll
Ensure uninterrupted payroll with Transwest Capital's fast and reliable funding. We understand the importance of meeting your employee payroll obligations. Our program provides immediate access to cash to cover payroll expenses, even before your clients pay their invoices.
Submit your funding requests through our secure online portal and choose your preferred funding method. Transwest Capital can advance up to 95% of your payroll needs within the same day, ensuring your team gets paid on time, every time.
Accounts Receivable Management
We'll manage the entire invoice and collection process for your payroll advances. This includes creating invoices for your clients and pursuing timely payments.
Maintain complete control and visibility through our secure online portal. You can track invoices, monitor collections, and access detailed reports.
You’ll free up time to focus on employees, strategic planning, and business growth, while Transwest Capital takes care of these behind-the-scenes details.
Credit Outsourcing
Our team of credit specialists serve as your outsourced credit department and advise on funding eligibility. This allows you to make informed decisions about which projects to take on, minimizing the risk of late or non-payment from clients.
By outsourcing your credit department to Transwest Capital, you can:
Free up valuable internal resources previously dedicated to credit checks.
Benefit from Transwest's expertise in credit analysis, ensuring a faster and more reliable funding process.
Reduce costs associated with maintaining your own credit department, including subscription fees for credit reporting services.
Benefits of Payroll Funding for Small Business
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Improved Cash Flow
Get immediate cash to meet payroll, sustain operations, and maintain employee morale.
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Flexible Financing
Meet fluctuating funding needs without adding debt to your balance sheet. Use your customers’ credit to your advantage.
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Efficiency & Time Savings
Outsource billing and collections to free your time and focus on core tasks.
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Scalability
Support business growth with additional capital without the need to reapply or renegotiate.
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Risk Mitigation
Protect your bottom line with professional credit analysis and accounts receivable management.
Who Can Benefit from Payroll Funding Solutions?
Payroll funding can benefit small businesses facing a variety of situations, such as:
Seasonal fluctuations: Bridge the cash flow gap during predictable slower times.
Variable staffing needs: Adjust payroll expenses proportionally without the associated wait times of traditional loans.
Rapid growth: Bridge the gap between revenue generation and increased staffing needs to fuel continued growth.
Freelance-heavy businesses: Pay promptly to attract top talent and quickly scale workforce based on project needs.
Slow-paying clients: Access funds immediately for clients with extended payment terms or late-paying clients.
Startups with limited credit history: Access funding with less strict requirements than traditional lending.
Businesses needing short-term working capital: Access funding without taking on long-term debt obligations.
Businesses recovering from financial strain: Get funding regardless of credit score or profitability.
Project-based businesses: Ensure smooth cash flow for employee wages during times of large upfront expenses required for certain projects.
Common Businesses Using Payroll Funding
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Staffing Companies
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Marketing Agencies
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IT Consulting Firms
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Construction Companies
Can Your Business Benefit from Payroll Funding?
How Does Payroll Funding Work?
Payroll funding, also known as payroll factoring, helps your business cover payroll expenses by leveraging open invoices.
Here’s how it typically works:
Complete a Service: Your business provides agreed upon services to your client as usual.
Sell Invoice to Payroll Funder: Instead of waiting for your client to pay, you sell the invoice to a payroll funding company at a discount.
Receive Immediate Cash: The payroll funding company provides a cash advance on the sold invoice, typically up to 90% of the invoice amount.
Client Pays Invoice: Once your client pays the invoice in full to the payroll funding company, they deduct their fee from the remaining balance and send it to you.
Receive Remaining Balance: Once your customer pays, the payroll funding company deducts their fee and sends you the remaining balance.
Payroll Funding Example
The Challenge:
Meet Sally, the owner of Sally's Staffing, a company dedicated to providing top-notch staffing solutions for live events. Business with Poppy's Parties, a regular client, is booming. They consistently require a team of 20 for their monthly events, generating a predictable $20,000 in revenue for Sally's Staffing. However, Poppy's Parties has net 30-day payment terms, leaving Sally with a cash flow gap when it comes to covering bi-weekly payroll for her talented staff.
The Opportunity:
Eva's Events, a much larger event planning company, contacts Sally about staffing their upcoming music festival. This is a golden opportunity – the gig requires 100 staff members for a two-week period, totaling a potential $150,000 for Sally's Staffing. However, securing this project hinges on Sally's ability to assemble a large, qualified team quickly. Unfortunately, waiting 30 days for Poppy's Parties payment won't cover the immediate payroll needs for Eva's Events.
The Solution: Payroll Funding with Transwest Capital
Remembering a recommendation from a fellow staffing company, Sally contacts Transwest Capital, a leading provider of payroll funding solutions. Here's how payroll funding helps Sally seize the Eva's Events opportunity:
Unlocking Immediate Cash:
Instead of waiting for Poppy's Parties payment, Sally decides to leverage payroll funding for her existing invoice. Transwest Capital advances a percentage of the invoice amount (typically 80-90%) within a short period, allowing Sally to meet her next payroll.
Example: With an 85% advance rate on the $20,000 Poppy's Parties invoice, Sally receives:
$20,000 invoice x 85% advance rate = $17,000
Staffing the Big Gig:
With the immediate cash injection from Transwest Capital, Sally can now confidently accept the Eva's Events project. She has the resources to cover payroll for her existing staff and recruit the additional personnel required for the music festival.
Settling the Invoice and Fees:
Once Poppy's Parties pays the invoice in 30 days, Transwest Capital collects the full $20,000. They then deduct a small fee (usually 1-5%) for their service and remit the remaining balance to Sally.
