How to Float Before Pay Day (and Ways to Make It Less Frequent)

How to Float Before Pay Day (and Ways to Make It Less Frequent)

I’m not a big fan of the float before pay day, but sometimes that’s what happens when you own a business. I’ve had to smooth my cash flow in the past, and you probably have, too.

The allure of starting a business is having flexibility and freedom with how you operate. You came out strong, putting in double the hours to see the efforts pay off — and they soon did!

Before long, though, you began experiencing the typical set of business problems. One in particular — cash flow problems — became the worst of them.

There are times when you’ll need an advance to float before your pay day.

This allows you to continue operations without major disruptions which could, otherwise, kill the business.

How Business Owners Find Themselves in Financially Troubling Situations

Payments are often handled on a 30-, 60-, or 90-day pay period. The most common — Net30 — creates a 30-day buffer from the point of invoice until payment distribution.

Any number of problems can happen during that time:

  • Late invoicing
  • Slow payments from those who owe you money
  • Poor accounting for expenses
  • Inadequate stock levels

Truck drivers, for example, are mostly independent contractors continually on the road since their pay is based on mileage and deliveries. The more they do, the better their pay.

However, payment delays are quite common in this industry. Add the need to refuel and lodging, and one can see how these contractors are frequently left pulling dead weight (cutting into business profits).

Even if you aren’t in the business of trucking, you might still have similar issues. I know that, in the past, I’ve struggled when clients are slow to pay their bills. I find myself waiting for the pay day, and wondering how I’ll cover my bills in the meantime.

No matter your business, you might find yourself looking to bridge the gap at some point.

How Businesses can Float before Pay Day during Payment Disruptions and Financial Mishaps

Truck drivers make a great example in this case. Many truckers turn to TBS factoring services due to their high reputation and ability to float income during the long waiting period with invoices.

Many small business owners are in similar situations. A similar service for some businesses is Fund Box. I’ve used Fund Box in the past (when they are running a fee-free promotion) to smooth my own cash flow issues.

Some of the other ways you can “float” before pay day include:

Credit cards

Dipping into credit cards or emergency funds are a usual go-to for handling cash flow disruptions. Though, this places a heavy, financial strain on the business and its operations due to high interests rates and general uncertainty. However, if you think you can pay it off in a couple of months, it can be a helpful way to bridge your funding gap.

Small Business Loans

There are many providers of small business loans. Those owners with stable credit and a solid, business history can receive cash injections with variable repayment rates and terms. You do have to spend the time to build up your business credit ahead of time. This is something that you do over time so that you are prepared when you need it.


It’s not uncommon for small businesses to conduct fundraisers to raise the necessary capital. These options are generally reserved for non-profits though small mom and pop operations may find success in their local community.

Online crowdfunding, too, is an appropriate action which extends the reach of these funding goals across social channels.

You can also use peer-to-peer lending through sites like Lending Club and Prosper to find someone willing to help you manage your cash flow more smoothly.

A Tax Advantage and Benefit of Floating

Businesses failing to produce a profit— and have a net operating loss — may claim tax write-offs. The business is not required to pay taxes and may find a tax advantage in the following years.

Another consideration is that the interest you pay on a business loan is tax deductible. That can help you reduce your income, even if you don’t have a net operating loss. You can deduct the interest you pay along with other costs that you pay for your business, such as costs for equipment, utilities, rent, and health insurance.

Perhaps the best benefit of floating comes from the realization the business isn’t as lean and agile as one expected. It becomes apparent there are areas of the business in need of trimming. This may include costs going into advertising/marketing, product development, software, hardware, or utilities.

It may also include the need to restructure the business operations. Or, a complete overhaul of the business plan to accommodate for better financial management. When you realize that you are constantly using a float before pay day, you can spot problems in the system that need to be fixed.

All-in-all, There are Options

Many business owners reach a financial rut and completely go off the rails. They shut down because of confusion (as to how it happened) along with not realizing there are options.

In the short term, use one of these floating options to keep things going. For the long-term, though, you need to review your business model, expenses, and more. Look for ways to boost income or stimulate passive revenues. As you move forward and see more success, the need to float before pay day is reduced.


What major, financial hurdles has your business experienced (and weathered) throughout the years?

Written by Miranda Marquit

Miranda Marquit is a freelance writer and professional blogger, specializing in personal finance, small business, and investing topics. She writes for a number of financial web sites and blogs, and has been featured in numerous media. Read about life as a freelancer at and in her book Confessions of a Professional Blogger.

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