Making Payroll During Uneven Revenue Cycles

With few exceptions, businesses rely on employees to maintain productivity levels and fill client orders. However, during uneven revenue cycles, making payroll can become a challenge. If sales are high, staggered payment schedules on invoices can still cause gaps in revenue, but employees rely on their paychecks as much as businesses rely on their workers. In a period when people are relying on revenue and paychecks, how can businesses make payroll during uneven revenue cycles?

Uneven Revenue Cycles and COVID-19

If businesses ever experienced cash flow disruption, it has been during the COVID-19 pandemic. State and local restrictions limited many businesses, and their clients were slow with payments on invoices. The CARES Act provided funds to businesses to maintain operations, but gaps in revenue caused some companies to take drastic actions. Some businesses were forced to furlough staff or lower wages, which went against the provisions of the federal relief and recovery loans. Other businesses stayed open, but had to take out additional short-term loans to make payroll while they waited for clients to make payments on open invoices. Businesses needed to find another way to improve cash flow so they could make payroll during uneven revenue cycles.

Tested and True Solutions for New Situations

Instead of taking out loans, some businesses turned to a tried and true method to improve cash flow: accounts receivable factoring. By using accounts receivable factoring, businesses were able to eliminate gaps in revenue because factoring converts unpaid client invoices to cash and the funds are made available within 24 hours. Not only does factoring smooth out uneven revenue cycles, it also accelerates cash flow so businesses can build up capital reserves to make payroll, cover financial obligations, and even roll out plans for growth. Accounts receivable factoring is used by businesses across all industries that issue invoices with payment schedules of 30 days or more. Since factoring does not place debt on the balance sheet, businesses can smooth out uneven revenue cycles without relying on short-term loans.

New Century Financial provides accounts receivable factoring nationwide. There are no long-term contracts, no hidden fees, and businesses get to choose which invoices or parts of invoices we factor for them. Contact New Century Financial today and eliminate uneven revenue cycles.