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When payroll is due before a customer pays, the practical choices are usually to accelerate collection on that receivable, draw on a line of credit if you have one, use short-term working capital if a partner offers it after review, or negotiate partial or early payment with the client. Each path has different speed, total cost, and paperwork — none guarantees approval or a specific timeline.
Compare paths by speed and total cost
Any business that pays people on a schedule while customers pay on terms can hit this gap — staffing agencies, professional services, logistics, and trades are common examples. The table is illustrative; your partner may offer different products after they review an inquiry.
Invoice factoring on the late invoice
Speed: Often fastest when a factor can verify the invoice and customer
Cost shape: Fee tied to how long the invoice stays open — compare total dollars, not the headline advance rate alone
You have one or a few large receivables causing the gap and your customer is creditworthy on paper
Line of credit draw
Speed: Depends on an existing line and draw limits — not instant if you still need to qualify
Cost shape: Interest and fees on the balance you use for the days you use it
Payroll gaps repeat across jobs or seasons and you can repay as cash arrives
Short-term working capital
Speed: Varies by product and partner review — timing is not guaranteed
Cost shape: Fixed schedule on a set amount; compare total repayment to the bridge you need
You need a defined lump sum for a one-off payroll week without a revolver in place
Ask the client for partial or early payment
Speed: As fast as your relationship and contract allow
Cost shape: No financing cost if they agree — may affect future terms or leverage
The customer acknowledges slow pay and you can document a partial release or accelerated schedule
Tools and product pages
- Cash gap calculator — model weekly payroll against slow receivables before you choose a path.
- Invoice factoring — how advances on approved invoices are structured.
- Line of credit — revolving draws for recurring timing gaps.
- Factoring vs line of credit vs MCA — compare total dollar cost on the same amount and period.
Primary sources
The U.S. Department of Labor Wage and Hour Division publishes federal wage-payment rules and employer guidance. The Federal Reserve Small Business Credit Survey reports how employer firms use credit and financing — we do not quote survey statistics here.
Related financing
Common questions
- Is there a special payroll loan for small businesses?
- Some lenders market working capital or short-term products for payroll timing gaps, but there is no single government payroll loan program for private employers. Partners review cash flow, receivables, and existing debt — approval and terms are not guaranteed.
- Should I use factoring or a line of credit for payroll?
- Factoring ties cost to a specific invoice and customer credit; a line of credit fits recurring gaps when you already have access and can repay draws. Compare total dollar cost for the same number of weeks, not product names alone.
- What if I cannot make payroll at all this week?
- Prioritize lawful wage payment obligations under federal and state rules, communicate with employees where appropriate, and seek professional advice on your situation.