When you place a candidate, temporarily or permanently, the payment process is not always conducive to your cash flow needs. Customers need between 30 and 60 days to pay the invoice, but you need to pay your staff, office rent, and other expenses now.
Payroll funding provides you with access to the money needed to cover payroll costs. You can invoice your clients for the money they owe without payroll waiting for it to come through.
Payroll funding allows businesses to carefully manage their cash flow, ensuring that they always have enough money on hand to meet their payroll obligations. If a client fails to pay their invoices on time, you will still be able to meet your financial commitments.
Payroll funding for unaligned invoice and payroll cycles
The recruitment and labour hire industries often struggle to attain smooth cash flow. You have to pay the candidates that you have placed with a company before that company pays you. The result creates a situation where you can fall short on having enough cash to pay your candidates.
But, you also cannot afford to miss a pay run because you risk losing your candidates. Rather than waiting for payments from your clients, payroll funding enables you to work with the assurance that you will have the funds needed to pay your staff on time, every time.
For recruiters, this situation looks different for temporary and permanent placement solutions. Many debtor finance companies may not fund permanent recruits because of the additional perceived risks and only fund once an invoice has been raised. Our specialisation in the recruitment and labour hire industries means that APositive has a solution to close your cash flow gap, whether you place temporary or permanent candidates, and irrespective of your billing cycle.
Protection from bad debt risks
An important aspect for many businesses is protection against bad debt risks. A payroll funding solution is one method for relieving your business of these risks. When a company generally takes out a finance arrangement, the lender will usually require some form of security, such as the company’s assets. If you do not repay the loan, the lender can seize your assets to recoup their losses.
Protection from bad debt risks is particularly important for businesses in the recruitment and labour hire industries, as they carry the payroll obligation for temp and contractor hires. If a client does not pay their invoices, the lender may not be able to recoup their costs. Payroll funding coupled with Bad Debt Protection provides peace of mind to businesses in this situation, as they know that they will be able to meet their obligations even if a client defaults on their payment.
We do not consider payroll funding to be a loan. You have invoiced your client and are awaiting payment. You have the money; you just need access to it while waiting for your client to send it through.
Foster positive relationships with clients
If you are a business in recruitment or labour hire, you know that keeping your clients happy is essential to your success.
When your cash flow becomes stuck in invoices, you might have to chase clients for the money you need and cash they do not have yet. It is a stressful process for both sides. Late payments can lead to confrontations and strained relationships, but you can avoid these problems with payroll funding in place.
If you can offer your clients flexible payment options without the stress of waiting on the funds you need, you can foster better relationships. You can access the money you need and offer your clients a flexible payment plan to remove the stress from the situation.
Flexibility to access funds as you grow
When a business wants to expand, it is important to have the financial resources in place to support that growth. Payroll funding provides you with the flexibility to access the funds you need as the business grows. This can be extremely helpful for businesses expanding their operations or hiring new employees.
Beyond your staff, you also have other business expenses to pay. Payroll funding allows you to access funds to pay office rent, insurance, general expenses, etc. This way, your business does not become stunted by financing issues. For example, when you need more staff, you can hire without worrying about your ability to pay them. So, you can take on clients and watch your business expand.
Even if you manage your payroll in-house, only need part of an invoice paid, or work on your finances after hours, a payroll funding solution provides the flexibility to access funding whenever you need it.
Avoid time-consuming payroll management
At any one time, your payroll function requires calculations for hours worked, payslip preparation, paying superannuation, etc. Payroll funding, coupled with a payroll management solution, eases the burden on your back office.
Reduce your administrative burden
A payroll funding solution that includes back-office management reduces your administrative burden. Your payroll funding provider will support you with a system that delivers easy onboarding for your staff with timesheet and invoicing options. They will also oversee legislation changes to ensure you maintain compliance with the latest laws.
Reduce the error rates
Payroll funding and management help reduce the error rate for businesses in the recruitment and labour hire industries. When you pay staff accurately, and on time, you improve your business’ reputation and increase employee satisfaction.
APositive’s payroll funding solution
Our Payroll Funding solution provides you with access to the money stuck in unpaid invoices. As one of the the top payroll funding for staffing companies in Australia, We also deliver a tech-integrated back-office solution with outsourced payroll options to remove the administrative burdens of managing it yourself.
Visit our payroll funding and payroll management page for more information.
