Originally Posted by california rick
Originally Posted by kap17
People on "main street" have no idea how payrolls are financed and that most of them are on credit. They'll cry when they find out that because they didn't want to bailout the banks, the company that they work for can't pay them because they can't get a loan from those banks.
What??

Given that most people are paid every two weeks - employers are borrowing money to pay their employees?

The payroll monies are coming from loans and not because the company has sold enough goods and services to pay its employees?

If this is the case, then the company needs to go out of business.

That's like me borrowing money to pay my bills.

You obviously don't know how the financial world is financed. Everything is based on credit.

Most companies have lines of credit opened with banks and they use that credit to cover day to day operation costs, payroll being one of them. Those line of credits do not carry a large balance and are paid back within days.

But let's say that your company has a slow week and has not made enough money to cover the payroll this Friday. No problem. You can still pay the employees through the line of credit and pay back the bank next week.


I'm not an accountant so I can't really explain how payroll line of credit work. But I do know that they are backed by real assets and do not have a high re-payment time... Kinda like Amex.. you pay balance in full when statement is due.

Last edited by kap17; 09/30/08 06:14 PM.
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