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Whilst Queensland businesses will benefit from a 17% reduction in the average workers' compensation premium for 2014-15 from $1.45 to $1.20 per $100 in wages, the lump sum bill, that is due on 16 September, is still a big hit to cash flows.

Hanrick Curran recommends business owners consider every opportunity to smooth out expenses across the year to match cash outflows with cash inflows.  There are a few payment options for business owners to consider before funding this year's Worker's Compensation premium.

Whilst Queensland businesses will benefit from a 17% reduction in the average workers' compensation premium for 2014-15 from $1.45 to $1.20 per $100 in wages, the lump sum bill, that is due on 16 September, is still a big hit to cash flows.

Paying upfront however typically results in a discount. In the instance of Workers' Compensation, to qualify for a 3% discount on your premium, businesses need to submit their Wages Declaration by 31 August 2014 and pay in full by 16 September 2014.

Hanrick Curran recommends business owners consider every opportunity to smooth out expenses across the year to match cash outflows with cash inflows. This reduces the need to rely on bank funded working capital and makes it more transparent for business owners to predict cash flow.

There are a few payment options for business owners to consider before funding this year's Workers' Compensation premium.

  1. Qualify for the 3% premium discount and pay upfront from available cash
  2. Forego the discount and pay over 10 monthly instalments using the Workers' Compensation payment plan (assuming you establish it on 15 September)
  3. Qualify for the 3% premium discount by using a Premium Funding facility then pay 10 instalments that include interest, over the course of the year (assuming you settle 15 September).

To illustrate the indicative cash flow of these options, we have prepared a case study based on a business with annual wages of $8,500,000 and a Workers Compensation Premium of $19,800 that settles on 15 September 2014.

Paying Upfront Monthly repayments plan with Workers Compensation Premium Funding Facility
Calculation $19,800 less 3% upfront discount = $19,206. $19,800 over 10 instalments $19,800 less 3% upfront discount = $19,206 over 10 months.
MonthlyInstalmentTOTAL P.A Nil$17,460 $1,980 p.m. for
10 months
$19,800.00
$1,974.38* p.m. for 10 months $19,743.78

* the repayment amount is calculated at an interest rate Hanrick Curran has negotiated with major banks, the associated interest component should be a deductible expense.

The interest payable on the premium funding facility will be evident in the application offer to include in interest expenses for FY14/15 year.

The Workers Compensation payment plan can be accessed within the Workcover Premium Online system.

Please contact your usual Hanrick Curran Adviser prior to 25 August to discuss your payment options and to request a quote to Premium Fund your Workers' Compensation premium.