Payroll funding: never miss a pay run while waiting on customers

Of all the bills a business pays, wages are the ones that cannot slip. Staff have rent, mortgages and families, and a late pay run damages trust in a way no supplier delay ever will. Yet for many businesses, pay day arrives a week or two before the money that funds it. Payroll funding is about making sure that gap never reaches your team.

Why wages and income fall out of step

The problem is structural. Staff are paid weekly or fortnightly. Customers, especially other businesses, often pay monthly on 30 to 60-day terms. A business with a busy month can be paying three or four pay runs before the first invoice from that month is settled. Growth makes it worse: hire two more people for a new contract and you are paying them for weeks before that contract’s invoices arrive.

The Payday Super change

From 1 July 2026, Payday Super requires employers to pay super guarantee contributions at the same time as wages, rather than quarterly. Contributions need to reach employees’ super funds within a short window after each payday. For many businesses, especially those that used the quarterly due date as an informal buffer, this means each pay run now carries a larger cash requirement. The ATO and the Fair Work Ombudsman both have details on the new rules, and our guide to Payday Super and cash flow explains how to plan for it.

Choosing the right structure

Line of credit. The most common payroll solution. Draw before the pay run, repay when invoices are paid, draw again next cycle. You only pay for what you use, and the limit is there when you need it. See business line of credit.

Short-term loan. Suits a one-off squeeze, such as a big contract starting before its first invoice, or a quarter where a large customer is paying late. See short-term business loans.

Invoice finance. If your wage gap is caused by business customers on long terms, advancing against those invoices can fund payroll directly from the work your staff have already done. See invoice finance.

Payroll coming up and cash running short? Start your enquiry now and tell us the pay date.

Sizing payroll funding

Work out your total pay-run cost, including wages, PAYG withholding and, from 1 July 2026, super. Then map pay days against when customer payments arrive. The largest gap across a typical month is what the facility needs to cover, plus a buffer. The cash flow gap calculator can model this if you enter your weekly wages and how long customers take to pay.

Do not forget PAYG withholding

When you pay wages, you also withhold tax for the ATO. That money is not yours, but it sits in your account until the BAS or IAS is due. Spending it on operations is one of the most common ways businesses end up with ATO debt. Set it aside at each pay run in a separate account. Our page on BAS and super payments covers this.

When wage gaps are a warning sign

Occasional gaps are normal. A wage gap every single pay run, growing over time, can mean something else is wrong:

• Pricing too low to cover labour costs properly.
• Payment terms too long for your cost structure.
• Overstaffing relative to current revenue.
• Slow invoicing that delays every payment.

Funding bridges timing; it does not fix margin. Run the break-even calculator to check, and consider shortening terms for new customers.

Hiring for growth

If you are hiring to deliver a new contract, plan the first few months of wages before the first invoice is paid. Our page on funding new hires covers the cost of a new employee beyond wages, including super, leave, equipment and onboarding time.

Practical habits that make pay day easier

• Keep a payroll calendar that shows every pay run, PAYG withholding due date and super payment for the next three months.
• Hold a separate account for wages, PAYG withholding and super, topped up from each customer payment.
• Invoice weekly rather than monthly if your clients will accept it, so income arrives closer to when wages go out.
• Set reminders for large customer invoices due a few days before each pay run and chase them early.
• Review rosters against forecast revenue so labour costs follow demand, especially in seasonal businesses.

None of these replaces funding when a real gap appears, but together they make gaps smaller, rarer and easier to plan for. They also give a lender confidence that a payroll facility will be used for timing, not to prop up a structural shortfall.

An illustrative example

An illustrative cleaning company employs fourteen staff, paid weekly, and invoices its commercial clients monthly on 30-day terms. Before Payday Super, it paid super quarterly; now super goes out every week with wages. The business sets up a line of credit sized to its largest monthly gap, draws before the third and fourth pay runs each month and repays when client payments land. Staff are paid on time every week, and the business pays mainly for the days the money is drawn.

Protect every pay run

If wages are arriving before your customers’ payments, tell us your pay cycle, total pay-run cost and how long customers take to pay. There is no credit check to enquire, we do not spread your details around a network of lenders, and a real person reads your enquiry. Accurate numbers help us size the facility so pay day is never a worry. Apply now.