The Cash Flow of Small Businesses: The Current State of Payroll
It is a pre-eminent yet a very basic fact that cash flow is a vital and decisive factor when it comes to business growth. The behavior and attitude of a company towards finance management contributes a great deal to the cash flow conditions that prevail. One of the most major occupant of any company’s cash vault is payroll and it has a profound impact on the cash flow of a small business. For a big portion of the business, money coming in doesn’t compensate enough for the money going out. Popular surveys have shown that about 39 percent of the small businesses around the world have payroll taking up to 30% of their entire cash budget and expenses.
When we say that a dwindling cash flow leads to difficulty in payment of the employees and checking off the payroll, it might sound pretty obvious. If a business is sans cash, it can’t pay its workers. A survey conducted b Intuit; the developer of QuickBooks shows that in 2019, more than 43% of small business owners admitted having frequently been at risk of not being able to pay their employees by payday. And for about 65% of business owners; who were able to make it through the payday deadline, couldn’t afford to move the money around as a major chunk of it was consumed by payroll.
These projected numbers seem worrisome for obvious reasons. Fallbacks in such large numbers; where are we lagging is it our personal finance management issues or is the economy on a whole? This is a question to pose to ourselves. Of course, there are some very commonly occurring cash flow implications of not having an apt amount of money at your disposal to pay those who work for you. But as we move on further, we see this is more than just a superficial issue. It goes beyond the fact of falling short of money, it’s about the dwindling morale of the employees. We see that payroll is a time-sensitive expense; employees expect, deserve, and need to be paid on time.
Delayed or inaccurate paychecks tend to damage the relationship and trust between employers and employees.
In a study called “The State of Small Business Cash Flow” conducted by Intuit, about 70% of small business owners admitted the fact that they’ve had human resource issues creep up of a nature that they had no answers to. This brings out an inference that it is very important to maintain a positive equation between the employer and their employees, but it is something that small business owners may not always know. It might get a little out of the hand of small business owners to navigate such relationships, especially with the payroll issue being involved.
The only resolute to such issues that keep cropping up is to bring about changes in our common practices. The study that we talked about earlier also found out that about 415 of small business owners take more than a week beyond the designated time to prepare payroll and about 34% are still adhering to manual spreadsheets to prepare payroll. It’s high time that we adopted the technology that’s available around us. Managing payrolls and miscellaneous company chores not only makes it easier but also makes it faster.
A viable solution to this drawback is being offered by Intuit, in the form of expanded QuickBooks Payroll suite. This software is helping business owners overcome the common cash flow and human resource capital management challenges, one step at a time. With innovations like Same Day Direct Deposit (SDDD), the money will stay in the business’s account until the day employees are actually paid off. Intuit’s new lineup with QuickBooks goes way beyond payroll. In addition to the feature of automatically running payroll, it also facilitates time tracking, expert live assistance, and protection from tax penalties. This software also allows the user to access a number of miscellaneous human resource services such as workers’ compensation and employee health benefits. All this leads to business owners developing confidence that their payroll is taken care of and is done right well within the time frame while strengthening the actual employer-employee connection by bringing in the trust factor.
Effectively and efficiently managing the payroll is something that should not only be done in order to streamline the company’s financial management and HR system but also as an ode to the people who work for you. Those who contribute their daily lives towards the progress and growth of their company deserve timely and well bread compensation, to say the least.
