Categories
Banks, Lenders & Investors

Is your business at risk from digitisation?

Insolvencies rose by 18% in April.

The rate of insolvencies over the past 12 months was 57 per 10,000 companies, higher than the previous year. However, the figures are still lower than the peak during the 2008-2009 recession.

Now there are warnings of a new risk to companies: digitisation.

According to Reuters: “The digitalisation and entry of Big Tech into finance create new vulnerabilities and amplify existing risks in the banking system”.

The Basel Committee of banking regulators lists growth of cloud computing, AI, and distributed ledger technology (DLT) as the additional risks.

“These can include greater strategic and reputational risks, a larger scope of factors that could test banks’ operational risk and resilience, and potential system-wide risks due to increased interconnections,” says the Basel report.

It will now consider whether there is a need for additional standards or guidance are needed to mitigate risks and vulnerabilities.

At a time when the economy may be slowly beginning to recover businesses will need to rely on their banks as much as ever.

They would also be advised to keep a close eye on their cash flow for obvious reasons.

Download our free cash management tool here to help you: https://lnkd.in/ee3pfuGa

Categories
HR, Redundancy & Trade Unions

Have you had management training?

A recruitment firm has surveyed more than 2000 workers and found that two-thirds of managers at British businesses were given no formal training before they took on leadership responsibilities.

As a result, many felt under-equipped for their roles especially as management these days is about more than keeping employees motivated, and now also includes “leading on digital adoption, possessing an innate ability to know if a member of their team is struggling mentally and also being the bearer of bad news.”

Yet among those surveyed it found that more than a third had asked repeatedly for formal training.

In 2023 the Chartered Institute of Management estimated that as many as 82% were so-called “accidental managers”.

Arguably, this lack of training could also be exacerbating “groupthink” at boardroom level.

The problem of groupthink was highlighted by Baroness Helena Morrissey, founder of diversity campaign group the 30% Club.

Although she did not specifically highlight the lack of training for managers she did say that groupthink is driving boardroom failures and presents a governance problem.

Are you a manager? Did you receive any formal training?

Do you think you needed or need it?

Categories
Finance

How helpful is your bank to your business?

The latest research from the FSB’s Small Business Index indicates promising signs of growth among small firms, with confidence levels soaring by over 20 points to reach +5.5 points in the first quarter of 2024. However, despite these positive indicators, small and medium-sized enterprises (SMEs) continue to face challenges, especially in their banking relationships.

This week the House of Commons Treasury select committee published a report showing that unfair banking practices, inadequate regulation, and barriers to accessing finance for smaller businesses are posing a risk to growth and innovation in the UK.

It highlighted the difficulties SMEs were having in accessing finance in the wake of Covid and energy price rises.

The committee urges the government to crack down on debanking and raise the minimum notice period for bank account closures.

MPs said a number of practices were harming firms, including the use of personal guarantees – where borrowers often have to put up their home as collateral against a loan.

The committee’s report also highlighted a growing concern about so-called “debanking” – when customers’ accounts are closed by their bank – noting that lenders had shut 140,000 SME accounts in 2023 alone, often without adequate explanation.

It also criticised the Financial Ombudsman Service for resolving disputes between SMEs and their banks “did not have the necessary resources and expertise to handle some of the more complex SME cases, while the Business Banking Resolution Service (BBRS) was deemed “ineffective” and “should close as planned”.

The FSB had submitted a report to the Treasury Committee last year in which it highlighted issues including the challenging application process for financing including “ the length of the application (62%), lack of communication or inability to talk to someone about the application (36%), the application requiring information SMEs could not access (26%) and the cost of the application itself (19%).”

It also highlighted the cost of finance as one of the three big barriers to growth highlighting a 61% success rate in applications, below the pre Covid success rate of 65%. It also ranked its members views of finance accessibility “In Q2 2023, the availability and affordability of credit by small businesses was considered good by 12% and poor by 52%”

So what’s your view? Do you have a good relationship with your bank or have you been treated unfairly?

Categories
Finance

Are British bosses paid too little?

The issue of pay for British bosses has been re-ignited by an article in the Main on Sunday.

“In an effort to determine whether British bosses are underpaid, the Mail has compared the pay of chief executives from leading firms in the UK and US, finding that while business leaders in the US generally earn more than their British counterparts, the gap is not always vast, especially when stock market valuations are considered.”

The number of leading companies pushing for pay rises for their leaders has jumped even after they trousered an average of £4.5 million, a recent study revealed.

The analysis by business consultancy Deloitte found that 16 FTSE 100 companies are looking to revamp their pay policies – with nine of them having ‘radical’ plans to boost their boss’s pay this year, compared to four previously.

Delve a little deeper and it seems that in the US while bosses may earn more than their British counterparts, they are often paid more in shares, whose value can, of course, fluctuate dramatically.

A comparison of the pay for bosses on both sides of the Atlantic found that while US bosses did indeed earn more, they were often the heads of significantly larger companies.

An example is BAE Systems compared to Lockheed Martin, where the boss of the latter is paid almost £5 million more. However, the American company is worth twice as much as the British one when comparing their share prices.

It is also true that US bosses wield much more power in the boardroom than their UK peers. They usually combine the role of chief executive and chairman, which is less common in the UK.

So is it a case that comparing bosses’ pay simply on monetary value is a blunt stick, and like comparing apples and pears?

Categories
Finance

Are regulations impacting your business finances?

UK businesses have expanded at their fastest pace in 11 months according to the S&P Global UK Composite PMI for the services and manufacturing sectors.

