New in NextCrew: Channels: group chat for your team, your Crew and your clients. See what's new →
Nextcrew Logo

Payroll Funding

September 25, 2026

2 min read

Running an Agency

Written by the NextCrew team

Definition

Payroll funding is financing that gives a staffing agency cash to meet payroll before its clients pay their invoices. The most common form is invoice factoring: a funder advances most of an approved invoice's value within days, collects from the client, then releases the balance minus its fee.

Staffing payroll funding exists because of one timing gap. An agency pays its Crew Members every week, but clients pay invoices on 30, 45 or 60-day terms. Every new client and every extra shift widens that gap before it earns anything. Payroll funding for staffing agencies closes it by turning approved invoices into cash now.

How a funded invoice moves

Shift worked Timesheet approved Invoice to client Funder advances cash Client pays funder Balance released, minus fee
Factoring: the funder buys the invoice and waits for the client, so payroll does not have to.

How does payroll funding work?

Most payroll funding for staffing agencies is factoring, and it runs in six steps.

  1. 1
    The funder underwrites your clients

    Because repayment comes from your clients, the funder checks their credit as much as yours. That is why a young agency with strong clients can often qualify.

  2. 2
    Crew Members work and timesheets are approved

    The funder wants proof the hours happened and the client accepted them.

  3. 3
    You invoice the client and submit the invoice

    Usually with the approved timesheets attached, through the funder's portal.

  4. 4
    The funder advances most of the invoice

    The advance rate and timing are set in your agreement. Payroll gets paid from it.

  5. 5
    The client pays the funder

    Clients are normally notified to send payment to the funder's account.

  6. 6
    The funder releases the rest

    The remaining balance (the reserve or rebate) comes back to you, minus the funder's fee.

Go deeper: what payroll funding costs, how it compares with a line of credit and asset-based lending, and the questions to ask a funder before you sign are in payroll funding for staffing companies: how it works.

Related terms

  • Payrolling: a provider funds and runs payroll, sometimes as employer of record.
  • Gross margin: what is left of the bill rate after pay and burden, and where funding fees come from.
  • Bill rate: what the client is invoiced per hour.
  • Burden rate: the employer costs on top of pay that payroll funding also has to cover.
  • Program fee: a deduction from the invoice that reduces what a funder collects.
  • Earned wage access: paying Crew Members early from earned wages, a different cash question.
  • Accounts receivable aging: tracking which client balances are getting old.

General information, not financial or legal advice. Compare funding agreements with your accountant or attorney.