Charles Mensah, a financial consultant, has disclosed that bonuses to employees by most companies are paid when the organisation have exceeded their target for the year.
According to him, bonuses must be paid to employees by virtue of the company closing their books months prior to December. Mr Mensah explained that it is equally prudent for businesses to pay their staff bonuses in January since it’s during those periods that most people go broke.
During the month of December, he indicated that there is the tendency for people to spend and for most employees who plan well, they will have their “thirteenth month” happening in December because these days, nobody does “twelve months”.
“Bonuses are paid when we have exceeded our target because the reason why I have employed you, I am paying you salaries. And I earlier made mention of 13th month. If I am going to pay you bonus, the bonus would have come out as a result of preparing my books. Any company that pays bonuses around December is probably because they are closing the year in September, November or December. But if you’re really closing the year in December and they want to define it as bonus, bonuses are not paid in December. Because you have to close your books, it’s part of the expenses so you have to close your books well and appreciate that we’ve made quite a substantial profit”.Mr Charles Mensah
This year, Mr Mensah revealed that, it has been another COVID year and businesses are just “coming out of COVID”, which means that those who will “pay bonus” probably will be the banks. He noted that for sectors such as those who are really into manufacturing, he doubts that some of them can pay bonuses this year.
“If they will, maybe they will just share [bags of rice] but not pay physical cash because you cannot borrow to pay bonus… Borrowing to pay bonus is like borrowing to get married; you’re not ready. So, any company that borrows to pay bonus, you’re not ready, you’re just acting”.Mr Charles Mensah
Companies borrowing to pay bonuses
Mr Mensah emphasized that for most companies who borrow to pay bonus in December, the payment for the loans starts in January, questioning “where is the money going to come from to service the debt?”
“So, banks will call in [for] their facility and then you’ll be shouting on the employees when they haven’t done anything. I believe in quarterly communication to employees. So, every quarter, the KPIs are shown so everybody knows that yes, we are making money or we are not making money”.Mr Charles Mensah
The Financial Consultant also advised employees on how to spend the bonuses awarded them during Christmas. Mr Mensah urged employees to adopt something called “BSI”. By this, he explained that when an employee receives their bonus, “the B stands for pay down your debt, your own personal debt people that you owe, the S stands for savings”.
“When you pay down your debt then you can save before you probably do the Investment”.Mr Charles Mensah