This week the FTSE 100 hit a record high, going above 8000 for the first time. It has been speculated this is due to an expectation of interest rate cuts and some alleged easing of geopolitical tensions.

NatWest says that SMEs had a strong first quarter with a rise in new business and the highest rate of output growth since last year.

Research commissioned by British Gas Businesses also found that small businesses have managed to save £450 on their energy bills over the last 12 months by implementing cost-cutting measures.

It’s all good news of course but, as ever, there is a “but”.

The regulatory cost burden on businesses has increased to £6 billion a year under the Conservatives, the party that has been promising to “cut red tape”.

Worryingly, the Centre for Policy Studies has warned that its figures were an underestimate due to “glaring flaws” in the regulatory regime.

Researchers at the Centre for Policy Studies (CPS) looked in-depth at 3,528 items of legislation from 2010 to 2019 to calculate the additional annual regulatory costs.

Impact assessments attached to more than 3,500 pieces of legislation over almost a decade have cost firms a gross £35bn a year – with £39.6bn in one-off costs – or up to £57.1bn, with £148bn in one-off costs, if pension reforms were included, the study found.

While businesses may be able to do something to reduce their overheads, such as energy consumption, payroll costs and sourcing of materials and services, regulatory costs are something they can’t escape.

According to a report in CityAM John Penrose, former government anti-corruption champion, added: “Every pound of red tape costs has the same effect on our economic growth, jobs and exports as a pound taken through tax. But governments of every stripe behave as though it is free.”

“Treating red tape costs as seriously as taxpayer-funded spending is long overdue.”

Has the cost of red tape impacted on your business finances?

Categories
Cash Flow & Forecasting

The UK economy in April – A Mixed Picture

It has been reported that the economy grew in February and continues to move out of recession. A survey of City economists for Refinitiv suggest GDP rose by 0.1% in February, delivering the first consecutive months of growth since September.

However, it is not yet time to relax business vigilance as the headlines suggest that the UK economy is not yet on a reliable upward trajectory.

Here are several reasons why.

Allianz Trade has predicted that post-Brexit border controls coming into force this month will cost British businesses £2bn.

Another study has revealed that one in three businesses are understaffed at least once a week due to a lack of available employees with employers reporting difficulty in recruiting the right people.

A fall of 156,000 in the number of people in employment in the last quarter to the end of February on the previous one, gives a clear sign that all is not well.

A British Chambers of Commerce (BCC) survey has just reported that more than half of its members have signalled their intention to raise their prices over the next year due to high wage bills.

The survey also highlighted conflicts around the world and the costs of post-Brexit checks on imports from the EU as factors influencing pricing expectations.

It said that while 56% of respondents expect turnover to grow over the next year there was no overall improvement in business conditions.

Businesses will have to continue to be meticulous in monitoring cash flow for a while yet and we have a free tool here to help you.

Download our free cash management tool here: https://lnkd.in/ee3pfuGa

Categories
HR, Redundancy & Trade Unions

How will the new rules on flexible working affect your business?

From April 6th 2024, employees in the UK now have the legal right to request flexible working from the day they enter a new job.

Previously, the right was only applicable if someone had worked for their employer for 26 weeks or more.

The change has been welcomed by the Chartered Institute of Personnel and Development, because it “stands to benefit millions of people, helping them to balance their work and life commitments and give them more say and more opportunity in where and how they work”.

Other changes to employment law include new protections for pregnant employees from redundancy, and new entitlements for carers to take unpaid leave.

But what effect will it have on employers who now have a duty to consult with workers before they can refuse a flexible working request?

However, some of the reasons why a demand could be rejected include the arrangement costing the business too much, a negative effect on performance and the inability for the company to hire more team members.

Businesses have all sorts of costs to contend with, not least Business Rates, Staff overheads, and materials costs.

While business output in the UK has reached its highest level in nearly two years, indicating a turning point for the economy it is not out of the woods yet as costs continue to rise.

Cautious optimism may be in order, but keeping a close eye on the bottom line is still essential.

We have a tool to help you do that and it’s free:

Download our free cash management tool here: https://lnkd.in/ee3pfuGa

Categories
Employees HR, Redundancy & Trade Unions

Managing people is part of a manager’s job

However, a survey by the Chartered Management Institute (CMI) suggests that 82% of UK workers in management positions lack full training or qualifications.

Just 27% of workers surveyed said say they would describe their manager as “highly effective.”

Furthermore, the poll found that 72% of people who rated their own manager as effective also felt valued and respected. This dropped to just 15% where there was a bad boss in place.

When there is good leadership in place, 74% of those polled were more satisfied with their job, 77% were motivated, and 67% said their organisation had a good culture.

The study also found that bad managers and a toxic workplace culture are causing one in three workers to quit their jobs.

There are bound to be times when a manager has to have a difficult conversation with an employee.

It may be that the employee’s behaviour is proving disruptive and they are not working as part of a team as expected.

It may be that they are not as productive as they should be and they have been given a less than stellar performance review.

It may be that you have to inform people of delays or changes to a contract or project.

Other reasons might include:

Addressing negative feedback

Owning up to a mistake

Providing feedback to a direct report

Investigating inappropriate behaviour

Mediating disputes and conflict resolution

Whatever the reason, there are ways to prepare for that difficult conversation and hopefully arrive at a positive outcome.

Rather than labelling it difficult in advance, try thinking of it as a conversation. It’s wise to plan ahead for the points that you need to make but not to write a script. It is, after all a conversation involving at least two people.

Make it clear that you are open to hearing their perspective and try to show compassion. That means listening to what they have to say.

