For millions of Canadians, the first of the month, mid-month or end of the month is a time of relief. Pay day! A time when bills can be paid, savings accounts topped up, and for the 53% of Canadians who are living paycheck to paycheck, necessary purchases made.
However, pay day may have the opposite feeling for many business owners, especially those without a healthy cash flow. For businesses struggling to make payroll, it can be a time of stress and a scramble to come up with the cash to pay employees what they’re owed. To do so might mean investing time and resources chasing overdue invoices, transferring funds from one account to another, or even drawing on debt. This moment of panic often takes place quietly, so as not to raise concern with employees, which can add further to the stress and isolation experienced by business owners.
Sound familiar? If so, then it’s time to consider factoring for payroll.
One Simple Process to Remove the Stress Associated with Payroll
Factoring for payroll is a service offered by J D Factors and other factoring companies that’s designed to reduce the common stress and uncertainty associated with payroll.
Here’s how it works: Your business turns over your invoices to the factoring company who will then pay your employees consistently and on time. The factoring company will collect the money owed from your clients when each invoice is due. In this way, factoring for payroll is the ideal solution to solve your cash flow issues and ensure that your employees are paid, no matter when your client’s invoices are due.
The Benefits of Factoring for Payroll
Factoring ensures that your employees are taken care of, stabilizes your cash flow and reduces your stress come pay day, but these aren’t the only benefits. Factoring eliminates the time spent chasing clients for overdue payments, a process which is often uncomfortable and can strain important relationships.
Factoring is also a way to provide your business with the cash it needs to grow and stay competitive, because when you use factoring, you know you have cash on hand when you need it rather than having to wait for payment, or wait for a commercial loan to provide the funding that you may need now. This benefit is especially useful in cases where there’s an opportunity to take on a new client but doing so requires an immediate upfront investment in product, equipment or people.
How Much Does Factoring Cost?
Factoring companies will take a percentage of each invoice as their payment. This amount will depend on factors such as:
- Monthly sales
- Terms of sale (net 30, net 60, etc.)
- Level of concentration (one customer at $100,000 vs 10 customers at $100,000)
- Your customer’s credit profile
- The industry.
At J D Factors, we’ll sit down with you and discuss your goals, challenges and finances to ensure that you choose the type of factoring that’s most beneficial for your situation and industry. We’ll also take the time to explain all the terms and conditions of your contract so that you have the knowledge you need to make an empowered decision that supports the future of your business.
So, what are you waiting for? Eliminate your payroll woes and protect your employees and your business. Give J D Factors a call to explore the benefits of factoring for payroll.
