At the end of each pay period, employees have every right to expect a complete paycheck, delivered on time after payroll tax deductions. If a healthcare company finds itself in a situation where it cannot pay its employees, serious issues can arise.
For staffing agencies and healthcare companies, staffing payroll funding can offer a fast, flexible way to bridge short-term cash flow gaps and keep employees paid on time.
The Importance of Paying Healthcare Employees on Time
Employees depend on their paychecks, so it’s imperative that employers deliver on payment promises. Whether employees are paid biweekly, monthly or even less frequently, they should receive full payment when promised.
In certain cases, employees might be living paycheck to paycheck. These individuals rely on full, on-time payments to satisfy basic living expenses such as food and shelter. Therefore, timely payroll is critical.
Additionally, many workers schedule bill payments and plan vacations, large purchases and other expenses around pay dates. When companies can’t pay their employees on time, employees are forced to reorganize their payments and expenses.
The Consequences of Missing Payroll
Your healthcare company can also face significant setbacks from missing payroll—challenges that may ultimately threaten the future of your organization.
Impact on Healthcare Staff Morale
When employers fail to make payroll, trust between staff and management can quickly erode. In healthcare settings, where teamwork and reliability are critical, a delayed paycheck can leave employees feeling undervalued and uncertain about their future with the organization. This strain often leads to frustration, reduced engagement and strained workplace relationships.
Increased Employee Turnover
That loss of morale and trust can prompt key employees to seek employment with an organization that can deliver on their payment promises. Without employees available to perform essential company processes, your business can face serious staffing issues.
Legal Ramifications
Employers who cannot pay employees can also face legal penalties. The Fair Labor Standards Act (FLSA) protects every employee’s right to a fair wage, overtime hours and fair compensation. Companies that do not promptly pay employees for their services violate the FLSA and are subject to fines and penalties.
Injunctions
Unpaid employees can request injunctions against an employer. In response, a court can issue an order requiring the employer to pay overdue wages. If the employer ignores the order, they can face heavy fines and even prison time.
State Laws
Companies must also comply with state regulations when compensating employees. Consult your state’s labor office for specific details on wage protection, employee payment standards and penalties for an employer’s willful negligence.
What to Do When Payroll is at Risk
If you can’t pay employees on time, be transparent about the reasons why, and provide a timeline for when the issue should be resolved.
Reiterate that although payroll might be delayed, other corporate benefits are still active. For example, employees can still take advantage of medical services, paid time off, 401(k) match and other benefits that the company offers.
Better yet, avoid this uncomfortable and potentially damaging situation by considering the following solutions to fund your payroll:
- Apply for a business loan
- Use personal funds
- Open an additional line of credit
- Liquidate company assets
Healthcare Payroll Funding Through Invoice Factoring
Often, though, those solutions are unattainable or undesirable. Fortunately, you can still obtain funds to pay employees through healthcare invoice factoring. This service converts accounts receivable into cash that’s immediately available for use. As long as your customers maintain favorable credit scores, you can leverage factoring for staffing payroll funding.
Invoice factoring is different from forfaiting, where a company sells the right to their accounts receivables. Through factoring, you can meet financial obligations, including payroll, without surrendering your right to accounts receivable.
Many medical transcription companies, medical supply vendors, medical billing providers and medical staffing agencies can benefit from factoring. Specifically, payroll funding for staffing agencies provides a flexible alternative to bank loans, helping you cover payroll without adding long-term debt.
Improving your company’s cash flow gives you breathing room to find solutions that prevent future payroll issues, whether that means expanding your customer base, sending immediate invoices, offering shorter customer payment windows or processing payments electronically.
Contact PRN Funding for Healthcare Factoring
PRN Funding offers a range of alternative funding solutions designed to help cover payroll during periods of slower cash flow. Through our invoice financing services, we provide access to substantial funds to ensure your employees are paid on schedule.
With over 20 years of experience in the industry and a network of reliable lending partners, we are committed to offering financing options tailored to your unique business needs. That includes staffing payroll funding programs built specifically for healthcare staffing agencies and other service providers.
At PRN Funding, we understand the importance of timely and reliable funding for your business operations.
Contact us today to explore how we can provide the financing and support you need to ensure your employees are paid promptly, even during periods of slower cash flow.