It helps to be able to give something back and in this context if a follow-up conversation is needed after outlining the changes that need to be made try to find positives when you have that conversation.

Categories
Finance General

Good news to start the Easter break

Activity across the UK’s private sector has grown steadily this month, providing further signs that the economy has climbed out the brief recession experienced last year.

The S&P Global/CIPS flash UK purchasing managers’ index (PMI) reported a reading of 52.9 in March, down slightly from 53.0 in February.

The slump in UK manufacturing has reached its bottom and output is starting to recover, according to a survey by the CBI.

Hargreaves Lansdown says UK fund managers are seeing a “material boost” from bumper share buybacks.

Retail sales in Britain have started to stabilise after ten consecutive months of decline, according to the Confederation of British Industry (CBI). Sales volumes rose by 2% in the year to March, from a weighted balance of -7% in the year to February.

Nevertheless, more than two thirds of British small business leaders believe that the Tories have lost the trust of the business community, according to a new poll by Opinium. The survey also found that 60% of small-scale entrepreneurs think that the last few years of chaotic government have damaged their businesses.

We’ll see how far the unrest has spread at the general election.

Enjoy your Easter break.

Categories
Cash Flow & Forecasting Insolvency

Some rays of light amid the gloom

More than 2,000 UK firms went bust in February, nearly a fifth more than the same time last year, according to the latest research.

However, there are some rays of light amid the gloom.

The UK has returned to growth after a brief recession at the end of last year, although trading conditions still remain challenging.

A survey commissioned by KPMG of 150 senior executives revealed that financial services leaders are confident about their second quarter results. “Around 87% had a positive outlook on profitability, up four points from January.”

Nevertheless, interest rates remain at a 16 year high and inflationary pressures are still pushing up operating costs, the survey found. “Nearly 40% of leaders named cost pressures as the biggest challenge facing their business in the coming quarter.”

In addition, a survey by Lloyds found that output in most sectors had returned to growth although Bibby financial services has found that interest rates and political uncertainty are holding back many businesses from investing.

This is no time for businesses to take their eyes off the ball.

It is crucial to keep track of cash flow and that’s where we can help.

To help you keep track you might want to download our free cash management tool here: https://lnkd.in/ee3pfuGa

If you would like to talk over the state of your business you can also book a free call with K2 here https://www.k2-partners.com/book-a-free-call

Categories
Insolvency

Unfair Payment Practices Pushing Small Businesses To the Brink

It pains us that this continues to be an issue but…

this week some big name companies were revealed by a national newspaper as among the worst offenders for paying their bills to small businesses.

They include Cadbury owner Mondelez UK Confectionery, Coca-Cola UK, Budweiser owner AB InBev UK, Formula One Marketing, and consumer goods group Reckitt.

All were revealed as taking more than 110 days to pay their invoices.

The Small Business Commissioner, Liz Barclay was quoted as saying “the payment lengths were “grossly unfair” for small businesses”.

It remains to be seen whether expected changes to the late payment rules will make a difference.

From April 1st the new Prompt Payment Standards will require firms bidding for large government contracts (over £5M) to demonstrate they pay their own invoices within an average of 55 days, tightening to 45 days in April 2025, and to 30 days in the coming years.

In most recent statistics from 2023, a survey found that just over half (55%) of small and medium-sized business managers are waiting on payment for the financial year (2022-23).

It has been estimated that 50,000 businesses shut down annually in the UK due to late payments.

According to the FSB (Federation of Small Businesses) the definition of prompt payment for a small business supplier, contained in the voluntary Prompt Payment Code, is to pay 95% of invoices within 30 days.

Note – the use of the word voluntary!

Perhaps it is time for more hardline compulsory legislation? What do you think?

Categories
Finance General

A Budget for business?

Businesses were asked by Enterprise Nation what they wanted from today’s spring budget and of course they came up with a long wish list.

It included raising the VAT threshold from the current £85,000 turnover level, providing more access to financing options like grants and low-interest loans, encouraging technology adoption to boost productivity and creating affordable working spaces and small business hubs.

These were at the top of a long wish list and it was unlikely they would get everything they wanted.

A YouGov poll also found that two in five businesses expected that the budget would leave them worse off: “SMEs are a little more cynical – 36% anticipate that the Budget will make life more difficult for businesses.”

In addition, the poll found “Some 51% said it wasn’t doing enough to support micro businesses, with 61% saying the same of smaller enterprises and a further 34% saying the same of medium-sized businesses.”

So, did the budget deliver?

The VAT registration threshold will be increased from £85,000 to £90,000 from the start of April.

£120m was allocated for green industries to develop technologies including offshore windfarms and carbon capture and storage projects.

Fuel duty was frozen again, with the 5p cut in fuel duty on petrol and diesel, due to end later this month, kept for another year.

On the whole though, it was a low-key budget.

The FSB (Federation of Small Businesses) reaction was basically “some good news but there were still serious challenges”.

The FSB policy chair said: ““We welcome today’s increase in the VAT threshold as well as the cut to self-employed National Insurance Contributions (NICs). Elsewhere, we were pleased to see a package of small business support in the Budget documents, including commitments to make progress on the HMRC administrative burden and on the national roll-out of the Business Energy Advice Service, as well as extending the Recovery Loan Scheme under a new name – the Growth Guarantee Scheme. Small firms are crucial for economic growth, and we were glad the Chancellor said that clearly from the despatch box.

“That said, many of those running businesses face serious challenges – not least through rapid hikes in labour and input costs – and many will have understandably hoped that there would be more measures announced today that would help ease the tough decisions small employers are having to make day-in day-out to keep their businesses going.”

