Payroll Funding What To Do When You’re Short on PaydayIt’s every business owner’s nightmare. It’s payday and you’re financially tapped. You know that there are huge penalties, fines, and other repercussions for failing to pay your employees on time but you just don’t have the payroll funding you need to pay your people.

Luckily, there are funding options to get you out of this predicament. Better yet, there are ways to ensure that you don’t fall into this trap in the first place. Keep reading to get our best tips on how to ensure you stay solvent and liquid, even in the leanest times.

The Cause of the Problem

There are two kinds of budgetary shortfalls that lead to the situation we’ve described above.

1. Fundamental Insolvency – While this is not a term in the financial world, we think it accurately describes the situation some people find themselves in. If you’re spending more money than you’re taking in on a regular basis, you either need to rethink your business model, refinance, or both to get you out of your cash crunch.

Being regularly short of cash is not a sustainable situation for any business. Unless you can find a way to increase your income, decrease your expenses, or both, you will likely find yourself insolvent very soon.

2. Cash Flow Issues – These are less frightening but still serious issues. Cash flow problems occur when the timing of your income and expenses are inconvenient. In other words, you’re expected to pay an expense before you’ve realized the income that allows you to pay it.

Different types of budgetary shortfalls call for different solutions but we’re confident that the following tips will assist the vast majority of small- and medium-sized business owners.


Believe it or not, our first few tips have nothing to do with financial products. Instead, they’re all about planning ahead. One of the most crucial planning tools in any small- to medium-sized business is a budget.

You probably already know what a budget is. In fact, I’m sure you do. Suffice to say, budgets are the single most important weapon in your financial planning arsenal.

But it’s not enough for small business owners to jot a few figures down on the back of a napkin and call it your financial plan. Budgets are only as useful as the effort you put into them. That means doing (at least) the following:

  • Ensuring accounts receivable factoring is realistic and based on likely outcomes
  • Ensuring expense projections are realistic and based on good evidence
  • Ensuring the budget is complete (ie. there are no expenses, fees, or liabilities “left out”)
  • Ensuring the budget is up-to-date and based on the most current information available
  • Including pro-forma financial statements with your budget

If we had to reduce our point to a single idea, it would be this: A properly constructed budget prevents 95% of planning-related cash flow problems.


PrioritizeUnfortunately, many small- and medium-sized businesses go through a period where they have to choose which bill gets paid. These are the lean times and they can feel quite desperate. If you find yourself in one of these situations, make sure that you prioritize your expenses.

For example, don’t pay your own salary before making payroll. Don’t pay an optional expense before paying a necessary one.

If you have a budget, you should be able to see, at a glance, what expenses are coming up soon and which ones can wait. In the meantime, you’ll need to work hard to rectify your financial health.

Keep an Emergency Fund

Emergency funds go a long way towards preventing unexpected cash shortfalls. Nobody should be living paycheck to paycheck and no business should be living invoice to invoice.

If it’s at all possible in your situation, try to put together an emergency fund that can cover your company’s expenses for at least a few months. This protects you if multiple clients decide to pay late, all in the same month or if you face another unexpected emergency.

Secure a Business Line of Credit

If you’ll recall, earlier in the article we described one kind of budgetary shortfall as a problem of expense and income timing. Business lines of credit can be lifesavers for companies that are suffering from this type of cash flow problem.

Business lines of credit allow you to pay your expenses before realizing the income you need to pay that expense. In effect, they allow you the flexibility to decide when to pay expenses. They also come without the baggage that a lot of business loans come with.

Of course, that ability does not come free. Companies that provide business lines of credit don’t do so out of the goodness of their hearts. They charge either fees or interest for the benefit of being able to time your expenses more conveniently.

Usually, it’s well worth the charges in the long run. That’s particularly true when the expense is something crucial and necessary, like payroll.

Financing Solutions: Payroll Funding and Credit Lines

At Financing Solutions, we specialize in offering lines of credit to businesses that need to make crucial payments on time: payroll, capital expenditures, utility bills, etc. We understand that life throws a lot of curveballs and, for that reason, you may need additional flexibility when your income is lower than expected or your expenses are higher. Our low-cost business lines of credit are perfect for small- and medium-sized businesses that want to ensure they make every necessary payment, even if the timing of their income isn’t perfect. They can also help you continue to grow your business without worrying about payroll loans or other costly financing options.

Our credit line application allows you to access a quote in just a few minutes. Or give us a call at 862.207.4118 and let us know what you’re looking for. We’d love to chat with you.