Payroll Cashflow Planner
Plan payroll cash flow with revenue collection timing and working capital needs. Enter values for instant results with step-by-step formulas.
Worked Examples
Example 1: Growing Startup
Problem:25 employees, $70K average salary, biweekly payroll. $500K monthly revenue with Net-30 terms.
Solution:Payroll: $71,154 biweekly ($142K monthly with taxes). Revenue lags by 30 days. Need $142K working capital minimum. Revenue:Payroll = 3.5x (Healthy).
Result:$142K monthly payroll | Net-30 creates 1-month lag | $150K working capital recommended
Example 2: Seasonal Business
Problem:15 employees, $50K average, weekly payroll. Revenue varies $100K-$400K seasonally.
Solution:Payroll: $18,750/week ($75K monthly). Low season revenue only $100K. Cash strain during slow months. Need $150K+ reserve for 2-month low period.
Result:$75K fixed monthly cost | Revenue varies 4x | Significant reserves needed
Example 3: Service Business
Problem:50 employees, $60K average, biweekly. $800K monthly revenue, Net-45 collection.
Solution:Payroll: $140K biweekly ($280K monthly). Revenue lags 45 days. Need $420K working capital (1.5 months). Revenue:Payroll = 2.9x (Adequate but tight).
Result:$280K monthly payroll | Net-45 is painful | Negotiate faster payment terms
Frequently Asked Questions
What payroll cycle is best for cash flow?
Monthly payroll minimizes administrative overhead and stretches cash flow. But employees often prefer biweekly or weekly. Biweekly is most common in the US. Match to industry norms and employee preferences.
How much working capital do I need for payroll?
At minimum, one full payroll cycle's worth. For biweekly, keep 2 weeks of payroll + taxes in reserve. Add buffer for revenue collection delays. Many small businesses struggle because revenue lags payroll obligations.
What's the full cost of payroll beyond salary?
Add 25-40% for employer taxes (FICA, unemployment), benefits, 401k matching, and payroll processing fees. A $70K salary costs ~$90-100K fully loaded.
How do payroll taxes affect cash flow?
Employer taxes are paid on a schedule (monthly or semi-weekly depending on size). You must set aside funds with each payroll even if payment is later. Failure to pay payroll taxes has severe penalties.