Categories
General

Slow progress for women on business boards

The numbers are up but could still be better.

Women hold 42% of board seats at big UK firms, but just 10 are FTSE 100 bosses.

Fewer than 10 per cent of CEOs at UK FTSE 350 companies are female and just 10 are FTSE 100 bosses.

The proportion of board positions held by women in the FTSE 350 rose to a record high of 42% this year, up from 24.5% in 2017 when the report was launched.

In the FTSE 100, 25% of finance directors were female, up from 23%, and 27% of chief information officers were women, up from 21%. Women make up 30% of executive committees.

The FCA (Financial Conduct Authority) rules are that 40% of boards should be women and a woman should occupy at least one of the senior board positions.

Senior board positions are chair, chief executive, chief financial officer or senior independent director.

Despite the improvements, “the appointment rate continues to be in favour of men. In the FTSE 100, two-thirds of new appointments went to men in 2021 (1,604) compared to just one-third of women (945).”

According to money.co.uk “In 2020, 16% of SME employers were led by women, up from 15% in 2019.”

The presence of women in business varies by sector it says: “In 2020, just 6% of SME employers were led by women in the construction sector, compared to 37% in the health sector, 36% in the education sector, and 25% in the accommodation and food services”.

So while progress has been made, what continues to hold women back?

Women-led SMEs contribute around £85 billion to the annual economic output in the UK, which is 16% of the Gross Value Added by SMEs. 

According to the NatWest Rose review, “more women than ever are starting new companies, with 145,200 all-female-led incorporations in 2021, up from 56,200 in 2018, an average year-on-year growth of 37.3%”.

It calculates that £250 billion could be added to the UK economy if women in the UK matched men in starting and scaling businesses.

This is where access to finance is key.

Some High Street banks, such as Santander and Metro Bank, have been proactive but female access to finance is still challenging.

The 2023 Review found that 50 per cent of female business leaders and entrepreneurs reported finding access to funding and investment hard in the past 12 months.

Why?

It is argued that traditional money lending methods follow the conventional practices of favouring financing business owned by men and that most lending businesses are run by men, and the lending models created by bank lenders are also predominately male-led.

BFS’ (Bibby Financial Services) research reinforces this: 62 per cent of female SME leaders assert that securing a business loan is now more challenging compared to pre-pandemic, compared to 57 per cent of male business leaders.

Clearly, there is more work to be done to create a level playing field for women as entrepreneurs, CEOs and on boards.

Categories
HR, Redundancy & Trade Unions

Toxic behaviour and divas in the workplace

There can be nothing more disruptive to a business than the behaviour of some individuals, in particular the Diva.

The Diva is identified, like most disruptive people in the workplace, by always believing they know best, that they are always right, and that they are the most charismatic and charming individual.

While they may have skills that make them stand out, this outweighed by their need for attention and praise.

Divas drain creative energy from the team and misuse their real talents for selfish ends.

To sum up, the Diva:

· Is used to getting what they want and can be highly manipulative.

· Thinks they need no guidance or management.

· Lives for drama in the workplace, so can be very negative and spread discontent.

· Is hyper-critical, sensitive and intolerant.

· Is great at what they do so resists constructive feedback.

But there are some ways to manage their behaviour.

First and foremost, you should discuss problematic behaviours immediately – before they develop into patterns.

You should also establish clear boundaries and expectations for behaviour, which include mutual respect and professionalism.

It should also be made clear that there will be consequences for disruptive behaviour and what these are.

Above all, remember that you are their leader and should lead by example.

Categories
HR, Redundancy & Trade Unions

What are your hiring intentions for 2024?

The Government is insisting that the UK economy is returning to growth with the prime minister saying that national debt is set to fall.

But to many businesses the economic climate may still feel bleak.

Business life has to go on though and that may mean hiring more or replacing staff.

According to BDO, employment levels in the UK’s private sector have dropped to their lowest in a decade and a report by the Chartered Institute of Personnel and Development (CIPD) reveals that employers believe that pay in private firms will rise by 4% in 2024, while pay increase expectations in the public sector have fallen from 5% to 3%.

The CIPD also reported that 60% of the employers they surveyed were expecting significant difficulties recruiting for vacancies in the next six months.

The National Institute of Economic and Social Research, also says that international workers are propping up the labour market as employers struggle to compete for British staff.

So, will you be looking for foreign workers to fill vacancies?

Are you expecting to have more or fewer vacancies to fill in the coming year?

Can you afford salary increases?

These are just some of the questions businesses will need to answer over the coming months and underlying all this is the continuing need for business stability and hopefully growth.

It is a conundrum many businesses will struggle with in 2024 and to solve it you need to know exactly what your cash flow and financial situation is.

We can help.

Why not download our free cash management tool here: https://lnkd.in/ee3pfuGa

Categories
HR, Redundancy & Trade Unions

What is employee engagement and why does it matter?

How often do you talk with your employees?

Do you involve them in decision-making?

Do you give them positive feedback when they have done well?

These are just a few of the aspects that make up the term employee engagement.

It isn’t just a HR catchphrase, it really matters. Engaged means people who are highly involved in, enthusiastic, and committed to their work and workplace.

Ultimately they are the people who contribute to making your business a success, driving forward productivity and increasing your profits.

Engaged and enthusiastic employees will stay in their jobs longer and are likely to also help in your efforts to recruit new staff.

Research suggest that disengaged employees can lead to a drop in morale and innovation in the workplace, and productivity and revenue overall.

So it is in your interests as a business owner to ensure they are feeling involved, rewarded and valued for their input.

