What is a payroll funding service?
When considering a financing alternative there are lots of options that could be available when dealing with payroll funding source or a factoring. Let us explore 2 choices payroll funding and factoring. Staffing company owners find out when beginning their company that it is a cash business. Stuffing’s idea is straightforward you market your services sign a contract to set contractors or your employees with these customers, identify candidates send your people then bill for your services. The issue is that you pay their salaries on a weekly basis and employ the workers, yet your customers can take to pay your bills. This makes a cash flow deficit the idea is simple, yet in fact, it takes cash flow pay your workers to pick up the customers, and wait to get paid for your services.
Among the most easy and most effective solutions is to find a funding source that is suitable. It is usually a painless process and it will allow staffing owners to take on customers that are new without the worry of paying before becoming paid on your bills. You submit your invoices to the factoring company, and are paid a discounted percentage usually 80 to 90 percent instantly for those invoices. After the invoices are paid, a percentage is deducted by the variable and returns the rest. This program is called invoice or factoring, and the support is given without office services. Put it differently, invoicing, billing, payroll tax filing and payment, w2 submittals, etc. Are created and maintained by the staffing firm, and the factoring company only provides financing for invoices.
Some factoring companies go a step further and take the responsibility and supply back office services together with invoices. These services include funding 100 percent of payroll and payroll taxes, processing weekly payroll, processing weekly billings, creating original invoices and submitting those statements to the staffing customers in their behalf, preparation and submittal of payroll taxes as needed, creating payroll checks, payroll journals, check registers, bill previews, accounts receivable aging, gross profit reports, and preparation of yearend. The fees for this sort of payroll funding can be a little higher compared to factoring; however staffing companies want to relieve themselves of responsibilities to focus on revenue producing activities like sending temps out to their clientele and signing up new customers.