"A major pitfall in the PEO business is the combination of thin profit margins and the unpredictability of future obligations. It doesn't take much to cause a sudden and severe cash shortage. Almost every PEO owner knows what it's like to be faced with an unexpected jump in SUTA rate or Workers' Comp mod rate. One day everything is fine, the next, there's not enough cash to meet collateral requirements or make payroll tax deposits. It happens even to well-managed companies."