Tips for keeping employees engaged include recognising they are individuals and connecting with them, encouraging them to be involved in making suggestions and in the decision-making process, offering training to help their careers to progress and giving positive feedback when they have done something well.

Above all, have rules people can believe in rather than trying to micromanage their activity to fit into some corporate ideal that makes no sense to them.

Categories
HM Revenue & Customs, VAT & PAYE

Is the current VAT threshold hampering your business’ growth?

The FSB (Federation of Small Businesses) has recently called on the Government to raise the VAT threshold from its current level of £85,000 to £100,000.

It argues “this would give firms stepping into the VAT-paying ring crucial breathing space. It would also be an incentive to grow their turnover without fear of having to charge customers an extra 20% overnight”.

At the moment, the OBR (Office for Budget Responsibility) says many small firms are keeping their turnover just below the £85,000 threshold.

As businesses struggle to restore their activities after the last few bruising years it seems foolish to ignore something that could help them grow.

It becomes even more difficult when SMEs have to outsource some of their functions because they do not have sufficient expertise in house.

This too can hamper growth, especially if the deadlines are not met or billing takes a long time.

Transparency in payment agreements, with specified amounts and dates need to be set as part of the initial agreement at the outset of the arrangement.

Small businesses are the engines for growth in the economy.

Categories
Finance General

Mixed signals for UK businesses

No wonder we’re confused!

On the one hand we are being told that lower interest rates will ease inflation and lift the economy and house prices.

On the other, we have a dire prediction that approximately 47,000 UK companies are on the brink of collapse after a 25% jump in the number of businesses facing critical financial distress in the final three months of 2023.

At the same time a survey by jobs website Totaljobs, as revealed that almost half the firms they asked were intending to review pay and benefits and possibly improve them in order to retain staff.

Furthermore, more than twice as many British industries reported rising demand last month, according to the latest Lloyds Bank UK Sector Tracker.

But the benefits of any improvements are not evenly spread as the Resolution Foundation points out.

While it says the services sector is booming, “London is capturing an ever-bigger share of the UK’s service sector exports”.

Meanwhile there is also speculation that the UK may already be in a “technical” recession.

So what are businesses to make of all this?

It could be argued that it is the perfect storm.

And what do you do when it is stormy?

You take cover and take precautions.

That means keeping up to date records, tracking cash flow rigorously, being careful not to expand too quickly and if you are having cash flow and other problems talk to someone such as a restructuring advisor to get a handle on the position your business is really in.

If you are in need of an informal chat we’re here for you, You can call, message or email us to set up a date.

Categories
General

Reality Check: Balancing Hope and Caution in 2024

How are you feeling about the start of 2024?

How are you feeling about your business prospects?

According to multiple media sources “Britain’s business leaders are feeling more optimistic as they head into 2024, with a poll by JPMorgan finding that fewer decision-makers expect the UK to fall into recession.”

Backing this up, BDO reports that while vacancies are expected to fall, bosses remain more optimistic about 2024 than last year.

In addition, a poll by small business lender Iwoca suggests that for SMEs too the prospects are looking brighter with almost half of small businesses expecting their revenues to expand this year.

While we do not want to put a dampener on expectations, we would sound a note of caution.

We can’t pretend that trading conditions are not still difficult.

This is supported by an article in the law publication, The National Review, which warns that despite the improving conditions “Consumer confidence is low and economic growth during 2024 is projected to be weak.”

“With insolvencies expected to increase in 2024 to around 7,000 per quarter, restructuring professionals can expect to be busier,” it says.

However, it warns restructuring professionals that HMRC continues to dominate over other creditors when it comes to repayment plans and may make restructuring plans impossible for those companies where the ability to pay the secondary preferred element is not often possible.

We would advise businesses considering restructuring to ensure that all their records are up to date and accurate and to consult a professional restructuring adviser to help them in negotiations.

We are always available for an informal chat and you can contact us via LinkedIn, by email and by telephone for help.

Categories
Cash Flow & Forecasting

A New Year, A New Hope

Are you ready for lift off with your business?

Welcome to a new year. We hope you have had time to refresh and relax over the Christmas break.

It seems there are tentative signs of activity among investors and businesses in both Europe and the UK as the new year begins.

In Europe, research has shown that there has been an increase in all types of investment over the last year. According to Darren Novak of JPMorgan, more funds were being formed and more institutional investors use tools of traditional activists to make changes at companies such as proposing strategic reviews and even board nominations.

Deloitte has reported that more finance chiefs were feeling optimistic about their firms’ economic prospects than they did three months ago and that the financial markets in 2023 had proved more resilient than expected.

In the UK, a poll by industry body Make UK and PwC of more than 200 manufacturers found that 52.7% believe Britain is more competitive compared to a year ago. This is up from just 31% in last year’s poll.

Hopefully all this means that economies have turned the corner at the start of 2024 after the last couple of bruising years.

But are you ready for it?

Did you reflect on plans for your business during the break? Have you any new ideas for products and services?

Do you know exactly what your cash situation is now? Whatever your plans, they will come to nothing if your cash management falls behind.

To help you keep track you might want to download our free cash management tool here: Download Free Cash Management Tool

Categories
Uncategorized

Relax and enjoy your Christmas

We hope you have been following our advice to take time out to enjoy yourselves with friends and family and other non-business-related activities.

You’ve earned a break and you’ll be in a far better postition to enjoy the challenges of the new year.

We’d like to wish you all a Very Happy Christmas and a Prosperous New Year.

Categories
General

Take time out and breathe

Surveys reveal that 57% of small-business owners say they work six or more days each week and 62% of small-business owners say they work 50 or more hours each week.

