Will I make payroll this month?
Take today’s bank balance. Add only the customer payments you’re confident will arrive before payday. Subtract every other payment due before then. If what’s left covers net pay, you’re fine. Then repeat the check for PAYE and pension, due around the 22nd.
The five-minute check
- Today’s cleared balance. Across all business accounts.
- Add certain money in before payday. Only invoices from customers who reliably pay on time, or money already confirmed. Leave out anything you’re hoping for.
- Subtract everything else due before payday. Direct debits, rent, loan repayments, card payments, suppliers you’ve promised to pay.
- Compare with your net pay bill. If the balance left covers it, payroll is safe.
- Now look past payday. PAYE, National Insurance and pension contributions for this payroll are usually due by the 22nd of the following month. Run the same check to that date.
Step 5 is the one people forget. Payroll can go out fine and the business still comes up short two to three weeks later when PAYE and pensions are due.
If you’re short: what to do, in order
The earlier you act, the more options you have. Work through these in order, cheapest first.
- Chase specific invoices. Call, don’t just email, the customers whose payments would close the gap. Ask for a date and an amount.
- Move payments you can move. Agree a new date with a supplier before the payment is due. Most would rather be asked than be paid late without warning.
- Ask a good customer to pay early. Some will, especially for a small early-payment discount.
- Talk to HMRC before the deadline. If PAYE or VAT is the problem, HMRC can agree a Time to Pay arrangement. Contact them before the payment is due, not after.
- Use short-term funding, if it fits. An overdraft, invoice finance or a short-term facility can bridge a timing gap. Apply as early as you can: lenders look more favourably on a business that applies with a forecast and weeks to spare than one that applies the day before payday.
Don’t pay late without talking to people
Paying wages late can breach employment contracts and minimum wage rules, and it damages trust quickly. Missing PAYE without contacting HMRC can lead to penalties and interest. If you can’t avoid a delay, take professional advice and be open early.
How to stop asking the question
Payroll anxiety usually means there’s no forward view. A rolling 13-week forecast shows every payroll, PAYE and pension date for the next quarter, so you see a shortfall weeks ahead rather than days.
Lucid’s Payroll Safety Light
Lucid shows whether your next payroll, and the PAYE and pension that follow it, are covered, every morning. If they aren’t, it shows how far short you are and the cheapest way to close the gap.
Common questions
When is PAYE due?
If you pay electronically, PAYE and Class 1 National Insurance are usually due by the 22nd of the next tax month. Tax months run from the 6th of one month to the 5th of the next.
Can I delay paying staff?
Not without consequences. Wages must be paid as set out in employment contracts, and late payment can lead to claims. Take advice and talk to staff early if you face a delay.
Can HMRC give me more time to pay PAYE?
Often, yes, through a Time to Pay arrangement, if you contact HMRC before the payment is due and can show how you’ll pay.
What cash buffer should I keep for payroll?
Many owners aim to hold at least one full payroll plus the following PAYE and pension payment, on top of other fixed costs.
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