If you’ve been crunching the numbers, and it looks like you won’t be able to pay your employees, don’t lose hope. This happens to the best of small business owners. Sometimes, seasonal changes make cash inflows sluggish, while other times the company’s money is tied up in unpaid invoices, or the business dealt with an unexpected expense. Yet, your employees rely on you to make good on your obligations to them, so they can make good on their obligations, and you need to make payroll a priority if you’re going to keep a talented workforce in place. With this in mind, the solutions outlined below can help you get cash in hand quickly, so you can make payroll and continue to grow your business.
1. Collect Overdue Invoices
Print out a report of all clients with past-due invoices and start making calls. If things are particularly dire, consider offering a discount or accepting only a portion of the bill as payment in full. When you’ve finished contacting everyone with overdue invoices, start working through those who have payments due in the next few weeks.
2. Offer Prepayment Discounts to Good Clients
If you have clients who always pay on time, consider contacting them and offering them a discount for prepaying their next round of services or goods.
3. Sell Your Invoices
If you invoice your customers for goods and services, you can sell your invoices to a third party in a process known as invoice factoring. That company, referred to as a “factor,” handles the invoicing process and collects from your customers, but gives you cash up front.
4. Leverage Lines of Credit
If you’ve got lines of credit available, take cash advances and cover payroll through them. If you don’t, but your business has good credit, see if you can qualify for a line of credit or a traditional small business loan.
5. Look into Alternative Lending
There are many forms of lending today. For example, if your customers pay with credit cards, a merchant cash advance could work. You may also qualify for a micro loan or hard money loan that’s backed by collateral.
6. Liquidate Inventory and Unused Equipment
Do a complete inventory and sell off stock you don’t need right now. Take a good hard look at your business equipment, from vehicles to computers, and sell off anything you don’t need for daily operations.
7. Ask Vendors for Extensions
If you’re missing payroll by a matter of days or weeks because of other payments you need to make, contact your vendors or suppliers and ask for extensions or request to make a partial payment this month. When you approach them, make sure you’ve got a plan in mind to pay off the balance, so they can extend their terms with greater confidence.
8. Explore Personal Loans
Do you have friends or family members who can pitch in? If so, create a formal contract, complete with repayment terms and interest.
Make Payroll with Help from Interstate Capital
Interstate Capital is an invoice factoring company. We purchase B2B invoices and can fund our clients in as little as 24 hours. This works well when you need a cash injection for something like making payroll and can also be used as part of a long-term strategy to improve cash flow, so you don’t wind up in a bind again later. Get your instant funding estimate now.