To end the Risk Management Tips for the week, the focus is on transaction times and deadlines for both collections and deposits, and procedures set in place for competitive services offered.
Tip 9: Expand time between collection and deposit transactions. You should consider the benefits your company would have if you processed payroll on Monday for a Friday check date. You will collect from the client on Tuesday and by Thursday you’ll find out if there is an NSF.
Tip 10: Establish procedures for next-day and same-day payrolls. To stay competitive, you need to be in a position to offer next-day and same-day processing. Consider requiring these clients to wire funds to you. If your ACH direct deposit payroll processor has the capability, Drawdown FedWire (reverse wire) may also be a good choice.
Additionally, make sure you are reconciling your accounts, especially your tax impound account, down to the FEIN (client) level, on a daily basis.
*Bonus Tip: Consider contracting a risk management expert. You can limit your risk by contracting with a trusted partner, allowing you to focus on your core product — payroll. A service like PTM’s FlexTax, gives you the control you desire in an in-house tax processing system, but with all the checks and balances you get with traditional payroll tax outsourcing solutions.
Whichever way you go, make sure you establish risk management policies, and that you review and revise them no less frequently than annually. Make it a point to read articles on industry trends and adjust your business policies as needed.