7 ways to avoid Payday Cash Flow Problems
Founder & CEO
7 Ways To Avoid Payday Cash Flow Problems
Every business is kept alive with its lifeblood known as cash flow. One single obstacle that’ll destroy its steady ins and outs can lead to problems that may affect payroll, that may lead on later to unhappy employees, and end up with a dying business.
No one wants to work in a company that’s about to crash. As an HR manager, you have the power to avoid certain problems that may stop the flow.
How do you recognize cash flow trouble?
But before you take action, take note of the common indicators that’ll tell you that the company’s cash flow is on the rocks.
- Inability to pay taxes
- Inability to meet payroll
- Inability to meet payables on time
- Building up debt
- Bounced checks
If you noticed any of these, the company you’re working for could end up in big trouble. Some of the factors that can contribute to these indicators are the following:
- Keeping employees not needed
- Spending on things that don’t bring profits
- Credit card abuse
- Poor sales
- Not keeping track on expenses
- Not doing cash flow projections
You’ll realize that most of the causes go around expenses, expenses, and expenses. While your employer and other departments have their own must dos to prevent cash flow problems, your focus now is to do measures that will keep you away from uncertain expenses that won’t contribute anything to the company.
What can you do to avoid cash flow problems that may affect payroll?
Being efficient is the key to save you from additional expenses. Now you ask yourself, “What can I do about it?” Here are some ways you can do to avoid these cash flow problems from happening to keep the payroll prompt and consistent:
- Conduct regular audits
Prevent payroll errors from happening by checking the entire process from beginning to end. Whether you’re using a manual timecard or an automated system, it’s better to often check if everything’s running smoothly and accurately.
- Let the employees know about payroll policy
Prevent employees taking your time because of misunderstanding payroll policies. Put these policies in paper. Make sure it’s written simply and concisely. Display it or hand out copies so everyone is informed.
Some of the important policies that should be indicated include how the payroll process works, how employees are classified, and how wages and promotions are calculated.
Employees may have copies of the payroll policies, but are you sure they fully understand them? That’s why it’s important to talk to them. You can set meetings to talk about these policies and the payroll issues needed to be improved. Be open to the employees’ suggestions.
- Understand your employer’s obligations in payroll tax policies
Know about the payroll tax policies applicable to the business as missing these details may affect the company greatly.
- Go paperless
Go eco-friendly and cut expenses at the same time by going paperless. Start by recommending eliminating time cards and other payroll-related printouts by using software that will enable everyone to time in and out, check attendances, and know more payroll information electronically.
- Understand accounting
To be able to understand corporate cash flow, you need to be knowledgeable about accounting terms. Having a background in accounting also helps you analyze and calculate every cost made for HR initiatives may it be on budget developments, policy proposals, investments, and performance measurements.
- Invest on a payroll software
With payroll software, you can make sure that all records are easily tracked in one place. This is the type of expense that is all worth it and useful for the company as it makes your HR job easier and faster because it simplifies the entire payroll process.
Working in human resources is more than overseeing people assets that will benefit the company. To be more effective and at the same time productive, you as an HR manager should be also familiar with the business side of the company. Your decisions have the power to help cash flow problems and it can easily start with simply being wise in choosing what the company should spend on.
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