Seasonal Cash Flow Challenges of Real Estate: Overcome Them with Payroll Funding
Seasonality is a business term that is used to describe a specific phenomenon that occurs in certain industries. Basically, there are times of the year when the demand for certain goods and services is high, while there are other periods when the demand is low. Lower demand generally means decreased cash flow during those periods.
The real estate industry is not immune to seasonality. The outcome is that making sure all that all employees are paid on time can be more of a challenge certain times of the year. Here are some examples of what sort of seasonality may affect a local real estate market, and how agencies can use payroll funding from Payro Finance to get through those slower times.
When is The Local Market Likely to Soar?
Real estate can be bought and sold at any time of the year. Even so, there are months when people are more likely to look for homes and commercial real estate. The pattern seems to persist in many areas of the country from one year to the next, with little variation.
Typically, you will find that the market is likely to be more active and generate more revenue during the warmer months. The trend usually begins to pick up steam during February or March, depending on when the weather is more likely to begin warming. It will continue through May and June, then remain strong during July and August.
Along with the weather, there are other reasons why people may be looking to make a change during this period. School being out for the summer means parents can sell their old homes, move to new ones, and have the kids enrolled before the next school year begins. This is also a time frame when many corporations are likely to transfer employees to new locations. Finally, college graduates who now have degrees and are launching careers are more likely to be looking for starter homes.
How About Seasons When The Market is More Likely to Be Slow?
Generally speaking, people are less likely to list or buy homes as the weather gets cooler in many parts of the country, the first signs that cold weather is on the way begin to appear in September. As fall arrives, the temperatures cool, motivating people to focus more on settling in for winter rather than making any major changes.
School again has some impact on how much real estate business is conducted during the months of October, November, December, and January. By the time the weather begins to cool, the kids are settling in for the new school year. Many parents are reluctant to uproot children and transfer them to a new school after the holiday break.
What About Property Managers?
It’s not unusual for real estate firms to have people on hand who function as property managers. What may surprise some is that those managers may experience some seasonality with their job responsibilities. While it may not have as much impact on agents who are seeking to list and sell homes, it is an aspect that agencies have to consider.
Basically, some of the functions that a property manager fulfills may slow during certain seasons. That’s because many tenants don’t like the idea of moving during colder weather. As a result, there’s less need to qualify applicants who are looking for new apartments or rental homes. Property managers are also more likely to handle renovation, repair, and improvement projects to properties during the warmer months.
Projecting Payroll Funding For an Upcoming Slow Season
Being aware of slow seasons that recur annually is only part of the process. Managers and agency owners also need to think about how to cover payroll during the slower seasons. That can partially be accomplished by setting aside funds during seasons when business is booming. However, that may or may not be enough to take care of the entire payroll.
It’s a good idea to project how much will be needed for payroll during the upcoming slower season. Take into consideration everything that has to do with payroll. From wages and salaries to commissions, use historical data to come up with an informed estimate. That will serve as the basis for what is to follow.
Arranging For The Funding in Advance
While Payro does offer fast and easy funds for real estate agencies, you may find it helpful to apply for payroll funding before the next slow season commences. Doing so allows you to secure the funding and place the money in the account that you use to manage payroll. If that account happens to bear interest, you may even earn a tiny amount on the balance before needing to make use of the money.
Another perk is that you may be in a position to repay the loan before the slow season begins. Think of how nice it would be to enjoy the autumn chill and know that payroll is covered through the end of winter. That will make it all the easier to concentrate on other aspects of operating the business as the current year ends and the new one begins.
Remember that you can approach Payro for lending opportunities any time of the year. That makes it easier to project when you will need to make use of the funds, and ensure they are in the account in plenty of time. Even if you wait until the slow season has begun, don’t worry; Payro is known for fast consideration of applications, and typically has the same-day funding in the hands of approved clients. The approval is done within one to two business days.
Payroll and Your Hourly Employees
Thanks to the Payro solutions that provide payroll funding for small business operations, you can rest assured that there will be no issue paying all of your hourly employees in a timely manner. The money is in the account, and ready for use. That makes it easier to process payroll without any worries.
This also means no worries for your hourly employees, at least as it relates to being paid on time. They will know that even if things are a little slower, the paychecks will keep coming. This helps them feel secure and provides motivation to continue managing their assigned responsibilities productively. From experience, you know that it’s more cost-effective to retain valuable employees than have to train new ones. See meeting payroll on time as one more way to ensure those employees don’t start looking for opportunities elsewhere.
Providing Timely Pay to Agents
In like manner, it’s not unusual for real estate agencies to pay agents with more than one structure. In some cases, it’s strictly based on commissions. Other agencies may provide a base salary plus a commission for each sale. With either approach, you want to ensure that the money is there to provide timely payments to the agents.
It’s true that commissions may be paid out of the proceeds from sales. However, there may be a delay in receiving all the money due from that sale. If your agreement with the agents is commissions based on generated revenue rather than collected revenue, it’s possible to find yourself temporarily short.
Payroll funding via Payro has you covered. Determine what you need to cover the agent payroll, secure the funding, and then disperse it to your agents. Everyone is happy and ready to close another sale.
Repayment Terms That Your Agency Can Manage With Ease
This all sounds great, but what about the loan terms and conditions? Make sure that you understand them all, and know how you will go about fulfilling those obligations. Doing so will make it all the easier to set up funding when it’s needed in the future.
You’ll find that Payro provides full disclosure about the rate of interest for the funding. You will also have a specific due date to pay off the loan. Designate an account to be debited on that appointed date, and you won’t even have to think about the process at all, other than making sure the money is there to cover the withdrawal.
If you have any questions about the loan terms and conditions, the underwriter is happy to answer them. You will find that the goal is always to be open and honest with applicants, and ensure there are no miscommunications about what is involved.
Learn More About Payroll Funding for Real Estate Agencies Today
If you’ve never tried payroll funding to get through the slower seasons, this is the year to learn more about what it can do. You’ll find plenty of information from Payro about how this type of lending arrangement works, what sort of documentation is needed, and even how quickly the funding is provided once the loan application is approved.
You’ll also learn that Payro provides payroll cash without any stipulations about charges or fees for early repayment. If you find that it’s possible to repay the obligation ahead of time, rest assured that doing so will not add anything to the outstanding balance.
Contact Payro today and consider how this approach to meeting payroll during the off-seasons will make a difference. After trying this approach once, you may never think of dealing with another slow season without this type of support.