An easy way to improve the cash flow for your business is simply to change how you pay for your workers’ compensation insurance.  By switching to a “pay as you go” workers’ comp program, your premium is paid over the course of a year according to your payroll processing schedule and is based on your exact payroll figures.  For example, a business on a weekly payroll frequency would spread their annual premium payment out over 52 payments.  Workers’ comp insurance is required by law for most states and is a direct function of payroll. 

Check Your State’s Rules & Statutes for Workers’ Comp Insurance

Does Actual Versus Estimated Really Matter For Workers’ Comp Insurance?

If your business is not utilizing a pay as you go program, a large down payment is usually required to get the policy started and then payments are made on a quarterly basis.  The policy is based on estimated payroll figures for the year and often includes a lengthy audit at the end of the policy.  This year-end audit compares your actual payroll figures to the estimated amount which in turn can result in a hefty adjustment to make the policy whole. 

Learn How Workers’ Comp Rates are Calculated

3 Main Benefits of a Pay As You Go Program

Switching your workers’ comp insurance policy to a pay by pay program provides three main benefits for businesses including…

  • Improving your cash flow by spreading out the payments over the course of the year according to your established payroll frequency.  This frees up money to re-invest in your business that normally would have gone to the insurance company.
  • Often eliminating the lengthy audit and sizable adjustment at policy end since your policy is based on actual payroll numbers and is adjusted accordingly throughout the policy year.
  • Helping to streamline your business operations by eliminating an extra check you need to send out since the premium payments are automatically deducted from your account.