When the coffers are bare, it may feel like nothing is coming together. But this is your time to shine. Crises can bring out the best in people, and it’s your job to steer the ship. This requires leadership, intuition, communication, and well-informed decisions, as you need to explore all available options to make it to next week.
Following our blogs on the first steps to take in order to stabilize your company position, the spend management imperative, and the ways to collect money and shore up AR, we would today like to turn our attention to payroll—namely, how to balance cash flow and ensure employees are paid.
Pay Your People, but Don’t Lose Sight of Cash Flow
Times are tough, and people are nervous. Knowing this, the term “scared chickens don’t make eggs” comes to mind. Maintaining morale is key here, and if you took the Paycheck Protection Program loan, the term ‘paycheck protection’ implies that you need to keep paychecks going out.
Paying employees in a crisis needs to be a top priority for businesses, as these are the people who got you where you are—and people remember will how they were treated. As we discussed in our HR tips blog, keeping morale from plummeting is vital to success, and there are many ways to make this happen.
But that doesn’t mean that you don’t have opportunities for improvement.
Direct Deposit Offers Stability and Visibility
First, start by moving your employees to direct deposit. This will help you to maintain stability and visibility, as rather than cutting a check and watching the money trickle out, money will flow more predictably.
Utilize Technology to Improve Payroll Processes
It may not feel like the right time to spend money, but the right payroll system can help you make your payroll processes run smoothly. A payroll system update will help you to gain visibility of your employment records and find out if there are any errors in classifications, time, or taxes.
Take Advantage of Resources Available
If you’re facing hardship at your own business, it doesn’t hurt to look for help. Whether it’s in the form of tax credits, forgivable loans, or grants, there is money available if you look for it. From Facebook’s grant for businesses to the CARES or FFCRA Acts, there are ways to find money.
- The Families First Coronavirus Response Act (FFCRA) established the COVID-19 tax credits. These credits help small and medium employers afford the coronavirus-related paid sick and family leave required by the FFCRA.
- The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) established the Employee Retention Credit. This credit encourages employers to keep employees on their payroll during coronavirus-related hardships.
Move from Bi-Weekly to Semimonthly Pay
Another way to facilitate payroll cash flow is to rework your payment processes. For instance, if you pay employees every second Friday, there are instances (like this month) where you’re paying employees three checks. However, a move from this biweekly paycheck to a semimonthly (i.e. the 1st and 15th of every month) will again deliver your business more consistency in cash flow.
Keep Up with the Controllers Council for All the Latest Tips and Advice
Whether it’s in times of plenty or times of struggle, the controller is one of the most important people at a business. We launched the Controllers Council to help people in this vital-yet-underrepresented role do more and serve an increasingly important role. Get to know more about us and follow us for all the latest.