Example: Assuming a 3% fee on the invoice:
$20,000 invoice x 3% fee = $600
After 30 days, Sally receives:
$20,000 invoice - $600 fee = $19,400
Double Win:
By partnering with Transwest Capital, Sally achieves a double victory:
Smooth Payroll: She avoids any cash flow disruptions and ensures timely payments to her existing staff.
Growth Opportunity: With payroll secured, Sally can confidently take on the Eva's Events project, expanding her business and building valuable new client relationships.
This example demonstrates how payroll funding empowers businesses like Sally's Staffing to bridge cash flow gaps, capitalize on growth opportunities, and thrive in a competitive industry.
We’re the Payroll Funding Company Small Businesses Trust
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Experience
We’ve provided funding solutions for small businesses since 2007. Our team is experienced in a variety of industries and providing a great experience for you and your customers.
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Ease
We make payroll funding easy. Competitive rates, high advance rates, and fast funding puts more cash in your hands quickly.
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Satisfaction
We make payroll funding an awesome experience as evidenced by our outstanding reviews. We have a 4.9 Google Review rating from more than 100 satisfied customers (as of Q1 2024).
Payroll Funding FAQs
Costs and Fees
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Payroll funding costs are typically determined by a tiered pricing structure.
For example:
for the first days the invoice is outstanding plus % for each days the invoice remains unpaid.For this reason, payroll funding costs can vary depending upon timeliness of payment, but they typically fall between 1% and 5%.
Get a quote within minutes.
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The different types of fees associated with payroll funding include:
Factor fees: This is calculated as the agreed upon factor rate x invoice amount.
Payment processing fees: Typically provided via ACH or wire, a minimal fee may be charged each time a funding request is processed.
Invoice processing fees: Some companies may charge a fee for each invoice processed.
Transwest Capital does not charge invoice processing fees.Account setup or due diligence fees: Some companies may charge a fee to underwrite your account.
Transwest Capital does not charge these fees.Credit check fees: Some companies may charge a fee each time you request a credit check for a customer. Transwest Capital does not charge credit check fees.
Monthly minimum fees: Some companies may charge a monthly minimum fee if the monthly invoice volume does not meet a certain threshold. Transwest Capital does not charge monthly minimum fees.
Early termination fees: Some companies may charge a fee to terminate your contract prior to an agreed upon contract length. Transwest Capital offers both month-to-month and fixed term agreements.
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Payroll funding costs are determined by several factors, such as:
Invoice volume: The total dollar value of the invoices for which you request funding, typically expressed as a monthly amount. Higher invoice volumes typically result in lower rates.
Average invoice amount: The total dollar value of the invoices / # of invoices over a given period. Higher average invoice amounts typically result in lower rates.
Customer creditworthiness: Your customers’ credit scores are analyzed for risk of non-payment or slow payment. Higher credit scores typically result in lower rates.
Repayment term: The average # of days it takes to receive payment from your customer(s); in a tiered pricing structure, you will typically pay a lower rate if the invoice is paid sooner.
Process & Eligibility
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Your business is eligible for payroll funding if you meet the following criteria:
You invoice business or government clients.
You can provide documentation of services completed.
Your clients are creditworthy.
Your invoices are not encumbered by any judgments or liens.
Owners and officers’ backgrounds are free of any fraud and certain violent criminal offenses.
That’s it! It’s easy! Still unsure if you’re eligible? Contact us today, and we can get you approved within hours.
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Payroll funding approval can typically be completed within hours of completing an application.
Contact us today to apply!
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Minimal documentation is needed to apply for payroll funding:
Application
Clear copy of your Drivers’ License
Articles of Incorporation or Articles of Organization (not applicable for sole proprietorships)
Accounts Receivable Aging Report
Contact us today to start the application process.
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Once approved, invoices can be funded within hours.
However, it’s important to note that certain issues can cause funding delays. Such issues include but are not limited missing/illegible paperwork, invoice verification delays, and delays in account setup with your customers.
Our team is proactive in communicating such issues with you and your customers to avoid delays and get you funded as quickly as possible.
Business-Specific
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Payroll funding does not impact your credit score as it is not a loan.
Your credit score may be indirectly positively impacted by your ability to pay your bills in a more timely manner.
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Payroll funding fees can typically be written off as an ordinary and necessary business expense, as defined by the IRS. However, as with any tax-related question, you should work with a trusted tax professional to determine deduction eligibility and properly account for these expenses.
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You can use payroll funding to cover other business expenses besides payroll. It is commonly referred to as payroll funding as this is one of the largest expenses that a company typically has, but there are no limitations on how you can use the funds generated by the advances on your unpaid invoices.
Terms & Repayment
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Payroll funding is repaid by your customers. When the invoice is paid by your customers, the payroll funding fee is deducted, and the remaining balance (reserve) is forwarded to you.
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Payroll funding is not a loan. It is the sale of an asset (invoice) in exchange for another asset (cash). This is commonly referred to “off-balance sheet financing” since there is no debt (liability) incurred.
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If your customer is late on their payment, you may be charged a slightly higher rate according to your tiered pricing structure.
If an invoice is not paid within 90 days, the invoice is re-assigned to you for payment.
Proactive measures and communication with you and your customers are of utmost importance to avoid these situations and ensure payment.
Get Started with Payroll Funding Today
Just complete the form below for a quick quote and customer credit check.
Our team will follow up with you promptly during normal business hours (M - F, 7am - 4pm PT).
Or Call (877) 741-1301 Today!
Our team is available Monday - Friday, 7am - 4pm PT.