Word on the street is that payroll finance is going to make a comeback. Payroll finance was the short lived funding solution that provided the equivalent of  two months gross payroll on a revolving credit facility.

Until recently there were two funders in the market providing payroll finance. Wageroller was the first company to stop trading and more recently Smartflow went into administration.  Payroll finance albeit an expensive finance solution providing a working capital solution for businesses which maybe couldn’t obtain working capital via the more traditional funding facilities such as overdrafts, invoice discounting or factoring. The facility was ideal for businesses which worked on a contract basis such as construction companies. It was also very popular with private schools and also PLCs.   

The advantages to the customer of payroll funding was that the facility was totally unsecured and no personal guarantees were required. In addition the funders were providing a finance product which was deemed to be a service and as such it was classed as a trade creditor. This would have been of particular benefit to PLCs or businesses with onerous banking covenants because the facility would not have affected any banking facilities.

If the product does make a come back it will be interesting in what guise it will take  and what will be different that will make it succeed  where it did not do before.

Running a busines is a challenge at the best of times and keeping cash flowing and paying suppliers and staff is a constant juggling act. This has never been more relevant than in the current economic climate where raw materials , energy and fuel costs and a squeeze on credit are putting pressure on business owners.

XL Business Finance has access to a number of funders who can provide you with flexible funding solutions that can release cash tied up in your company and releive some of the pressure you face every day in business.

refinancing existing machinery

invoice discounting

factoring

payroll finance

Cash Flow Finance is the most raidly expanding form of finance and their are many funders positively active even in the current market. Whether it is factoring, invoice discounting or payroll finance these different  finance companies all have different areas of expertise. For example international trade finance is only undertaken well by 3 or 4  companies. Like wise stocking finance is provided by only 2/3 companies. Choosing the right company for your business can be made easier by speaking to a good independent broker.

At .85% per month Payroll Finance isn’t the cheapest form of funding however when you consider that there are no personal guarantees required and that the payroll funder is classed as a trade creditor it is proving a viable alternative to a bank overdraft. There is no guarantee that banks are even willing to grant overdrafts and they more often than not require additional and onerous security.  Payroll finance provides up to two months of the gross monthly payroll on a revolving credit facility. It can sit alongside traditional cash flow facilities such as factoring or invoice discounting. Surely less reliance on the bank has got to be a good thing in these difficult times!