Labour costing software has the obvious benefit of keeping your current costs under control. However, there are other benefits that not everyone considers, such as tax planning, soliciting investors in your company with real-world numbers, and projecting costs versus income over longer time periods. In addition to these you can also extract the benefits of avoiding legal conflicts that can arise due to over-working people beyond what the law allows. Finally, a benefit of labour costing software that not everyone considers is that you can give your employees planned raises to keep their morale high and steady.
As any good accountant would tell you, it is never too early to start planning your taxes. Particularly when quarterly payroll taxes are an issue, you need to think ahead in order to keep your bill reasonable. You have enough cash flow drains without paying unnecessary amounts of extra tax for workers you did not need to have around at a given time. By using a labour costing software option, you can plan this better than you could by simple estimation, as pay grade and hours worked can be projected for months in advance without having to build a complicated spreadsheet or getting out a pad of paper.
When you speak to potential investors about helping your company to grow, or about selling it if you are considering retirement, it is important to come to them armed with the most accurate numbers you can get. While pro forma numbers are an okay baseline for your figures, reputable investors are going to want to know how your company is really doing. With payroll being a sizable portion of every company's overheads, knowing the precise costs of labour will aide you in presenting accurate profit and loss with confidence.
Long-term Cost Projections
Projecting your costs is a difficult game most of the time. While it is relatively easy to project what your costs are going to be in the near term, such as this month, often they are called year-end estimates because they are so unpredictable. When you can decide how much you are likely to spend on labour over longer periods of time, this can aide you in determining whether you are going to have the capital to make large investments in your business. The further out you can project these costs using the software, and the more accurate you can be, the better you will be able to identify where you can put the money you will have based on probable revenue figures and notes receivable.
Keeping the Law on Your Side
Every municipality has its own set of laws regarding how much holiday time a person is required to have. As well, most workers do not enjoy being treated like virtual serfs, and enjoy their personal time away from work. For these reasons, avoiding legal hassles begins with keeping your labour costs under control through guiding worker hours carefully. If someone is getting a lot of overtime, it is worth identifying if you are working them too hard, from both a morale and a legal standpoint. Further, there are few more embarrassing expenses than simultaneously paying someone for their labours as well as their holiday pay.
Raises and Morale
The ability to regularly grant raises is at least some compensation for inflation, and is great for helping your workers know that their continued service is appreciated. By tracking labour costs carefully using the appropriate software, you can both promise routine raises to increase morale in the short term and provide them to keep morale going along smoothly.