Accurate Payroll Reporting and its Impact on Workers’ Compensation Costs and Cash Flow
According to the National Federation of Independent Business (NFIB), on average, approximately 82% of small businesses in the U.S. collapse due to poor cash flow management; an alarming statistic that shows just how important cash flow management is for today’s businesses.
For Transportation companies, managing cash flow can be particularly challenging due to the high fluctuation of drivers; where there is already a great demand for drivers, more of them are retiring, and competition to hire is increasing. In this environment, it is becoming more difficult and more costly for Transportation companies to replace drivers that leave, accurately forecast payroll, and be able to predict reliable cash flow.
Tips for Transportation Companies to Improve the Accuracy of Their Cash Flow Forecasts
There are a number of ways Transportation companies can improve the accuracy of their cash flow forecasts, some include:
- Clear communication with necessary stakeholders
- Identifying cash inflows and outflows
- Considering several scenarios/ contingencies that could affect cash flow
- Record keeping and monitoring and adjusting results
- Creating a feasible budget
- Analyzing business indicators
- Estimating short-term sales (e.g. weekly or monthly)
- Paying Workers’ Compensation premiums based on actual payrolls vs. estimated payrolls
Pay-As-You-Go Helps with Accurate Payroll Forecasts and More Reliable Cash Flow
Given the inconsistency of truck drivers, delivery schedules, and resulting inaccuracies in payroll forecasts, when it comes to Workers’ Compensation premiums and year-end audits, it is not uncommon for Transportation companies to incur large expenses due to underpayment of the Workers’ Compensation premiums. The Pay-As-You-Go premium payment model can help businesses better manage cash flow by reducing risks associated with the under-reporting or overestimating of payrolls.
Pay-As-You-Go offers flexibility, allowing Transportation companies to pay Workers’ Compensation premiums based on actual payroll; thus helping to protect cash flow as the number of employees fluctuates.
PMC PayGo Offers More
PMC PayGo is our proprietary Pay-As-You-Go option for paying Workers’ Compensation premiums. It gives businesses more control with:
- Greater Accuracy – premiums paid are calculated based on the actual payroll instead of estimates
- Improved cash flow – premiums are paid based on actual payrolls throughout the year rather than an estimated monthly lump sum installment that is based on an estimated payroll projected at the start of the policy period
- Increased Flexibility – premiums can be paid on a weekly, bi-weekly, or even a monthly installment basis
The PMC PayGo platform includes additional features to ensure greater accuracy and peace of mind.
- Easy to use web interface –PMC PayGo can be accessed online thru our user-friendly platform from any place and at any time, 24/7, 365 days a year.
- Flexible payment schedules – Premiums can be paid in installments (weekly, bi-weekly, or monthly) as preferred.
- Convenient year-end audits – The calculation of premiums based on actual payroll reduces the risk of incurring additional charges related to year-end audits.
- Flexible payroll reporting – Self-report payroll, partner with a payroll vendor, or upload a report via our online platform for optimal convenience.
With PMC PayGo and accurate payroll reporting, Transportation companies can be in a better position to manage their cash flow – and their business. To learn how PMC can help protect companies with Transportation Workers’ Compensation insurance, PMC PayGo, or risk management and loss control services, contact your PMC broker or Joe Bukovsky, PMC Transportation Practice Leader, at [email protected].