If your business has employees, it is essential to budget for workers’ compensation. This can be taxing for some businesses since they are required to make a large up-front payment at the beginning of the year. An alternative is pay-as-you-go workers’ comp insurance, which can alleviate a number of headaches associated with the traditional model.
Eliminate Surprise Payments
Traditionally, workers’ comp costs are determined based on financial estimates made at the beginning of the year. Sometimes, this means a business ends up owing an additional amount at the end of the year. With the pay-as-you-go model, you avoid this surprise extra payment.
On the flip side, sometimes businesses receive money back at the end of the year due to overpayment. While this sounds like a more favorable outcome, that’s still a portion of your operational money that is unavailable all year.
Free Up Cash
In addition to avoiding unnecessary fees, pay-as-you-go workers’ comp insurance also frees up cash by allowing you to make payments over time instead of a single large payment initially. This enables you to invest money in your business throughout the year.
While most businesses need to provide workers’ compensation, they don’t all have to pay for it the same way. The pay-as-you-go model offers many benefits over traditional workers’ comp and can be used to improve the financial health of your business while still protecting your employees.