Payroll Finance and Payroll Funding

Payroll Finance

Payroll finance is an innovative and flexible approach which offers funding for your company’s gross payroll, PAYE and NI without the usual restrictions of traditional finance. Unsecured payroll finance is ideal for company’s who are close to their limits on existing facilities and need a quick, flexible cash injection to use in conjunction with other existing borrowing facilities. This will allow funds to be retained as cash flow to help working capital and/ or used in any other areas you choose. As a rough guide, 2 months worth of payroll, PAYE and NI can be borrowed to give you a 60 day rolling credit facility, with a provision to allow for growth in payroll.

Payroll finance can be a cheaper alternative to an overdraft or factoring, for example. Payroll Funding can also be used in conjunction with an overdraft, factoring or invoice discounting facility.

The benefits are:
• Unsecured – no PG’s or any other form of security required!
• Flexible – the facility can be switched on and off to suit your needs
• Confidential – staff and customers need never know

The payroll finance facility is available to companies with a monthly wage bill (including PAYE and NI) greater than Ł20k. A decision can be made within 48 hours and you can be up and running within 3-6 days of acceptance of terms.

A minimum contract period of 6 months will apply, typically costing 3% over base for the funding plus an ongoing facility fee. No set up fees or termination fees. The lender will appear as a normal trade creditor in a company ’s accounts.

Case Studies – Payroll Finance or Payroll Funding

Temporary Care Staff. £300k turnover – Payroll Finance or Payroll Funding.
The existing factor could not support the business through a short-term cash-flow problem. A facility was provided which resolved the immediate problem and provided an over-payment to buy another business.

Freight Forwarder. £1.2m turnover – Payroll Finance or Payroll Funding.
The existing factor’s facility was restrictive and unable to meet the company’s short-term cash needs. Working with another factor, a package was produced which combined factoring with a £30k additional cash-flow (payroll funding) facility.

Pet Food Manufacturer. £8m turnover – Payroll Finance or Payroll Funding.
Did not use any form of factoring or invoice discounting but needed additional working capital to buy equipment to expand their production capabilities. A facility of £125k payroll funding was provided.

Building Contractor – Payroll Finance or Payroll Funding.
Public sector building contractor funded growth by transforming its payroll. Larger contracts meant a larger workforce. Payroll finance turned an expense into an asset, allowing the company to re-invest the money back into the business.

City College Merger for Charitable Training Organisation – Payroll Finance or Payroll Funding.
Available cash suddenly became unreliable and fluctuated from month to month due to changes in government policy. This negatively impacted on all areas of business, from quality of service to possible routes for expansion. Payroll funding provided a route out which was uniquely flexible and prepared the company for growth and expansion. Once the cash flow situation was steadied, the merger was completed.

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