# What is payroll funding?

Source: https://launch-rec.com/glossary/payroll-funding. Category: Funding. Market: US and UK.

Also called: payroll finance, contractor funding.

## Definition

A facility that pays your contractors each week and is repaid when your client settles the invoice, removing the cash gap from the agency's balance sheet.

## In practice

Payroll funding is priced on the funded amount, usually as a discount fee plus a margin over base rate, and is often bundled with back-office processing — timesheets, invoicing, credit control.

It is the difference between a desk that can place twenty contractors and one that stalls at five. The cost is real, but it is cheaper than equity and far cheaper than declining a rollout.

## Common mistake

Reading the headline discount rate only. Minimum-term clauses, concentration limits and bundled back-office fees usually move the true cost more than the headline percentage does.

## Related terms

- https://launch-rec.com/glossary/invoice-factoring
- https://launch-rec.com/glossary/working-capital
- https://launch-rec.com/glossary/concentration-limit
- https://launch-rec.com/glossary/advance-rate