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Payroll Funding

Companies use payroll funding as a way to be able to make payroll when they are behind on accounts receivable.  For example a consulting company may bill a client every two weeks but the client doesn't pay for 30-60 days.  The consulting company needs to pay their employees while waiting for their client to pay.  They could get a loan from the bank but in today's world most banks will not even talk to them.  So payroll funding companies loan the money to the original company so they can make payroll, then the funding company has the clients pay them directly, then they take their cut, then they pay the original company.  This is also called factoring.