Managing Cash Flow During Difficult Times

Business owners are continually challenged with reducing costs and managing cash flow, even more so during difficult times. Lowering your insurance costs is a simple way for you to keep money in your pocket. Here are a few ways to manage your cash flow:

Workers’ compensation insurance is often one of the largest expenses for small businesses. A workers’ comp premium is based on “estimated annual payroll”, which is the amount of payroll you expect to pay all employees within a twelve-month period. If you’ve reduced payroll, you can ask your insurance company for a “payroll endorsement” to your policy. A payroll endorsement can sometimes lower the estimate you were originally provided. If that is the case, the lower premium will automatically reduce the amount you owe for the policy term. In some cases, the insurance company may even refund the premium already paid.

Another opportunity to manage cash flow, and probably one of the best billing methods for small businesses, is a pay-as-you-go workers’ compensation policy. The value here is that you only pay the premium when you pay your employees. So, if you’ve reduced the number of employees currently working, or scaled back on operating hours and don’t have payroll, then you don’t pay a premium for workers’ comp, immediately saving you money. Pay-as-you-go can also decrease your chance of audit expenses. Talk with your insurance company to see if they offer pay-as-you-go. If not, we can help! For more information, visit Pay-As-You-Go-Workers-Compensation.

A third way to hang onto your cash is to reduce the revenue or square footage on your liability policy. If you’ve temporarily closed operations, you will want to remove that square footage from the policy. Of course, once you resume operations you’ll want to add it back into the policy to be sure you have adequate coverage. The same applies if you forecast lower sales. You can ask your insurance carrier to incorporate this new forecast into the price of your policy. Insurance companies use different methods to price liability coverage so you’ll definitely want to ask which variable your carrier uses.

Stop spending more than you need on insurance. Contact your insurance provider today to discuss your options.