What is Payroll Funding? How Does It Work? Payroll financing is a tool allows your company to finance invoices and assets so that it can make payroll. It usually refers to a common use of invoice factoring, though it can also refer to other solutions. Let’s look at the problem Making payroll is one of the biggest responsibilities for a business owner. As a matter of fact, the success of your business depends on your ability to pay employees regularly and on time. But making payroll can be difficult, especially for small and growing companies. There are a number of cash flow situations that can affect your ability to make payroll. Some businesses have seasonal sales and don’t have reserves to cover payroll during the slow season. Others are growing very quickly, and their growth gets ahead of their cash reserves. However, the most common problem is that most commercial sales are done on net-30 to net-60 terms. This ties your funds to slow-paying receivables. This drains your cash reserves. And if your cash reserves are not sufficient, you run into problems. This is where invoice factoring can help you.