Employee Leasing Quotes : PEO Blog

Employers may see on their workers’ compensation statement what their experience rating is, but knowing why can be difficult to understand.

Typically, the experience period used is three full policy years, ending one year prior to the effective date of the modification. To illustrate, a modification effective January 1, 2007 uses payrolls and losses for the policies effective January 1, 2003; January 1, 2004; and January 1, 2005. The length of the experience rating period may be as little as one year or as great as three years and nine months, depending on how long the insured has been in business and whether policies have been issued for a coverage period different than a full year.

Health Care and Benefits continue to be a big topic of conversation, especially in this election year. Here are few interesting statistics from the (EBRI) Employee Benefit Research Institute. They have a great site and you can view the entire article at:

Health Insurance: Trends in Availability and Cost

Average premiums for employee-only coverage increased from $28 to $52 per month from 2000 to 2006, an 86 percent increase. Average family-coverage premiums increased from $138 to $248 per month from 2000 to 2006, an 80 percent increase. In contrast, the consumer price index (CPI) increased by 17 percent from 2000 to 2006.

From 2000 to 2007, the cost of employment-based health benefits doubled, while wages and overall inflation increased only 25 percent.

Between 1994 and 2000, the percentage of workers with health benefits through an employer held steady between 73 percent and 75 percent. Since 2000, the percentage of workers with health benefits has fallen to about 71 percent.

These days, many employers are forced to wait up to 90 days to get their invoices paid… and are really feeling the pinch. Paying rent, paying suppliers and meeting payroll become extremely difficult in this situation. Not to mention the new jobs employers can miss out on while their money is tied up in slow paying invoices.

The first thought on this issue is usually to go to a bank to take out a loan. However, banks are becoming increasingly conservative and obtaining a loan is not always a sure thing. That’s why more and more business owners are turning to payroll factoring companies to help them get the financing that their company needs.

As opposed to bank financing, invoice factoring is easier to qualify for. The main requirement is that you have invoices from mid size and large commercial customers. Most factoring companies are comfortable working with new companies – even if they have no hard collateral – provided that they have good invoices and a solid business plan.

Factoring companies can get your invoices paid in as little as 2 days by buying your invoices and paying you immediately. You get money to meet high priority expenses while the factoring company waits to get paid by your client.

So how does it work? Once you have invoiced your customers, you send a copy of the invoice to the factoring company. Within days your first payment, called the advance, is given to you. The advance can be anywhere between 70% and 90% of the value of the invoice. The remaining portion is held as a reserve to cover disputes and chargebacks. The reserve is rebated as soon as the invoice is paid in full.

One of the big advantages of working with a factoring company is that they can usually extend you more financing than a bank can. While a bank will set a credit limit based on your company’s financial situation, the factoring company will set a limit based on your sales potential.

In terms of cost, factoring is a very competitive product. Factoring fees range from 1.5% to 3% per month, making it an affordable alternative to bank loans.

Using a factoring company can take away the burden of waiting for your invoices to be paid, while giving you cash to take care of your obligations and grow your business. If you find yourself in a situation where you need immediate cash to reach your full potential, consider using a factoring company.

1. What do their current customers have to say about them? Ask for and call at least three references.
2. What workers’ compensation carrier do they use? Are they A.M. Best rated?

3. How many years has the employee leasing company been in business?

4. Are they registered with the state? People have been charged and sentenced for illegally operating as an employee leasing company!

5. Does the workers’ compensation policy provide coverage if work is performed in other states (if applicable)?

6. Delivery costs: There can be a difference in $20- 30 a week with employee leasing companies. This can make a substantial difference in your overall costs!

7. Does the employee leasing company apply cut-offs on SUTA and FUTA (State and Federal Unemployment Tax) limits? This can add thousands of dollars onto the overall costs of the services!

One out of every three businesses pays a payroll tax penalty each year. Source: Department of Labor

Switching to a bi-weekly payroll can reduce payroll processing and administrative costs by 20 percent to 50 percent. Source: Department of Labor

The number one small business issue is the cost and availability of insurance. Source: Small Business Administration

Thirty-three percent of small business owners identified workers’ compensation as a critical problem. Source: NFBI

Business owners spend up to 40 percent of their time consumed by employer-related paperwork.< Source: Small Business Administration

The average U.S. employer spends over 32 hours and $900 per employee on employee training. Source: American Society of Training and Development

Access to a 401(k) retirement savings plan for small business employees has dropped from 28 percent to 19 percent. Source: Small Business Administration

In 2007 wages and salaries accounted for 69.8% of employee related costs. Legally required benefits – which include social security and Medicare, state and federal unemployment insurance, and workers’ compensation make up the remaining 30.2 percent. Source: Department of Labor