How Payroll Financing is Helping with Payroll Management
Paying your employees each pay period is always the number one priority for every business owner but how many businesses actually have a payroll management plan? A payroll management plan helps the business owner better prepare for not missing payroll in the future and in most cases is often developed after the business either came close to missing payroll or missed payroll.
FIRST START OFF WITH FORECASTING
Most small business will have a bookkeeper who is in charge of keeping the books. Usually that person is pretty good at understanding cash flow and projections. To develop a good payroll management plan, ask your bookkeeper to do some analysis on why you missed payroll and what can be done to not miss it in the future. The bookkeeper should look at clients who typically pay late , if certain clients pay at random times , and if there are certain expenses that can be paid later during certain times of the year. Next the bookkeeper should forecast 2 weeks out from payroll from that point forward if you are going to be short that way you can put steps in place. Missing payroll is a stressful time not just for the employees but for the owner and anyone who has ever missed payroll will say, I don’t want to go through that again. If you have a forecast it will give you time to make sure you make payroll each time.
TALK TO YOUR CLIENTS IN ADVANCE OF MAKING PAYROLL
It might also be a time to talk to your clients about the fact that you need to be paid earlier or the hard decision that maybe you need to drop that client. A business owner should also look at internal processes that would allow you to invoice the client faster or to get the PO assigned earlier so that you get in the queue to be paid earlier. Most of your clients often pay their bills automatically because like you, they don’t want to be bothered with stressful AP calls that upset everyone. If you find ways to bill your clients faster and to get into their queue earlier, you will address not missing payroll in the future and may not have to get a working line of capital, a bank loan or alternative lender financing.
GET YOUR FINANCING IN PLACE JUST IN CASE IT HAPPENS AGAIN
If your business just barely made payroll or if it was delayed but finally paid, don’t slack off. Take steps now to make sure it never happens again and tell your employees what you have done. Take a look at getting a business line of credit from a bank or get a home equity line of credit (HELOC) against your home in place so that you have something to turn to in an emergency. Those types of business loans will take a while to get so don’t wait for your next emergency. Another great alternative is to know about payroll financing also called payroll funding. Financing Solutions is short term business financing specifically designed so that good small businesses can make payroll and it isn’t unusual for its clients to come back again and again when their is a shortage of cash to make payroll. The financing can be issued same day and can be paid back as quickly as over 7 days or 26 weeks.
DON’T BORROW MONEY IF YOU HAVE A POOR BUSINESS
When crisis moments come in a business it often forces you to make a decision you were putting off. Do you have the right amount of employees for the size of your business, are you spending too much money in certain parts of your business, is your business a good business, are you trying to grow to fast, to soon. These are all good questions to ask and taking actions so that you don’t have the same emergency again will help you, your employees and your company.