Accounting & Bookkeeping Finance General

Are you prepared for Pension auto-enrolment?

get organisedThere cannot be many employers now who are not aware of the government’s legislation to ensure that all employees are enrolled in some form of workplace pension scheme and for most SMEs the deadline for action is approaching fast.
The new system – called automatic enrolment – started at the beginning of October 2012 with staff who work for the biggest businesses, with others being signed up over the following six years. It is expected that all employers will have joined the scheme by 2018.
Under the new system, those who work in the UK, are aged over 22 and under the state pension age, are not already in a scheme, and earn more than £8,105 a year must be automatically be enrolled. Those employees who already save in a workplace pension scheme or are self-employed will not be signed up.

Who has to comply?

Even if you only employ one person you are an employer and you have certain legal duties.  There is a guide for employers here   The process is now at the point of targeting micro businesses and SMEs with fewer than 50 employees. The Pensions Regulator issues letters telling employers their Staging Date, which is the date by which they must have a pension scheme and administration system operating. You can check your own here
Failure to register incurs hefty fines starting with a fixed penalty of £400. In some circumstances employers can be issued escalating penalty notices at a prescribed daily rate of £50 up to £10,000 depending on the number of staff employed by the business.

What’s involved and how long does it take to set up?

The advice is to allow at least six months before the staging date to make sure all the components are in place.
The employer needs to identify a suitable pension provider willing to provide a scheme.  Some smaller employers have found that providers are only interested in working with those that have a significant number of employees, although the Government has set up a basic scheme called NEST.
If an employer manages their own payroll and uses payroll software they also need to check whether it is able to accommodate pension scheme management or whether they need to buy additional components.
Accountants who have been preparing for helping clients with or managing their auto-enrolment schemes as part of payroll management services have identified some issues that can cause problems.
The first is cost. Buying an add-on package to existing software can cost about £350 and you need to check whether it is compatible with the Government’s online auto-enrolment software.
The second problem is again software-related in that employers will also need to purchase pension providers’ software and in some cases may find that it is unable to “talk” to the Government software. This too may need to be resolved.
Thirdly, there is the complexity of setting everything up. Here, it is wise for a business to check that their accountant managing their payroll, if they have one, has the capacity and is willing to carry out auto-enrolment.
Finally, once a scheme is in place and operating it needs to be administered.  It works on the employer providing Real Time information so employers will need to factor in the cost and time for this.
It may be more cost effective to outsource the whole process to your accountants or a payroll management service, many had been preparing for auto-enrolment for some years and will have dealt with the software incompatibilities and tested them. Alternatively speak to a pensions adviser but they can be expensive and do look for other options like those offered by membership organisations eg the fixed price package offered by the Federation of Small Businesses.
Whichever solution you adopt the time spent on early research will save costs and may avoid fines down the line.

Banks, Lenders & Investors Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

What helpful indicators can SMEs keep an eye on?

worried businessmanCost and commodity prices have been very low for quite some time and the exchange rate will now mean they are likely to rise quite sharply over the coming months.
This will have an impact on costs for all kinds of businesses, from manufacturing to retail.  But given the ongoing uncertainty following the EU referendum what other indicators might be helpful to SMEs to monitor what is happening to the economic cycle and to economic activity?

Businesses will need to be patient

Economic activity among consumers and clients is the easiest and most immediate clue. In the retail sector are the end of season sales starting earlier than usual? Monthly figures for house sale activity and prices and for mortgage approval levels can also be a helpful guide to how confident consumers may be feeling. These are published monthly in arrears but it may be better to look at quarterly or even annual trends to get a clearer picture.
For business activity the monthly Markit PMI (Purchase Managers’ Index) is useful for measuring confidence and activity levels in both manufacturing and service industries.  The most recent one published last week and the first post-Referendum made grim reading with a headline that the UK economy had been shrinking at the fastest rate since 2009, immediately after the 2008 crash.
It found that manufacturing had dropped to its lowest level since February 2013 and that confidence levels in both sectors had fallen from 52.4 in June to 47.7.  Any figure below 50 means a contraction in activity.
Another perspective comes from the quarterly economic survey of business confidence from the British Chambers of Commerce (BCC).  Its most recent one, published in early July and covering April to June showed that there had been improvements in both manufacturing and service sector confidence and sales during the second quarter of the year for most regions in the country with only slight reductions in confidence looking ahead to the next quarter.
However, for those companies that may be struggling but have delayed making decisions on restructuring and on investment until after the referendum a key question will be what happens next to interest rates. Restructuring company Begbies Traynor has reported that company insolvencies were stabilising with fewer than 4,000 going into insolvency in the first three months of 2016, a rise of 5.4% on the previous three months but remaining lower than the same period in 2015.
The insolvency statistics are also reported quarterly in arrears so again it is likely to be a while before a clearer picture emerges.
What will happen to the economy will also depend on what actions the Bank of England and the new Chancellor, Philip Hammond, take in the next few months to stimulate the economy and how successful any measures they introduce are, bearing in mind that here too there is always a time lag.
Basically, therefore, the advice to SMEs is to keep calm and carry on while keeping an eye on the developments we have suggested above.
(Image courtesy of Vlado at

