How do I fund payroll for a big new client contract?

Published 2026-10-29 · Timecard Capital · Nothing here is gated and nothing here is an offer.

Short answer

Fund the new contract’s payroll by factoring the new client’s invoices. Up to 90% of each week’s billing is advanced within 24 hours of invoice approval, the facility is sized to the new client’s credit rather than your history, and it grows with the contract instead of needing to be re-approved. Open it before the first shift, because the first week of payroll arrives before the first invoice can be funded.

Why a big win creates a cash problem

Suppose a light industrial agency running thirty workers lands a distribution center that wants forty more starting in two weeks on net-45 terms. Payroll roughly doubles immediately. The first invoice goes out at the end of week one or two, and the first client payment arrives 45 days after that. Between the first shift and the first check, the agency carries up to nine weekly payrolls for a client that has not paid a dollar yet. The margin on the contract is real; the cash to reach it is not in the bank.

This is the staffing cash cycle at its sharpest. Growth costs cash before it produces cash, and the bigger the win, the bigger the gap.

Which product fits the gap

The problem with sizing a new contract off your history is that your history is the small agency. A working capital advance is set against the deposits you had before the win, so it cannot stretch to a payroll that just doubled. Factoring sizes against the invoices the new client will generate, which is the number that actually grew.

The sequence that works

1. Open the facility before the first shift. A facility opens in 3 to 5 business days on a complete file. Send the signed contract or purchase order so the new client’s credit is approved before the first invoice exists.
2. Cover the first payroll separately. The first invoice cannot be funded until it is issued and the timesheets are approved. If your reserves will not cover week one, a working capital advance, sized off your existing deposits, bridges the opening payroll and the onboarding costs: drug screens, badges, a workers’ comp deposit.
3. Invoice weekly, not monthly. The faster the invoice exists, the faster 90% of it is in your account. Agree weekly billing with the new client up front if their terms allow it.
4. Submit each batch with approved timesheets. Up to 90% lands within 24 hours. On a $60,000 two-week invoice that is $54,000 in time for Friday.
5. Let the reserve do the rest. When the client pays at day 45, the fee comes out of the $6,000 reserve and the balance is released: at the illustrative 2.5% per 30 days, $2,250 fee and $3,750 released. An illustration, not an offer.

What to check on the contract itself

The contract does the underwriting, so read it the way a factor will. Confirm the client is a business, institution or government body, not an individual. Check the payment terms; net-30 costs less than net-60 because the fee accrues by the day. Look for a vendor management system or a pay-when-paid clause, both of which affect how and when invoices are approved. Make sure the agreement does not prohibit assignment of receivables, and if it does, raise it before signing; most clients accept a notice of assignment without issue. Finally, note the guarantee period on any direct-hire placements, since those fees cannot be factored until it has passed.

What you’ll need

• The signed contract, purchase order or award letter for the new client
• The new client’s legal name and billing contact, so its credit can be run
• A/R aging report and client list for your existing book
• Sample invoices with approved timesheets from a current placement
• 3 months of business bank statements
• Your start date and expected weekly headcount, so the first batch is sized right

One client is now most of your billing. Is that a problem?

For factoring, no. The facility is sized to that client’s credit, and a large creditworthy client is the best possible file. It becomes a question later, if you move to a line of credit or an SBA loan, where concentration is weighed. The practical answer is to use the new contract to build the billing and bank history that qualifies you for those products, and to keep adding clients as you grow. For the agency-type specifics, see light industrial, nurse staffing and the other agencies we fund.

---

Related: Invoice factoring · Working capital · How payroll funding works · Can a new agency get factoring · What you need to apply.