Imagine a workweek where you’ve increased your productivity, reduced your payroll costs, and revenue is growing 70%. You can make this fact. How? By partnering with a PEO.
Here at Liquid Ally, we’ve done just that to offer you one place to contact to assist your business with financing and arranging your needs as an employer.
What is a PEO?
A PEO is a Professional Employer Organization. It specializes in providing comprehensive human resources for your businesses so that you can focus on what you do best. Leaving the hassle of handling payroll, training and development, compensation, and benefits to the experts.
The list of services a PEO performs is extensive. The primary offerings focus on infrastructure and processes that are key to operating your business efficiently but are typically outside the focus of your core business. Engaging a PEO allows for key benefits.
Advantages & Disadvantages of Working with a PEO
Offloading your HR Function may sound like music to your ears, especially if you’re a business owner who’d prefer to devote your attention to your core business. It’s important to look at the pros and cons to understand if a PEO could be a boon to your company.
What are the benefits of working with a PEO?
There are many ways to capitalize on the time and money you may save.
- Significant Savings – From overhead to benefits, PEOs offer a greater opportunity to benefit from working with larger-scale organizations. The PEO pools employees from many companies that it serves together and thereby drives down insurance costs along with driving up the quality of insurance you can offer your employees. Additionally, rather than paying for the entire HR and Payroll departments to support your business, you’re only paying for the service you need from the PEO. Typically, as larger organizations, PEOs have increased bargaining power when negotiating benefit costs and these savings are passed on to your organization.
- Improved Training Opportunities – As subject matter experts, many PEOs have resources and training opportunities available for new hires, required safety programs, and even HR-specific training topics such as conflict resolution and ethics.
- Increased Tax & Payroll Compliance – Payroll operations seem straightforward until they’re not. It’s simple to overlook a deadline or form requirement with rules varying by state and local jurisdictions and federal compliance requirements. PEOs provide the opportunity to delegate the task of payroll processing and mitigate your risk of non-compliance issues.
Are there cons to working with a PEO?
There are few potential drawbacks, especially when compared to the potential gains.
- Customer Service – One of the downsides to outsourcing your HR is that the staff and workflow are managed by another firm. It is important to use the services of a well established PEO. Check references on your selected PEO to see how satisfied their customers are.
- Internal Turnover at the Start – If you reassign job duties from internal staff to the PEO, it could lead to unhappy in-house team members. This can impact morale.
- Potential Lack of Communication – This is dependent on the firm you select and your preferred level of communication. The best firms are highly responsive. If you’re having an HR or Payroll issue, slow communication is not ideal. Again, check references on your selected PEO to verify customer satisfaction before engaging with them.
We believe there are two ways to mitigate the risks above. Thoroughly vet the company you are considering doing business with to know that the relationship will be solid. Or work with a company like Liquid Ally. Here you will have one point of contact to assist you and act as an intermediary.
What is the difference between a PEO and an ASO?
You may have seen ASO (Administrative Service Organization) as an option on our factoring page or while investigating HR options. The primary difference is how the arrangement is structured.
PEOs can maximize their benefits for you by using a co-employment model. A joint partnership is created that gives the PEO its bargaining power and ability to streamline compliance and processes.
ASOs do not use a co-employment agreement. They simply arrange Payroll and HR services rather than provide them directly.
Are PEOs or ASOs the Same as Staffing Companies?
No. This is a common misconception. Staffing agencies provide temporary employees only while PEOs and ASOs provide centralized HR and Payroll services.
How Do Factoring, PEO, ASO, and HR Services Relate?
Your payroll cost could be 15 percent up to 50 percent of your revenue, depending on your industry. When you’re scaling or receive a business-changing order, you need the flexibility to act fast. Working with a lender and HR service company allows you to create a cash flow infusion, decrease overhead costs, and train new staff quickly and efficiently. It could be the difference between taking your business to the next and missing out.
At Liquid Ally, we’ve partnered with EmployersHR to offer our small and medium-sized clients all-inclusive PEO, ASO, and HR services. Schedule a call today to learn how this new partnership can assist your company!