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How Strategic Advisors Forecast Personnel and Payroll in LivePlan

[fa icon="calendar"] Thu, May 28, 2020 / by Joey O'Shaughnessy

strategic advising and payroll needs

For most small business owners, payroll is the most important payment they will make each month. It’s also very often the largest monthly expense. For so many of your small business owner clients, likely their first monthly cash flow consideration is, “can I make payroll?”

Planning for payroll needs, and related staffing (called full-time equivalent, or FTE) should be a key part of your strategic advising services.

An effective staffing plan goes beyond ensuring a business can make payroll. It gives small business owners the information they need to drive long term, strategic decisions. For example, if your client is considering staffing cuts, you can create a personnel plan to show them how lay-offs or salary cuts would affect their cash flow, or if they are considering a new sales or service offering, you can build a scenario for the required personnel, and how these expenses affect profit, and future cash.

You can easily help your small business clients forecast their payroll and FTE needs in LivePlan’s Personnel Tab. Help your clients be strategic about their staffing, payroll expenses, and long term needs.

Forecasting personnel in LivePlan is flexible and easy

Forecasting payroll and FTE in LivePlan is fast and flexible, with several features to help you effectively create a staffing plan:

  • Set-up employees as individuals or groups. Use groups to plan for similar positions, or teams and departments
  • Enter employee salaries as monthly or yearly figures, or choose to tie the labor cost to a percentage of overall revenue or a specific revenue stream.
  • Easily account for raises by including an annual raise rate.
  • Categorize employees as regular or direct labor. This ensures your financial statements accurately reflect your labor costs.
  • Account for related payroll costs, such as employer social security, taxes, and benefits, by setting a burden rate for your labor. This way you can capture your employee-related expenses without having to add each individual cost.

Once you have your employees set up, LivePlan will provide you with a personnel table displaying headcount, FTE, monthly and yearly payroll, and your employee-related expenses. Use the personnel table, alongside your forecasted financial statements, to help your client easily understand their projected payroll.

personnel tableRemember that in LivePlan you can have up to 10 different forecast scenarios. Create a new forecast to consider personnel changes. Is your client looking to add additional staff?

You can incorporate this change in a second forecast scenario, allowing you to understand the potential profit and cash-flow impact of this staffing change. You can use this information to help guide and advise your client regarding hiring, raises, and reductions in force.

How to connect your accounting information to LivePlan

Forecasting salaries is just one half of the equation. LivePlan’s Dashboard is where you’ll compare your actual payroll figures against your forecasted salaries and wages.

personnel breakdown

Once you’ve connected your accounting solution, you’ll be asked to map your accounts over to their corresponding forecast entries. The mapping process for payroll is a bit different than other categories. Instead of mapping to the individual personnel entries you set-up in the forecast, you’ll map your payroll accounts to overall labor categories:

  • Direct Salaries and Wages
  • Other Salaries and Wages

LivePlan will sum your forecasted personnel entries into one of these two categories. Direct Labor entries will fall under the Direct Salaries and Wages category, while Regular Labor will fall under the Other Salaries and Wages category. This then allows you to compare your payroll from QuickBooks or Xero to your forecasted entries.

The same will apply for payroll tax and benefits accounts. Those accounts will be mapped either to the Direct Employee Related Expense category, or the Other Employee Related Expense category.

Use LivePlan’s Dashboard reporting for added insights on expenses

Once your payroll accounts from QuickBooks or Xero are mapped to LivePlan, you can use the various trends and metrics available in the Dashboard to compare actuals to your forecast.

LivePlan also has full, comparative financial statements. The profit and loss statement on the forecast, for example, will give you a comparison between your forecasted personnel plan and your actual results.

Use the available trends and metrics in the Dashboard to help your client better understand their payroll. The Dashboard in LivePlan now contains full, comparative financial statements. The Profit and Loss Statement in the Dashboard, for example, will give you a comparison between your forecast personnel costs and your actual results. These reports can be downloaded and printed from LivePlan as well, so you can share these directly with your clients on a regular basis.

profit and loss statement

Try LivePlan for Strategic Advisors free for 90 days

Joey O'Shaughnessy

Joey O'Shaughnessy

Joey is the Channel Manager for Strategic Advisors. In his role he focuses on helping accountants and bookkeepers start, run, and grow their advising practice through LivePlan. He has been with Palo Alto Software for over 3 years and is a graduate of the University of Oregon.

Topics: Business Process for Advisory , Budgeting and Forecasting

Content, tips and best practice for accountants, CPAs and bookkeepers who offer Strategic Advising Services to small business clients.

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