6 Areas Where Businesses Frequently Overspend

6 Areas Where Businesses Frequently Overspend

Posted by HR Division of Propel HR on 4/24/24 2:15 PM
HR Division of Propel HR
Find me on:
Posted on: April 24, 2024

When you're running a business, it's easy to overspend. Here's how a PEO can cut costs in six important areas.

Choosing the Right PEO

HR Administration. From payroll processing to filing taxes and managing employee benefits, the cost (and time) of running your business's day-to-day activities, especially HR-related matters, can add up, demanding more than you initially realized. Outsourcing time-consuming HR-related tasks to a PEO is one way to significantly reduce costs. Studies show that companies that partner with a PEO see a 21% savings in HR administration alone.

AdobeStock_617732208_01Labor. Employees are one of the most important assets and also one of the most significant business expenses. PEOs can help employers take care of their workers and lower costs without sacrificing productivity. 

For example, according to a report conducted by the National Association of Professional Employer Organizations (NAPEO), PEOs provide access to more HR services at a cost that is close to $450 lower per employee compared to companies that manage their HR services in-house. 

Employee Benefits. For small businesses, chances are you're competing with large companies that can offer competitive benefits and perks to their employees. By partnering with a PEO, employers can offer top-rated health insurance plans and enterprise-level benefit packages, including health insurance and other perks similar to those offered at large corporations. This is because of a PEO’s ability to group employees of small businesses into one pool to negotiate better health plans at lower rates.  There's also valuable time saved by assuming administrative responsibilities for benefits administration, including enrollment, claims processing, and addressing regulatory compliance. 

AdobeStock_661209259_01Compliance and Workplace Risks. Just one wrong move can result in fines, penalties, and legal disputes that pose significant financial risks to businesses. With the complexity of federal, state, and local employment laws today, your HR team may not be equipped to handle the growing demands of compliance.

➡️➡️Link #1Read More: HR Issues that Cost Your Business

By working with a PEO, your business gains access to an entire team of experts who are current with changing labor laws and filing deadlines and can help protect your company from compliance risks - especially valuable for businesses with employees in multiple states.

The Unexpected. With extensive experience working with diverse companies across various industries, PEOs provide valuable insights and guidance to help businesses prepare for and navigate through unexpected events and weather periods of economic uncertainty.  

For example, during the pandemic, PEOs helped businesses survive with guidance on allocating labor and resources for the short- and long-term, support on payroll processing, employee benefits, and leave administration. According to NAPEO study, businesses working with a PEO were 32 percent less likely to have experienced an overall negative effect on business and 82 percent more likely to have business operations back to normal (or better) than similar small businesses that didn’t have a PEO partnership. 

AdobeStock_504682607_01Growth Stages. During stages of growth and change, it's the unknowns that demand your time and resources. A PEO has proven to be a trustworthy partner to help businesses navigate through growing pains with ways to reduce risks, save money, and preparing for what’s ahead. In the beginning, your business may only need help with payroll. But as your business grows and more employees are hired, your business's needs also grow. Partnering with a PEO boosts productivity by streamlining HR processes at every stage. 

➡️➡️Link #2Read More:  How to Save More and Get More HR Services

Because you pay for only the services you need, the cost to work with a PEO is often less than the cost to expand your HR department. In addition, there are also savings in terms of increased productivity and efficiency. Outsourcing non-core functions allows your in-house HR team to focus on your business and get more done. In terms of revenue and performance,

  • 70% of businesses that work with a PEO report revenue growth twice that of comparable non-PEO companies.
  • The ROI from using a PEO is 27.2% based on cost savings alone.
  • Businesses that work with a PEO grow 7 to 9 % faster, have 10 to 14% lower employee turnover, and are 50% less likely to go out of business.

Get Costs Under Control

Are you paying more than you have to? When you’re sidetracked by juggling time-consuming tasks in multiple areas of your business it’s challenging to step back and find ways to spend less. Where do you begin? That’s where a PEO can prove to be a valuable business partner. From access to better benefits, compliance protection, and expert guidance on improving HR efficiency, the advantages of working with an IRS-certified PEO, like Propel HR, mean controlling costs, reducing expenses, and leveraging all the money saved.

Choosing the Right PEO

About Propel HR. Propel HR is an IRS-certified PEO that has been a leading provider of human resources and payroll solutions for 25 years. Propel partners with small to midsized businesses to manage payroll, employee benefits, compliance and risks, and other HR functions in a way that maximizes efficiency and reduces costs. Visit our website at www.propelhr.com

 

Topics: Featured, PEO

Subscribe to our Blog for Fresh Weekly Content

3 New Employment Laws That Could Impact Your Business
Featured

New changes in three employment laws may have a significant impact on your business. ... Read More

HR Compliance Issues that Can Cost Your Business
Featured

The cost of HR compliance violations goes beyond penalties and legal expenses, damaging ... Read More

Save More, Get More by Outsourcing to a PEO 
Featured

Outsourcing certain HR functions to a PEO can help small businesses optimize operations ... Read More

hr-division-blog-article

HR Division of Propel HR

The HR Division is made up of a team of professionals with a vast level of experience and HR expertise, assisting organizations of all sizes and within a wide variety of industries. They readily partner with clients to address strategic and compliance challenges surrounding the employment life-cycle and the ever-changing laws that regulate it. Inquire below about how they can help you!