Labour hire finance: paying workers weekly when clients pay monthly

Labour hire is a simple business to explain and a hard one to fund. You place workers with clients, pay those workers every week, and invoice the client. The client pays when its own terms say so, which could be 30, 45 or 60 days later. In the meantime, you’ve paid wages, super, payroll tax and workers compensation. Every new client or extra placement makes that gap bigger, so the faster you grow, the more cash you need.

Why labour hire gets declined

• Thin margins. The gap between the charge rate and the wage cost is often small.
• Big payroll obligations. Wages, PAYG withholding and super are non-negotiable, and directors can become personally liable for some of them.
• Client concentration. Many labour hire firms rely on a handful of large clients.
• Growth looks like risk. Fast-rising payroll and a shrinking bank balance can look like trouble on paper.
• Compliance. Some states run licensing schemes for labour hire providers, and lenders want to know you’re compliant.

The payroll gap, illustrated

Week	Wages paid out	Client payments in	Cumulative gap
1	Paid	Nothing	Growing
2	Paid	Nothing	Growing
3	Paid	Nothing	Growing
4	Paid	Nothing	Largest
5 to 6	Paid	First invoices paid	Starts to stabilise

The shape is illustrative only, but it shows the problem: with 30-day terms, you fund roughly a month of payroll before the cycle settles. Win a big new client and you go back to week one for that contract.

Invoice finance: the natural fit

Invoice finance was made for this. Rather than waiting for clients to pay, you get a large share of each invoice soon after you issue it. The facility grows as your invoicing grows, so a new client doesn’t leave you short. Lenders look mainly at the quality of your clients, such as established businesses, government bodies and listed companies, rather than only at your own balance sheet. See invoice finance.

Other options

• Line of credit. Useful for payroll peaks, such as Christmas shutdown pay, or a quarter’s tax. See lines of credit.
• Unsecured working capital. Typically $5,000 to $500,000 on bank statement turnover, for a specific growth step.
• Property-secured loans. For larger needs, or to catch up on tax and super, from $20,000 to $5,000,000.

Payday Super changes the timing

From 1 July 2026, the way employers pay super is changing. Instead of paying quarterly, employers are generally required to pay super much closer to each payday. For a labour hire business with hundreds of workers on weekly pay, that means a large amount of cash leaves the business weeks earlier than it used to. If your current funding was sized around quarterly super, it’s worth reviewing it now. The ATO’s Payday Super pages explain the new rules.

Tax and super catch-ups

If PAYG withholding or super has fallen behind, treat it as urgent. Directors can become personally liable for these amounts under the director penalty regime. A lender may help clear them, often as part of a property-secured loan, but speak to your accountant immediately as well. Our page on ATO debt explains the lending side.

An illustrative example

A Brisbane labour hire company (illustrative only) placing warehouse and trades workers won a contract with a large logistics client paying on 45-day terms. Weekly payroll was set to jump by around $60,000. Its bank declined a larger overdraft because of the business’s rapid growth over the past year. An invoice finance provider set up a facility across its client ledger, advancing most of each invoice within a day or two. As the new contract ramped up, the facility grew with it, and payroll was met every Thursday.

Choosing the right size of facility

A facility that’s too small runs out just as you win the next client; one that’s too big costs money to keep open. A simple way to size it is to multiply your weekly payroll, including super and payroll tax, by the number of weeks between paying workers and being paid by the client, then add a buffer for growth and any slow payers. Our cash gap calculator can help you test a few scenarios before you talk to a lender.

What lenders will want to see

• Your client list, with contract terms and payment history
• An aged debtors report
• Payroll records and evidence super and PAYG are up to date
• Any labour hire licence that applies in your state
• Twelve months of bank statements

If you supply workers to builders, our page on construction business loans covers the progress-claim side of the cycle too.

Keep payroll on time

If your bank won’t fund your labour hire growth, send us a 60-second enquiry. There’s no credit check when you first enquire, we won’t pass your details around the market, and a real person who understands payroll funding will call you. Please be accurate about your weekly payroll, client terms and any tax or super owing on the form so we can match you properly. See if you qualify.