Net-30 and Net-60 Client Payments: How Service Businesses Can Finance the Payroll Gap

Many service businesses pay employees or contractors before their B2B customers pay invoices. When clients operate on Net-30 or Net-60 terms, a growing company can face a payroll gap even when the underlying work has already been completed.

If client-payment timing is creating an active cash-flow need, complete the EIN Business Funding Quick Lead Pre-Qualification with the amount needed, annual revenue, business history and current credit profile.

Why Can Growth Create a Payroll Problem?

Winning more contracts may require additional employees before cash from those contracts is received. Revenue can be growing while available cash temporarily moves in the opposite direction.

When May Working Capital Be Relevant?

Working-capital financing may be evaluated when a business needs cash for payroll and other operating expenses.

Common benchmarks in the EIN Business Funding guidance include approximately 600+ personal credit, six to twelve months in business and around $50,000 to $100,000 in annual revenue.

When May Invoice Financing Be Worth Reviewing?

If the company has eligible unpaid B2B invoices for completed work, invoice financing may be another category to evaluate depending on the provider and the quality of the receivable.

What Should the Business Prepare?

Amount of the payroll gap
Annual business revenue
Business formation date
Current credit profile
Recent bank deposits
Existing business debt
Customer payment terms
Eligible outstanding B2B invoices, if applicable

Should Payroll Financing Be Based on Future Contracts?

A funding provider will generally need to evaluate the current business and borrower profile. Do not assume that unsigned contracts or projected revenue alone will support a financing request.

If payroll is due before your customers are expected to pay, complete the EIN Business Funding pre-qualification using the actual cash-flow gap and current business information.

FAQs

Can a service business seek working capital for payroll?
Potentially. Eligibility depends on the funding provider and the complete credit, revenue, cash-flow and operating profile.

What are common working-capital benchmarks?
The EIN Business Funding guidance identifies approximately 600+ personal credit, six to twelve months in business and around $50,000 to $100,000 in annual revenue as common benchmarks.

Can unpaid B2B invoices potentially support invoice financing?
Potentially. Eligibility depends on the invoice, customer, completed work and financing provider.