Does Your Policy Payroll Match Your Budget Forecast?
Your policy payroll should match up with your budget forecast. Payroll and certain benefits – known as remuneration among the Workers Comp premium auditors – should match your budget for your next policy year. Just copying the payroll figures from your last years’ audit may result in giving your Workers Comp carrier having free use of your $$.
This is a very prevalent situation as employers are shrinking their payrolls and laying off workers in a very down economy. If your company has shrunk or your payrolls have declined, do not just allow the carrier to copy last years’ audit as a baseline. For instance if your company has reduced its payroll by 18%, why would you have to pay the extra 18%?
This is a hotly debated item as often your agent may tell your company that it will be all refunded or credited back to your company at audit. Why would you wait 13 – 14 months to recover what you knew was going to occur at policy inception? The 13 – 14 month figure includes 12 months for the policy to expire and then 60 days for the audit and the results of the premium audit to concluded and reported by the carrier.
This makes your projected budgets even more important when talking with your agent about your upfront policy premiums. If you do not have an exact budget prepared approximately 45 days before your fiscal end of year, your company will not have very much leverage or substantiating documentation.
You may wish to even throw in a graph of how your company is projecting your next fiscal years’ payroll numbers. As they say, a picture paints a thousand words – so do graphs.
Your agent and the carrier’s underwriter will require more than a verbal estimation. This is when Excel(R) can be very helpful along with your accounting package such as QuickBooks(R).
The same applies if your company decides to use temporary workers or subcontractors instead of regular employees. Using subcontractors invokes a new set of rules on whether or not they are actually employees.
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