General Uncategorized

Proactive Health and Safety initiatives can build employee loyalty

health and safety checklistMany SMEs regard Health and Safety (H & S) regulations as a burden and a cost but demonstrating a genuine commitment to best practices can bring huge benefits.
Employees are likely to be more committed to you and your company if you pay attention to any risks that may be involved in their jobs and their working environment.
Furthermore, supporting your staff by offering them training in various aspects of H & S and giving them responsibility for various aspects can boost confidence, which then transfers to their competence and loyalty when doing their jobs.
In factories, the basic elements of a good H & S policy include having available properly maintained eye washing and first aid kits and, increasingly, defibrillators and ensuring people are trained to use them properly.
Ensuring there are safe, and clearly-marked lanes for moving vehicles such a fork lift trucks, training in safe lifting and handling of heavy items are other items on the H & S checklist, along with safe handling and storage of potentially hazardous substances that may be needed for the manufacturing process.
In offices, again, keeping walkways clear and free of trip hazards is important.
H & S (Display Screen Equipment) Regulations 1992 cover aspects of working for long periods at a computer. The guidance is that short, frequent breaks are more satisfactory than occasional, longer breaks: e.g., a 5-10 minute break after 50-60 minutes continuous screen and/or keyboard work is likely to be better than a 15 minute break every 2 hours;
The guidance includes showing people who are deskbound and using computers for most of their working day how to set up their desks properly to minimise back and wrist problems.
Equally a business employing people who regularly work for long periods at a screen must provide eye tests for employees who request them and must pay for basic frames and lenses for spectacles for DSE work if found necessary. Why not be proactive and offer them to staff?
Regularly reviewing and applying H & S best practice can demonstrate concern for employees’ wellbeing and that you value their contribution to the business’ success.
It’s all about being proactive and demonstrating that you genuinely value and care for your staff. They are likely to repay your concern for them with loyalty to you and the business.

Finance General Rescue, Restructuring & Recovery

Documents, filing and systems – business housekeeping

business insuranceIn order to be ready for changes in the market and economic outlook a business needs to be organised and confident of its current position.
No, this blog is not about business plans or cash flow, but about reviewing the documents, filing and systems that support a business.
This includes insurance cover, asset registers, supplier agreements such as IT support, inspection certificates and service plans for vehicles, plant and machinery, PAT testing, asset finance agreements and many more.
If insurance cover is approaching renewal time it makes sense to review what is covered and whether any additional cover is needed so that the business has time to shop around for the best rates and deals and to investigate the fine print of any new policies it may be considering.
While the Health and Safety Executive (HSE) regulations do not make Portable Appliance testing (PAT) an annual legal requirement, the HSE does advise regular testing of any electrical appliances that have the potential for harming users.  However, the guidance is that frequency of testing depends on the type of appliance and the environment in which it is used, so that power tools used on a building site, for example, should be tested more frequently perhaps than a bedside lamp in a hotel room.
While there is no requirement to keep records of testing it makes sense to hold such records not only to know when appliances have been tested and to have a regime for regular testing, but also to demonstrate that the issue is taken seriously since such records will be looked at in the event of an accident.
Many businesses rely on outside support for their IT systems as well as for protection from attempts to hack into their information.  Reviewing the service, its costs and the availability of support in an emergency is also something that is worth looking at regularly.
If a business owns vehicles, plant or machinery, it may be that certain items need inspection certificates and regular maintenance.  As part of any review it may be worth considering the replacement of equipment to reduce costs or increase efficiency.  There may also be grants and incentives to replace capital items instead of repairing old equipment.
These are just a few examples of the annual review that businesses should be doing as normal housekeeping but just as pertinently should be in place so they are ready for the post-EU referendum opportunities that will emerge in due course.

Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Budgeting for marketing when the business future is uncertain

marketing and its role in businessAt the moment there is a big question mark over the future prospects for business with many companies unsure what it holds.
This makes it a good time to establish precisely where the business’ strengths and vulnerabilities lie, hence our focus on housekeeping.
The topic for this blog is the allocation of marketing resources.
Businesses often make the mistake of cutting marketing budgets during hard times, when actually it is a time to consider doing the opposite.  However, it makes sense to reposition the strategy and goals.
Plainly, it is always important for potential customers or clients to be aware of the brand and its reputation, whether this be for high quality, fast delivery and/or cost-effective prices for their services or products. Readers of my blog of a month ago will be aware that companies cannot promise all three.

Re-focus the marketing budget

However, until the trading picture becomes clearer this is not the time to plan for growth and increase the marketing budget with that goal in mind. When the tide is coming in is the time to spend on customer acquisition but it is a costly exercise and easy to waste money.
Instead, in the short term, marketing spend needs to be re-focused, towards retaining and reassuring customers. That does not mean that a business should not reflect on the markets it might pursue in the future and perhaps cost marketing campaigns tailored to that purpose.
But the primary focus should be on securing existing home and, if relevant, overseas markets so the marketing spending should be 100% focused on this, on the return on the investment and on improving efficiencies to stand out from competitors and to survive whatever is coming.
The prospects of a recession in the economy are relatively high, particularly where, as in the UK, so much depends on consumer spending. Consumers are likely to be cautious, especially on spending on big items, when it is unclear what will happen to their jobs, their food and energy bills and to the value of their homes.
At the moment, therefore, services, retailers, construction companies and small manufacturers are all particularly vulnerable, especially those who focus on B2C markets.
They need to send out a message through their marketing about the benefits of their product or service, but also to spend wisely on improving that quality, speeding up delivery or reducing prices wherever they can.
(image courtesy of renjith krishnan at

Accounting & Bookkeeping Cash Flow & Forecasting Finance General Turnaround

Understanding allowable business expenses is important

get organisedThis month is a good time to look at all aspects of your business “housekeeping” for two reasons.
Firstly, it will be some time before businesses have a clear picture of the effects of June’s EU referendum result on the UK economy and on trade so businesses can use this period to bring systems, process and records up to date and develop a clear picture of their current position.
Secondly, late July and most of August are traditionally the time when many people take a break and with the housekeeping done it is much easier to relax and to use the time for thinking and reflection to be reinvigorated for the return to work.
First on our suggested housekeeping list is business expenses and what can be claimed.
A key issue for many businesses is understanding what items are allowable business expenses and this can be important for ensuring a business does not pay out more than it needs to in tax.
It should be said at the outset that the regulations on what can be claimed as a business expense are complex and businesses would be well advised to consult their accountants or tax advisors.
What follows is therefore an overview.  The general rule is that most business expenses are likely to be allowable for tax relief.
This would cover accommodation, use of private cars, meals, repairs and renewals, business rates, energy and other overheads.  The devil, however, is in the detail.
Accommodation of staff is a good example.  Hotel stays would be allowable, but a company renting a flat for staff is only allowable if the journey is considered by HMRC to not be commutable. Travel expenses are also conditional.  Most people are aware that travel from home to work cannot be claimed as a business expense.  However, in some circumstances use of a private car for work is eligible for a mileage allowance at 45p per mile for the first 10,000 miles and at 25p per mile thereafter. In most cases a company car is likely to be more tax efficient.
Meals are allowable if staff are likely to be away from their normal place of work for more than five hours but be aware that there is a lot of HMRC advisory guidance on the details. There is no tax relief for entertaining clients.
Repairs and equipment replacements are allowable as capital expenses if the value of the items is more than £100.
Business rates and overheads are allowable provided the business is occupying business premises. For the self-employed and people working from home the regulations for claiming overheads changed in 2015-16 to a new flat rate allowance graded on how many hours are worked.
The lessons are to seek advice about the details, to understand what precisely can be claimed for and to maintain meticulous records just in case HMRC wants to inspect them.

