Payroll is due Friday and two big jobs haven’t paid – now what?

Every shop lives this nightmare. Customers drag their feet and suddenly there’s not enough cash to meet payroll. An overdraft or a credit card might cover a small gap, but for regular swings you need a revolving line of credit. A line lets you draw, repay and draw again; interest is variable and tied to benchmarks like Prime or SOFR.

Well-qualified borrowers might see rates in the high single digits, but new firms or unsecured lines can run north of 20%. Another option is invoice factoring: sell your unpaid invoices to a third-party company and receive 70%–90% of the value immediately. The factor collects from your customer and remits the balance, minus a fee of about 1%–5%.

Factoring isn’t a loan, so your credit score matters less, but the costs add up if you rely on it regularly. Avoid merchant cash advances unless you enjoy paying daily draws and effective rates that make payday lenders blush. The best cure is prevention: invoice promptly, enforce payment terms and maintain a cushion so payroll day doesn’t feel like Russian roulette.