Employees highly depend on their employer for payment just as the employer depends on them for the running of the business or the organization. However, the biggest and most stressful situation for any employer is when they cannot manage to make the payroll to their employees. Just as any problem has a solution, funding for payroll also has a way and a source to solve it. Nevertheless, before sourcing payroll funds, as a manager, you have to scrutinize and analyze why the business/firm can’t manage to pay or fund for the payroll. This will help you solve the problem early to avoid such a stressful scenario. Funding for payroll simply means sourcing financial assistance from an outside source to help the company meet the payroll. There are several alternatives a company can consider to finance the payroll. However, the company should waive the option before undertaking it as some may turn out to be a bigger problem or burden to the company in the future. The funding payroll is however a better option to meet the company payroll.
Alternatives to funding for company’s payroll
The following options are effective ways to finance the company payroll and maintain the company’s image to its employees.
Company or personal assets
As the owner of the company, you can easily invest personal assets in the company which contributes to your capital. Personal assets should be things that can be easily turned into cash and be used to leverage the company deficit. There are assets such as savings accounts that can help you fund the payroll. The personal assets plowed into the business or company, may not necessarily be free but can be in the form of a credit to the company or capital contribution. Once the money is transferred to the company bank account, it becomes easy to make the payroll liabilities. In addition, the company may have assets that can easily be turned into cash and help in funding for the payroll.
As a company, you may have financial institutions such as banks that give you a line of credit which you can use to fund the payroll. If as a company you lack such a line of credit, you can try to get one that will help you to meet such emergency cash flows. This calls for a good and positive relationship between your company and the financial institution which involves the trading history and company’s assets which most lenders tend to consider. This credit acts as a good source of funds in such scenarios.
Use of invoices
Another way to source money to fund the company’s payroll is by use of invoices especially if the company works with agencies such as those of the government. If the company’s money is tied up due to slow-paying invoices, then they are a good way to source out money. The invoice factoring is one easy way to turn the invoices into money that can help you finance the payroll.
To wrap up, when your company is faced with such a scenario where it can’t fund for the payroll, it is always good to consult a financial analyst and specialist to help advise on the best option to source the funds by weighing the option that won’t burden the company in future.