Business Development & Marketing General Rescue, Restructuring & Recovery Turnaround

Conflict is an opportunity for transformation and innovation

conflict and mediationA former peace monitor in South Africa during Apartheid and now the founder of a niche consultancy called Questions of Difference says conflict is “our greatest natural resource”.
Charles Irvine argues that, if handled properly, conflict resolution can lead to new ideas and innovative solutions and can be used to transform people and businesses.
He cites the example of an organisation where there was a deep disagreement over paper from a supplier that was deemed too expensive.  However, the technical people within the organisation insisted it was the only paper suitable for the job.
People from both organisations were invited to a lunch to resolve the issue. It emerged that the paper supplier’s vehicles were delivering to customers all over the country, but their vehicles were returning to base empty.
A solution was found that cut the paper company’s bills dramatically, enabling it to supply paper at a lower cost to its customers.
Honesty and a willingness to listen and learn are crucial to making the best use of a conflict, however. In some situations, an impartial mediator may be the best way to resolve conflict.

How can mediation help?

The advantage of having a mediator is that they have no vested interest in the outcome, beyond resolution, and are better placed to identify innovative ways and opportunities that can be hidden to those involved.
Neither avoidance nor sticking to one’s guns are helpful in resolving a conflict. Too often, particularly when a disagreement has been ongoing for a long time, people end up in entrenched positions and refusing to engage with their opponents.  Alternatively, one side can choose to give in without their issues being properly addressed or resolved.  Avoidance of the core issue is no solution.
Compromising is another option, but runs the risk of satisfying neither side nor resolving the issue once and for all.
Some mediators advocate keeping the two (or more) sides apart, allowing each to express its views in complete confidence.  The mediator will then go back and forth between the parties clarifying, perhaps seeking suggestions and eventually arriving at a solution that is acceptable to all.
Other mediators, having taken initial positions from each party separately, will choose to engage in further discussion with both parties present.
Successful resolution of a conflict means antagonists being willing to engage, being open to looking for new ways of doing things and perhaps collaborating.
In that sense, a conflict can turn out to be a positive stimulus to innovation and creativity, as Charles Irvine suggests.

Debt Collection & Credit Management Finance Insolvency Interim Management & Executive Support Rescue, Restructuring & Recovery Turnaround

Proposals for new legislation to restructure and save businesses

stressed businessman 2 Huffington PostAll too often when a business gets into financial difficulties the odds are heavily stacked against it being able to restructure and survive and, equally, many directors leave it far too late to call for help.

The important question is why?

We would argue that it is the very nature of current legislation that uses insolvency procedures to tackle problems where the word “insolvency” is such a toxic term. The process deters directors from seeking help and they view meeting an insolvency practitioner as being like a visit to an undertaker, rather than seeing a doctor. They tend to only seek help once they have lost all confidence in the business and assume it can no longer be saved.
In the changed financial landscape since the crash of 2008, creditors have increasingly sought to get to the head of the queue for being paid and there has been a rise in the use of hold-out or ransom strategies. Examples are landlords refusing access to serviced offices or wifi when there are rent arrears, bailiffs seizing key assets over rates arrears and creditors applying for Winding-up Petitions in the courts as a means of debt collection.
It is therefore encouraging that the Government is consulting on proposals to improve the process of helping companies in financial difficulties and shifting the emphasis decisively towards rescue and recovery.

So what is being suggested?

The Government is proposing to introduce a three-month moratorium to prevent enforcement or legal actions by creditors and allow a breathing space for rescue plans to be prepared and considered. This would allow businesses to continue trading during any restructuring and include measures that ensure continued supply of essential goods or services without being held “hostage” by suppliers.
It is also proposing measures to bind creditors to a rescue plan and introduce a “cram-down” mechanism to prevent a minority of dissenting creditors from blocking the plan. This would level the playing field between unsecured and secured creditors, where currently secured creditors can wield disproportionate power in their own interests.
We would argue that any new legislation should be seen as being entirely separate from the current insolvency options.  It would allow directors of a struggling business to make a simple application to the courts early and easily, thereby allowing time to develop a realistic restructuring plan that would be in the business’ interests while also protecting creditors.
To avoid abuse, the new process would be overseen by independent professionals where the proposals are considering who these professionals might be. We believe that such professionals should have turnaround experience and be qualified accountants, lawyers and turnaround professionals. We would also argue that those insolvency practitioners who do this work should be excluded from taking a formal insolvency appointment so as to avoid any conflicts of interest.
These proposals, if introduced following consultation, would, in our view re-balance the process of helping struggling companies and encouraging directors to seek help much earlier and that such help should be free from the fear of it being tainted by the word “insolvency”.
Hopefully this welcome initiative will result in more businesses surviving, being able to trade their way back to stability and eventually growth, thus improving the returns to creditors and saving jobs.
(picture courtesy of Huffington Post)