Payroll is and will always be a daunting task, most especially for small business owners. Hiring employees simply means you need to pay them back to the service they incur to your business. And it is always a struggle to meet the needs of the payroll. The business should bring enough revenues to cover up the expenses and can accommodate for the payroll. That is why this article was created for you to be aware of the cash flow hacks you should know about payroll.
Hack # 1: Consider paying your employees weekly.
This can be beneficial for you and for the employee. Beneficial for you because your time sheets will be more accurate. This can force your employees to fill out their time sheets more frequently, having a more accurate recorded hours. This can help when your business tracks labour hours against customer projects.
Hack # 2: Run a separate bank account for your payroll.
Always make sure you have a separate bank account for your payroll and operating expenses. However, please note that it should be within the same bank so that bank transfers will be easy. This can also avoid any discrepancy within the budget because the funds are separated.
Hack # 3: Create a cash flow for your payroll.
Just like your expenses, create a cash flow for your payroll. You have to map out your payroll cash and the schedule. This can prevent you from using cash for a non-urgent item since you can already see whether you can replace the cash or not. If you are not that well versed with creating a cash flow, you can always hire a bookkeeper to complete the task for you. Eclat Accountancy Ltd offers one of the best bookkeepers that can help you with this. Visit their website here and see all the services they are offering.
Hack # 4: Prioritise vendor bills.
It is important that paying the vendor bills first than saving up for payroll because it will incur interest if not paid on time. Always make sure to cover these payments first, then the payroll and non-urgent bills will be the last. As the business owner, you should make sure you allocate your resources to the most important, down to the very least.
Hack # 5: Open up a line go credit to cover payroll shortfalls.
This will be your last resort if it happens that your business cannot provide the needed cash for payroll. However, make sure you will not use it as payment for vendors and other operating expenses. This line of credit will solely be for the benefit of the payroll. And before diving into this credit, plan out first the payment terms of this credit for you to plot your game plan so that you can have an overview of what will happen within the next months.
These are just simple reminders to guide you on how to create a payroll system that can help you run your business smoothly. You just have to pick the best practice for your business.