Revenue-Based Financing for Security Guard Companies
Revenue-based financing hands a security guard company a lump sum that's repaid from a fixed share of monthly revenue, so a month with fewer billable hours means a smaller payment. Guard companies use it to staff a new site, add patrol vehicles or start a monitoring line, and it's a poor fit for a payroll that's already short.
What do security companies use revenue-based financing for?
Staffing up for a new contract
A new site contract means hiring, licensing and uniforming guards and paying them for weeks before the client's first invoice pays.
Patrol vehicles and equipment
Mobile patrol routes need vehicles, radios and tracking systems before the contracts that use them start billing.
Monitoring and technology services
Camera monitoring and access control add recurring revenue at a higher margin than guard hours.
How the remittance moves in a slow month
Take $200,000 of average revenue, $110,000 advanced and a $137,500 repayment cap. 10% of sales goes back each month.
| Month | Revenue | Remittance at 10% | Remittance as a share |
|---|---|---|---|
| An average month | $200,000 | $20,000 | 10.0% |
| A slow month, 23% under average | $154,000 | $15,400 | 10.0% |
Expect about 7 months to hit the cap at average revenue, with a slow month sending only $15,400. BLS headcount for security guards and patrol services (NAICS 561612) moves just 4.1 points over the year, so use your own thinnest month here.
Why does a percentage payment suit slow-paying clients?
Guards are paid weekly or every two weeks, while clients pay invoices on their own terms, often a month or more later. A fixed daily debit adds pressure in the weeks between client payments. A percentage of monthly revenue follows what clients actually pay.
What providers look at
Monthly revenue by client, how concentrated revenue is in the largest contracts, payroll as a share of revenue and how quickly clients pay.
Which contract risks should the agreement address?
- Whether revenue counts invoices when billed or payments when received.
- The repayment cap, and whether a minimum payment survives a lost contract.
- What happens if a large contract ends early.
Quick answers
Is revenue-based financing a good fit for a security company?
When you're staffing a new site or adding patrol and monitoring work, yes, because the payment follows what clients pay each month. A short payroll gap is cheaper to cover with a line of credit. Companies with several steady contracts and clients who pay on time get the best terms.
How does losing a contract affect the payment?
The payment drops with revenue, because it's a share of what comes in. That's a real advantage when a large contract ends. Read the minimum payment terms and any clause about losing a major client, since either one changes how much protection the share of revenue gives you.
Do slow-paying clients affect a guard company's terms?
Yes. Providers look at how long clients take to pay, since payroll goes out every week or two. A company whose largest clients pay on time gets better terms than one waiting on old invoices. An aging report showing current receivables helps answer the question before the provider asks it.
More for security guard companies
- Same-day merchant cash advance for security guard companies
- Second position MCA for security guard companies
- MCA consolidation for security guard companies
- Business line of credit for security guard companies
- How funders read security guard companies
- Revenue-based financing: how it works
Run your own numbers with the factor rate calculator.
Want to see what fits a security guard company like yours?
Tell us your slow months and your open advances, and we'll shop the file with funders whose programs fit. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.