A high percentage of small-business owners work while on their holidays, with 81% saying they made or returned business calls, and 52% initiating or answering e-mail.

Ultimately this is not good for your mental and physical health nor is it good for the health of your business.

So it is a good idea over the Christmas break to take time out to reflect, catch up with loved ones and plan ahead for the next year.

If you know you should take time out here are some things you should do:

Make sure you get enough sleep. Take some exercise. Even a stroll in the park will help declutter your brain. Eating healthily is also a must.

You should also try to switch off completely from work as it will recharge your energy and focus.

Promise yourself you will take a break from emails and social media.

It is noticeable that when people take time out properly to switch off and do something else, they often find that when they return to work they have ideas for propelling their business forward,  not to mention the energy to do so.

So we would suggest you enjoy the coming Christmas break and take time out and breathe.

Categories
General

A couple more glimmers of hope for businesses?

The IoD (Institute of Directors) is reporting that “businesses are growing slightly less pessimistic about the economy”.

In addition, in November the manufacturing sector exceeded analyst expectations, recording a slowdown in decline.

But the IoD also said “overall sentiment remains firmly entrenched in negative territory, with optimism among business leaders rising from -25 to -21”.

Executives said the biggest problems they face are economic conditions and skills shortages. Costs of energy and taxes also remain big challenges.

On manufacturing, the S&P Global/CIPS UK PMI for November came in at 47.2 on an index where a reading above 50 represents growth.

At least things seem to be moving in the right direction, albeit at a snail’s pace.

Nevertheless, we will have to see how well small businesses fare over the festive season.

Michelle Ovens, director of Small Business Saturday UK, said the research shows how “uncertain” this time of year is becoming for smaller firms.

And the small business minister, Kevin Hollinrake, has called on people to support small businesses during the festive season.

We are clearly a long way from being out of the woods yet.

Categories
General

Some good news for small and micro businesses

New research by GoDaddy and Frontier Economics suggests that “each additional microbusiness – those with fewer than 10 employees – in regions across the UK raises the median income by around £1,400”.

It adds that “an additional microbusiness per 100 people can contribute £37,000 to local GDP”.

Given how challenging the economic climate has been for small businesses, the various measures announced in the Chancellor’s Autumn Statement should be good news for them.

The measures include ending late payments to small suppliers, offering relief on business rates, and cutting taxes for the self-employed.

Companies bidding for public contracts worth more than £5m will have to show they pay all their suppliers within an average of 55 days from next April.

This is something many including the Federation of Small Businesses (FSB) have long been campaigning for.

There will also be business rate relief worth £4.3bn over the next five years, while some retail, hospitality, and leisure companies will benefit from an extension of a 75% rates relief scheme.

But, given that there will be an election in the earlier part of next year, will all these measures come to fruition?

We shall have to wait and see.

Categories
General

Everyone’s talking about AI

Three-fifths of businesses view generative artificial intelligence as a good opportunity but research has revealed many fear they are exposed to cyberattacks.

Businesses will “not progress” if they do not take risks, as the race to adopt new and emerging technologies heats up, according to PwC.

Around 37% of firms believe they are highly or extremely exposed to cyber risks, PwC’s survey of more than 3,900 firms around the world found.

More leaders who are responsible for managing a firm’s risk said they thought cyber-related threats were a bigger concern than inflation.

Meanwhile Daily Mail owner Lord Rothermere has called AI a potential “’existential threat to democracy’.

As with any emerging technology there is potential for both good and bad in AI so what can businesses do to protect themselves?

Firstly, keep abreast of developments, if necessary designate someone tech literate to do this.

Secondly, make sure there are robust security measures in place to protect the business from cyber-attacks and improper use of technology.

This should include limiting access to sensitive information only to those who will need it. Regular password updates including two-factor authentication.

Cyber security training for all employees together with regular updates as new threats emerge.

While understandably businesses need to stay competitive to survive and that includes adopting new technology including AI they need to understand the technology they are using and perhaps limit it to those areas where automation and AI will improve productivity but not expose the business to the possible theft of sensitive information.

Categories
Employees

Skills shortages are holding back growth

Companies are struggling to find suitably skilled candidates at all levels, according to recent research by the Federation of Small Businesses (FSB).

In a study of 800 SMEs, the FSB found that “22 per cent of small companies said a shortage of skilled workers would be a “stumbling block for growth in the upcoming year”, with the information, communication, and technology sector reporting one of the largest skills gaps.”

In its report it said “Successful and growing small businesses are essential to the UK’s economic success. Only when business owners and their staff are equipped with the right skills can their enterprise grow.”

It has called on the Government to maintain an apprenticeship levy which covers the bulk of a company’s training costs.

It also said “lifelong learning must be more widely adopted. Effective support should be readily available to allow small business employers to support their staff to learn new and pertinent skills.”

A separate study from the Institute for Fiscal Studies found that high-paid and high-skilled graduate jobs were becoming more concentrated in London and the south of England, forcing graduates in other parts of the country to work in jobs that were below their skills levels.

The CBI has also reported on the issue:

Matthew Percival, CBI director of Future of Work, said: “Pay decisions in the last 12 months have been difficult for businesses and workers with companies having to put up prices to afford pay rises that still didn’t match inflation. Fewer than half of companies expect to be able to match inflation in the next 12 months suggesting another difficult year ahead. Employers will need to invest heavily in relationships with their workers and trade unions to minimise disputes and maintain employee engagement.”

