Calculator
Payroll gap calculator
Payroll runs on a fixed calendar and payers do not. Enter the billed balance, the advance rate, and the days outstanding, and the model shows the cash the operation floats between the shift worked and the remittance received.
Direct answer
Practition Finance publishes this model so a staffing, home health, or hospice operator can size the gap between a 2-week payroll clock and a payer clock that runs far longer. It converts billed volume, days outstanding, and payroll cost into the working capital each cycle consumes.
As of October 2026
Run your numbers
Model the advance against payroll
Payroll runs on a 2-week clock and the payer runs on its own. Move the billed balance, the advance rate, and the fee.
Invoices already issued against completed shifts or visits
Charged per invoice, on the face amount
Cash forward at funding
$332,000
An 85% advance on $400,000, net of the discount fee
Discount fee
$8,000
2% of the face amount for this cycle
Reserve released on payment
$60,000
The held-back share, returned when the payer remits
Annualized equivalent
16%
Same fee over a 45-day cycle, expressed as an annual rate for comparison
Educational arithmetic on the numbers you entered. It is not a quote, a promise to lend, or an indication of offers to come, and no funder has priced this file. Program availability varies by state.
| Assumption | What the model uses | Why it is set that way |
|---|---|---|
| Payroll cycle | Every 2 weeks, paid in full on date | Clinical labor is the largest fixed outflow and it does not wait for a remittance, which is what creates the gap. |
| Billed balance | Invoices issued against completed shifts or visits | Work that is completed but not yet billed does not enter a borrowing base, so it widens the gap rather than funding it. |
| Advance rate | Applied to eligible invoices only | Aged invoices, disputed items, and concentrations above a limit are commonly excluded from eligibility. |
| Collection timing | Driven by the payer, not the invoice date | The gap is the difference between the payroll date and the remittance date, so the aging report sets the size of the facility. |
| Growth | Increases the gap before it increases cash | Every new shift adds payroll now and collections later, which is why growing operations run short while profitable. |
| Facility cost | Excluded from the gap figure | The gap is a size, not a price. Cost is modeled in the receivables and factoring pages where the fee structure lives. |
Educational arithmetic on the numbers entered. It is not a quote, a promise to lend, or // copy-allow an indication of offers to come, and program availability varies by state.
How to read what it gives you
Read the gap as a number of payroll cycles
Divide the outstanding balance by the payroll amount. That count is how many cycles of labor the operation has financed for its payers, and it is the number that decides whether a facility is a convenience or a requirement.
Size the facility above the peak, not the average
The month with 3 payroll dates and a slow remittance run is the month that breaks. Size against that peak, because a facility that clears the average leaves the operation short in the month it matters.
Separate the timing problem from the margin problem
A facility fixes timing. It does not fix a bill rate below cost. If the gap grows every cycle at flat volume, the issue sits in pricing or in collections, and financing it makes the arithmetic worse.
Watch concentration
When one payer or one contract dominates the balance, the eligible portion of the borrowing base shrinks under concentration limits, and the facility covers less of the gap than the headline advance rate suggests
When the number means it is time to talk to someone
- The gap is widening at flat volume, which points at collections rather than timing
- A single contract represents most of the billed balance
- Payroll is funded through a professional employer organization that holds the receivable
- The operation is onboarding a large contract with a start date before the first remittance
- An existing lender holds a lien on receivables that would have to be subordinated
The figures behind the model
| What it measures | Market range | Confidence | How to read it |
|---|---|---|---|
| Staffing advance rate | 85% to 90% of eligible invoices4 | DirectionalAugust 2026 | The share of eligible invoices commonly advanced in staffing and home health facilities. |
| Days in accounts receivable benchmark | Under 30 high performing, 30 to 40 acceptable, over 50 a problem5 | VerifiedAugust 2026 | The aging benchmark that sets how many payroll cycles the gap spans. |
| Net collection rate benchmark | 96%6 | VerifiedAugust 2026 | The collection benchmark that tells you whether the gap is an aging problem or a billing problem. |
Keep the numbers
Email me this scenario
The page stays open either way. This sends a copy of the inputs you noted, so the numbers are in your inbox when you sit down with an accountant or a partner.
What owners ask about this calculator
01How large should the facility be?
Size it against the peak gap, which is usually a month with an extra payroll date or a slow remittance run, then add the growth expected over the next 2 quarters. A facility sized to the average leaves the operation short in exactly the month it is needed.
02Is a receivables line better than factoring here?
A line revolves against a borrowing base and reports as debt. A purchase facility buys invoices and does not. Operators with clean aging and reliable reporting often price better on a line, while newer operations with concentrated payers commonly start with a purchase facility.
03Does unbilled work count?
Not in most borrowing bases. Work completed but not yet invoiced sits outside eligibility, which means a billing lag of a week or more directly widens the gap. Tightening the billing calendar is often cheaper than enlarging the facility.
04What happens when one client is most of the balance?
Concentration limits reduce the eligible portion of the base, so the effective advance falls below the stated rate. Funders vary in how they treat a single dominant payer, and the limit is a negotiated term in the facility documents.
05Does Practition Finance fund payroll?
No. Practition Finance is an independent business financing referral service. It publishes market figures with sources, collects an inquiry with consent, and refers it to funding partners who communicate every term directly with the operator.
Sources
- 1U.S. Bureau of Labor Statistics, healthcare employment
- 2Centers for Medicare & Medicaid Services, home health
- 3Medical Group Management Association
- 4Noble Funding
- 5MGMA and HFMA aligned sources
- 6MGMA-cited
When the gap is sized and the aging report is in hand, send the request for team review