The beauty of payroll factoring is that it allows you to focus on your business while the factor handles the details.
The bulk of your efforts are required at the beginning of the factoring process, when you fill out an application form and discuss rates, terms and conditions with the factor.
Once you sign an agreement, your factor will set up procedures for funding your payroll. You will need to provide names, Social Security numbers and other employee information, as well as a list of your accounts receivable invoices and copies of the invoices and timesheets.
As new employees are hired, current ones leave the company or pay grades change, you’ll need to update your factor. You also need to send additional accounts receivable invoices as you generate them.
If you are a full-service client, you will need to regularly provide the factor with additional information, such as tax documents or delinquent accounts.
Communication is key. If you have questions, problems or concerns, speak honestly with your factor. Developing a strong relationship will ensure your payroll factoring process operates smoothly.
And don’t forget to review your options annually. Banks and other payroll companies often offer aggressive rates to hook new business, so if you find a lower rate, let your factor know. It will most likely beat the price to keep you as a client.