The report found that:

  • 65% wanted reforms to the apprenticeship levy whereby employers could use the funds more flexibly.
  • 59% of businesses support making all skill levels eligible for the shortage occupation list.
  • 62% thought the financial support available through the Access to Work scheme for people with disabilities should be increased.
  • 54% thought there should be incentives for businesses to invest in workplace health measures.
Categories
HM Revenue & Customs, VAT & PAYE Insolvency

Is your business connected to the construction industry?

The construction and related industries are having a bleak time at the moment.

Both commercial property and housebuilding are affected, with knock-on effects to landlords.

London office values have fallen 26% in the City and 14% in the West End and analysts believe prices have a lot further to fall.

Insolvencies of real estate investment companies have increased 16% in the past 12 months.

In housebuilding, UK construction activity contracted in October, although slightly less so than in September, according to the S&P Global/CIPS UK construction PMI.

One company, Persimmon, has reported a 37% drop in home completions compared to last year.

If you fear your business is on the brink of insolvency, HMRC has just published guidelines and advice for insolvency practitioners helping businesses wanting support for repayments.

However, there is a caveat in the details published on the HMRC website:

“HMRC will only offer support to companies to restructure where we believe you have a realistic chance of succeeding. If we do not believe you have a realistic chance of succeeding, we will work with you to try and find other ways to repay your debt to HMRC.”

Above all, your business must provide a “true asset and liability position”.

This is only one of several key requirements for information to assess the position.

If you are thinking of a restructure take action now.

You can call or message us at K2 for an initial informal discussion but we would also advise you have an accurate picture of your financial position.

We have a free tool to help you with this and you can download it here: www.linkedin.com/smart-links/AQG7fCQTtXx4Zw/310d8411-02db-4f49-9e6f-b9a3f4d4473e

Don’t wait to get help.

Categories
Debt Collection & Credit Management HM Revenue & Customs, VAT & PAYE Insolvency Liquidation, Pre-Packs & Phoenix

More than 50,000 businesses could avoid closure if late payment is properly addressed

Insolvency experts Begbies Traynor have revealed a 25% increase in firms in “critical financial distress” in the last three months.

Official insolvency figures for 2023 predict that the year will see the highest number of business failures since 2009.

According to Xero’s quarterly small business index, small firms are waiting an average of 29.4 days to be paid by their customers.

Some of this could be avoided, according to the FSB (Federation of Small Businesses) if decisive action was taken on the issue of late payments.

The FSB has calculated that tougher action could prevent the closure of 50,000 businesses, many of them SMEs.

A recent ​​survey commissioned by the AAT and the ACCA found that MPs want more powers to be handed to the Small Business Commissioner – a body introduced in 2016 to tackle unpaid invoices. 

This is a something we at K2 support.

Tell us your stories and give us some ammunition to add to the growing pressure on the Government to provide more effective business protection and stiffer powers for the Small Business Commissioner.

Categories
Accounting & Bookkeeping Banks, Lenders & Investors Finance

Winter storms ahead?

According to Allica Bank, SMEs are “losing out on £7.5bn each year because banks are failing to pass on higher interest rates to companies with savings”.

 “Banks are systematically offering larger companies better savings rates while small firms have £150bn of deposits sitting in accounts offering no interest at all.”

Craig Beaumont, of the Federation of Small Businesses, said that with companies “are under significant pressure” because of the difficult economic environment, “the least your bank should do at a time of high inflation is provide a fair rate of interest. Small business owners should look at their current arrangements and shop around”.

And with memories of the weekend’s Storm Babet not yet faded, there are more concerns for SMEs,  with Supply chain disruption the top concern for medium-sized businesses ahead of winter, according to a survey by consultancy BDO.

It says rising costs are also a major worry amid fears that customers will trim their spending over Christmas because of this.

Businesses wanting to keep a close eye on their cash flow can download this free tool here:
https://lnkd.in/ee3pfuGa

Categories
Business Development & Marketing

Is using online platforms causing difficulties for your business?

The FSB says “53% of small businesses surveyed currently use an online platform, with 71% considering them “very important”.

But they are also encountering problems according to their latest research.

Among these are fake or malicious reviews, delayed payments and being delisted when similar products surfaced.

According to FSB research, “12% of people who have used an online platform in the past year reported “fake” or “malicious” reviews.

The FSB is calling on the CMA (Competition and Markets Authority) to investigate the charging structures of retail platforms.

A CMA spokesperson has emphasised the importance of ensuring fair competition and consumer protection.

The FSB also called on the Government to make online fake and malicious reviews an offense and to introduce a dispute resolution procedure.

A Department for Business and Trade spokesperson said the department is “cracking down” on false reviews to protect small businesses and consumers.

“We also know late payments are a massive issue for small businesses and a barrier to growth.”

Has your business experienced difficulties with e-commerce? Let us know.

Categories
Employees Finance HR, Redundancy & Trade Unions

Will everyone return to office-based working by 2026?

According to research by KPMG, two thirds of CEOs expect a return to the five-day office-based week by 2026.

But is that realistic?

Is it affordable?

From an employer’s perspective it might seem desirable at first glance.

But it is important to consider the costs of either renting or buying suitable office space as costs are likely to have risen substantially.

Then there are the energy costs, which will also have risen. In addition, the Government aims to have all commercial buildings in the country with an energy performance certificate rating of A or B by the end of the decade. This is also likely to add to landlords’ costs, which would inevitably be passed on to leaseholders.

There are further, perhaps not yet quantifiable costs as the survey pointed out that 83% of UK executives, believed that financial rewards and promotion opportunities could be linked in future to office attendance.

According to Jon Holt, the chief executive of KPMG UK, a move to return to fully office-based working is likely to raise tensions between employers and employees.

