Payroll Factoring, also known as Staffing Factoring, is a big part of day-to-day operations at Catamount Funding

Payroll factoring is a process where a company can sell their unpaid invoices for a small fee to an invoice factoring company like Catamount Services, for almost immediate cash. Once the factoring company advances a significant portion of the invoice value to the business, it can then use that working capital to pay its employees on time. Responsibility for payment tracking and monitoring of the unpaid invoices is transferred to the factoring company, allowing the client to focus on their core business instead of chasing down payments, which may not be due for weeks or even months.

What industries commonly use payroll factoring?

A broad range of industry sectors use payroll factoring, particularly those where payroll obligations are frequent, and client payment terms are longer-term. For instance, payroll may be weekly or bi-weekly, and clients may be invoiced with 30-90+ days before payment is due. This can be a particular challenge when there are seasonal peaks in sales or services, as the money earned will not be available immediately, and staff still expect to be paid regularly and on time. Consequences of not being able to fulfil payroll on time could include an impact on employee morale and productivity, difficulty retaining staff, a poor reputation, and a subsequent challenge to attract new staff.

Common examples include:

• Staffing Agencies: Perhaps the most common user of payroll factoring, hence the alternative name of ‘staffing factoring’. Agencies typically pay their temporary workers on a regular, frequent schedule (e.g., weekly) but may not receive payment from their clients for weeks or months. This applies to various sub-sectors like healthcare, IT, and light industrial staffing.
• Transportation and Trucking: Companies in this sector have unavoidable high daily expenses for fuel, driver wages, maintenance, and insurance, and often wait anywhere from weeks to months for payment from freight brokers or shippers. Catamount’s Houston freight factoring services help fleets stay on the road. Catamount proudly serves major freight hubs across the US, including Houston, TX, Dallas, TX, Atlanta, GA, Chicago, IL, Los Angeles, CA, Memphis, TN,New York, NY, Louisville, KY, Miami, FL, and Columbus, OH.
• Healthcare Providers and Medical Billing: Insurance reimbursements following medical procedures can take months, sometimes creating significant cash flow challenges for medical practices, clinics, and home healthcare agencies. Factoring is a way to cover payroll and equipment costs.
• Wholesale and Distribution: Businesses in this sector use factoring to manage inventory purchases, cover operational costs, and handle large orders during seasonal demand spikes despite extended payment terms from major retailers. This can be evident particularly around the holiday season.
• Construction: Contractors and subcontractors have high upfront costs for materials, labor, and equipment, while project billing cycles can be long and otfen unpredictable, making factoring a useful cash flow tool.
• Manufacturing: Payments from large distributors may take 60-120 days. However, to stay competitive in the marketplace, in order to take advantage of any special offers or temporary price reductions, manufacturers need consistent access to capital to purchase raw materials and keep production lines running smoothly.

How quickly is the payroll factoring process?

With Catamount, the process is fast and simple. Get approved within 48 hours with minimal paperwork. There are no hidden fees or long-term contracts.

If you’re ready to find out more about payroll factoring, give us a call today.