Adequate Working Capital
PEOs assume fiduciary responsibility for numerous employer functions involving substantial amounts of client and employee money. For every dollar of wages paid to worksite employees, the PEO is responsible for handling significant additional costs related to employee benefits, payroll taxes and other employer services.
PEOs generally deliver their services for a modest service fee, which has resulted in a high value, low margin industry. Because of the relatively thin profit margins, it is therefore very important for a PEO to be adequately capitalized, and its finances carefully managed at all times.
ESAC diligently monitors on a quarterly basis each accredited PEOs' working capital, related party transactions, and the validity of various assets and liabilities to verify compliance with financial standards and to ensure corrective action can be taken in the event of downward trends.