March 21, 2019 Cash Flow en_US Many SMBs face cash flow challenges when juggling payroll expenses. QuickBooks "State of Cash Flow - Payroll Report" dives deep to uncover the struggles SMBs face. Small business cash flow: The state of payroll
Cash Flow

Small business cash flow: The state of payroll

By QuickBooks March 21, 2019

Last month Intuit released “The State of Small Business Cash Flow”, a global study focused on the behaviors, attitudes and status of cash flow challenges experienced by small business owners and the self-employed. Today, we are diving further into the nuances that make up cash flow, by exploring the State of Payroll among small businesses.

In The State of Small Business Cash Flow, we learned that two-thirds (61%) of small businesses have had cash flow issues. And due to these struggles, nearly a third (32%) have at one time been unable to pay themselves or employees.

In addition, more than 2 in 5 business owners have frequently been at risk of paying their employees late.

This is because payroll expenses are often one of the largest expenses that small businesses experience and ensuring payroll is accurate, on time and compliant is essential to a small business’ success.

Payroll is an overhead expense (like inventory or rent) that is time sensitive, and it can be unforgiving when cash isn’t readily available. Many business owners who struggle with managing their cash flow have had to make uncomfortable adjustments in order to get employees paid, such as moving money around or paying them late.

Beyond affecting cash flow, accurate and timely payroll has a direct impact on employee retention. Both full-time and contract employees expect to be paid fairly for their services –and on time. And according to recent data from QuickBooks Payroll and TSheets, 17 percent of employees who work for small businesses say that a single inaccurate paycheck would be enough to make them quit their job and 18 percent would quit after a single late paycheck. This puts a lot of pressure on small businesses to make payroll and in order to keep employees happy.

Intuit strives to make payroll simpler for small businesses, especially for those who may be struggling with managing their cash flow. Same-Day online direct deposit  allows all QuickBooks Payroll customers to hang on to their money up until payday and get employees paid quickly, instead of having to prepare payroll days (or even weeks) ahead of time. As a result, small businesses hold onto an average of $9K more per month. With QuickBooks Payroll, they can pay their teams faster than any other comparable payroll service with complete confidence.

Intuit also makes it easier for small businesses to pay and manage 1099 contractors. The on-demand economy has changed employee expectations and both traditional and contract workers expect to be paid quickly and on a continuous, as-they-go basis. Through QuickBooks Payroll, small businesses can pay employees and contractors on the same day via direct deposit.

One of the reasons payroll expenses can pose a challenge to achieving positive cash flow is because small businesses often pay employees by check, and have to worry about having enough cash in the bank by the time a check is cashed. By switching to direct deposit, SMBs can ensure all employees are paid quickly while they have cash readily available.

QuickBooks is dedicated to backing small businesses and giving them the tools they need to prosper. With QuickBooks Payroll, QuickBooks is simplifying the complicated nuances of paying workers correctly and quickly, which in turn improves their overall cash flow. Today, 1 in 12 American workers are paid through QuickBooks Payroll and there have been 68 million paychecks sent through QuickBooks Payroll. How have you seen QuickBooks Payroll make a difference for your business?

The State of Small Business Cash Flow was conducted by Wakefield Research in Fall 2018 and surveyed 3,000 small business owners of companies with 0-100 employees in the U.S., UK, Australia, Canada and India. To read more of the survey data, you can read the full State of Small Business Cash Flow report here.

Keep checking back for more deep dives into the pieces that make up small business cash flow.

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