Workers’ Comp with No Down Payment: Healthier Cash Flow
This is often quoted as the biggest benefit to pay-as-you-go workers comp: the ability to avoid a large, cash-flow-killing down payment up front. You can purchase a policy with little money down, and pay your premium in smaller amounts spread over the course of the year.
That can markedly improve your cash flow—especially when you compare it to traditional workers comp premiums, which typically require you to put down a hefty 25% deposit (based on your estimated annual payroll) and make several monthly installments thereafter. This can put quite a squeeze on your operating cash. Since most employers earn revenue throughout the year, it makes sense to spread an insurance premium payment over the course of the year.
Reality check: Contrary to some industry hype, pay-as-you-go workers comp is not a no-money-down proposition. You will need to pay some cash up front—just not as much.