Workers Compensation Payroll Audits Shows Need For Better Forecasting
A huge concern for Workers Compensation payroll forecasting shows up very often when we assist employers with their premium audits.
I had posted about this situation over the last few weeks. This situation is becoming a very urgent one as companies are trying to survive in this terrible economy. We have seen this happen over and over again lately when we conduct premium audits for employers.
I wanted to re-post over the concern we have with employers not accurately forecasting their payroll figures. The payroll figures are sometimes called remuneration. This can push a company to the brink of bankruptcy if not done properly.
The very bad economic situation we all are having to bear has caused many employers to layoff a large portion of their staffs. Some employers are just now making cuts to their ranks. Even if your company has not experienced any layoffs, an upcoming reduction may not accurately reflect your payroll figures for Workers Comp policies or audits.
Yes, the premium auditor will catch it at the end of the year with a refund or credit to your next policy. Do not let your premium auditor be the one to refund your company money at the time of the premium audit. You can do it on the front end of the policy.
Overestimating your Workers Comp payroll figures is the same as giving your insurance carrier a free loan of your funds for a year or more. It is recommended that just using last year’s payroll figures be avoided completely. We have seen companies harm themselves greatly due to not adjusting their future payroll figures to match their correct forecasted payroll.
We are not advocating that any employer intentionally underestimate their payroll. We heavily suggest looking at each future payroll period to see if there will be any changes to those figures. You cannot ask for a refund from your insurance carrier mid-policy.
There are many options at the time of policy renewal that will enable your company to avoid this situation. If you need further info, please feel free to contact us. If you have already renewed your policy or are in the midst of a payroll and premium audit, I recommend that you begin to plan for the next policy renewal.
One thing I wanted to clear up is that we are not agents. We do not have any outside influences on what advice we give out to clients.
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