4 Options You Have When You Are About to Miss Payroll
Missing payroll is probably one of the most stressful events in a business owner’s life. When speaking to a business owner about it, the stories they often tell revolve around a time in their life when they lost a great amount of sleep because they were afraid of missing payroll. So what is a business owner to do when they are about to miss payroll and totally disrupt any good established with employees? There are four courses of action to consider taking.
- Get a line of credit from a bank. This often takes months to organize and in today’s regulatory environment, the bank is going to want a ton of collateral. In addition, the line will need to be renewed yearly with certain restrictions.
- Ask friends and family for money, although if you want to continue being friends and a respected family member, it is smart to opt not to ask. Also, most friends and family members don’t always have the money to lend out and often times don’t understand why the money is needed so frequently when the answer is indeed very simple to understand.
- Speak to a factor. A factor will fund you money against your receivables up to 80 percent, however, there are many negatives. Most factors will take 2-3 weeks to make arrangements for you to begin receiving funds. Due to the fact that all receivables will now be directed to the factor instead of you, your clients will undoubtedly find out that funding is needed. Down the road, it is very hard to move away from a factor because they seek long-term relationship so the amount of due diligence they will do on your business becomes very expensive and extremely labor expensive.
- Use credit cards. This method will work, but if there is an extensive payroll to pay, finding enough available credit to meet payroll funds can be difficult.
The best option for a business owner who does not have time on their side is to consider a Payroll Financing/funding company. There are two key advantages to a payroll financing company. The first advantage is that they will usually provide you with an answer within hours and be able to transfer the money within 48 hours or less. The Payroll Financing Company does not frequently require personal liens and will take alternative variables about your business into account that a band or factor would never fathom considering. The second key advantage of a payroll financing company is that payments will be spread out over a period of time making it easy to say yes to business and meeting payroll.
Every business owner who has ran a business long enough knows what it is like to miss payroll. It is the last thing you want because it sends a damaging message to employees that something is wrong. Also, legally, the government will not let you miss payroll and could force the business to be shut down. The government wants their payroll taxes and if they find out about a missed payroll from one of your employees, it will significantly affect your ability to continue doing business.
Financing Solutions (www.payrollfinancingsolutions.com) provides fast business funds of $5,000-$100,000 to good small businesses with sales of $500,000-$7 million that can be used for working capital.