Lowers Up-Front Costs
When businesses choose the Pay as You Go Method for Workers Compensation Coverage, it allows them to get coverage in place at a drastically lower amount than with a traditional policy. This is because with a traditional policy, a large payment is required up front just to get coverage in place. This amount is usually one third of the total policy. Depending upon the size of your business, this payment can be substantial. The rest of the premium is paid in monthly payments over the last nine months of the term. For a Pay as You Go Policy, the amount to get coverage in place is commonly as little as a few hundred dollars. The is an enormous benefit of Pay as You Go Workers Compensation.
Frees up Cash
Another great benefit of Pay as You Go Workers Compensation is less up front cost to get coverage in place. This lower fee frees up cash for your business that can be used on other more urgent business matters. Also, the fact that payments are made in real-time reduces the likelihood of over or underpaying premium throughout the year. This means during your end of year audit, you are much less likely to owe additional premium. That is additional cash that can again be used on other business needs.
Increases Payment Accuracy
Accuracy is crucial to the success of any business. This is especially true in relation to your insurance payments. For many businesses, commercial insurance is one of if not their largest business expense. Pay as You Go Workers Compensation allows a business to partner with a payroll company to pay their insurance premium each month based upon the actual hours their employees worked the previous month. This benefit of Pay as You Go prevents the business from overpaying or underpaying throughout the year and having a surprise during the end of term audit.
Reduces Mid-Term Audits
Not only does Pay as You Go Billing allow businesses to more accurately pay what they owe each month, free up cash, and lower up-front costs; it also reduces the likelihood of a mid-term audit. These audits can be timely for your business and can take several employees away from their day-today tasks. Because the payments are done in real time and are more accurate, they reduce the need for mid-term audits and shorten the amount of time needed for an end of term audit.
Allows the Business to Budget more effectively
Because the insurance premiums are paid in real-time based upon the previous months payroll and not on an estimate of last years payroll, Pay as You Go Workers Compensation allows businesses to more accurately budget other business needs. This is because payrolls fluctuate from year to year and with a traditional workers comp policy the premium is an estimate based upon the previous years payroll. Many businesses have payrolls that fluctuate from year to year and even month to month, based upon a lot of factors. If your business is one of these, the Pay as You Go Option may be ideal for your business to get your budgeting as accurate as possible.