“Issuing an ‘all hands on deck’ edict is a simple response to a complex issue – it won’t work for all businesses,” he said.

Many people have got used to the benefits of remote working, which include avoiding a sometimes-lengthy commute, better time management, lower costs and the ability to manage life in general more easily.

According to an article on the issue in the Guardian newspaper “Multiple employee surveys in recent years have shown that most workers have no desire to return to their desks full-time, with some saying they would quit their jobs if current workplace flexibility was taken away.”

Clearly, a lot more thought needs to be given before contemplating such a move.

Have you been working remotely and happily? Would you be happy to return to the office?

Let us know what you think in the comments.

Categories
Business Development & Marketing Cash Flow & Forecasting Debt Collection & Credit Management Insolvency

Are you feeling more optimistic about your business’ future?

There is no denying that it has been a bleak few years for businesses, but it seems there are glimmers of hope on the horizon.

This week it was announced that companies plan to keep on hiring according to a REC (Recruitment and Employment Confederation) poll, with business confidence in the economy climbing to a net -38, up from -41.

This is a small step that is being attributed to falling inflation and a pause in interest rate rises.

The trade body, Innovate Finance, reports that London’s fintech sector is showing “shoots of positivity.”

Nevertheless, the ONS (Office for National Statistics) reports that the numbers of businesses registered for VAT or PAYE have declined for the first time in a decade.

If this means that a number of so-called “zombie” businesses have finally thrown in the towel, this could mean that those businesses that remain are relatively healthy and that can only be good news for the future of the economy.

Only time will tell but in these difficult times the smallest of hopes are to be welcomed.

So, are you seeing signs of recovery in your business? Let us know and if you want to have an informal chat about the way forward then message, call or email us.

We are here to help.

Categories
Cash Flow & Forecasting Debt Collection & Credit Management Finance

Is your business hurting because of late payments?

The Office of the Small Business Commissioner, launched in December 2017, has reclaimed less than £800,000 for small businesses since June 2021.

At the same time it has been revealed that the British Business Bank (BBB), the Government’s economic development agency, reported a loss of £135m in the year to March.

Neither of these revelations is good news for SMEs, already struggling with rising interest rates and costs.

The British Business Bank was set up by the Government to support investments in SMEs.

The Office of the Business Commissioner was supposed to improve the situation for SMEs waiting on payments from bigger organisations.

It seems neither has been particularly successful in fulfilling its remit.

A Government review of payment rules and the role of the Commissioner was completed this year and is due to report soon.

Craig Beaumont, chief of external affairs at the Federation of Small Businesses, says the decline in recoveries shows it is “crystal clear just how much senior cabinet leadership is needed on this issue to turn it around.” 

But how much longer must SMEs wait before there is action to give the commissioner real powers to address the situation?

Meantime, businesses wanting to keep a close eye on their cash flow can download this free tool here.

Categories
Debt Collection & Credit Management Finance

Could an extension of business rates relief save your business?

The Federation of Small Businesses (FSB) is urging the Government to extend the 75% rate relief discount for retail, hospitality, and leisure businesses. 

It is due to end next April but the FSB argues that the relief is a “lifeline” for struggling small firms.

Martin McTague, FSB national chair, said the system is not fit for purpose and “small firms should not be stifled by the looming threat of higher business rates bills as a consequence of investment.”

Investment in their businesses may be a long way down the list of priorities for many SMEs with the news that the number of companies going bust in England and Wales increased by 19% in August 2022 compared to the previous year.

Elsewhere it has also been reported that Britain’s manufacturers are preparing for a potential recession as they see a sharp slowdown in activity, according to the Make UK manufacturing outlook survey.

Whether the Government is listening remains to be seen.

What do you think? Is the business rate relief crucial to your business survival?

Let us know and if you’d like an informal chat about your business. Just message us via LinkedIn or call or email.

Categories
Finance

Could you use some investment help?

According to research by fintech firm iwoca high street banks are proving reluctant to help SMEs with funding for innovation and development.

As a result the FSB (federation of small businesses) has called on the Government to support small enterprises in adopting new technologies.

The FSB says that one in three small businesses are being offered interest rates of over 11%.

This, it says, is contributing to a rise in insolvencies with an estimated 70% of medium-sized firms expected to experience debt-servicing distress.

The organisation’s report “The Tech Tonic,” argues that “affordability remains a major barrier to innovation, with the average cost of introducing new technology for small firms being £27,000 over three years”.

Both the FSB and the CBI (Confederation of British Industries) argue that SMEs should be helped by the Government addressing high interest rates, inflationary pressures.

The FSB wants to see over half of direct R&D funding allocated to SMEs and establish a tax-relief scheme for businesses actively trying to enhance their products and processes.

If you feel your business is being held back from growth let us know and if you would like to talk to us informally just message us via LinkedIn or email to set up a call.

Categories
Cash Flow & Forecasting Finance

How much control do you have over your finances?

Two recent headlines make clear just how difficult business finances are at the moment.

Legislation has failed to speed up payments, according to the Chartered Institute of Procurement & Supply (CIPS). It has found that despite the legislation “the average time it takes a large business to pay an invoice has fallen by just one day, to 36 days”.

This has had a particular impact on SMEs, according to finance specialist Sonovate “Nearly two-thirds of small businesses say late payments from clients are affecting their ability to pay contract workers on time,”. 

The second headline, arguably a result of this situation, is a surge in HMRC winding up petitions: “Directors were presented with 348 winding-up petitions in July, with this the highest number of court orders in any month since 2019.”

Reportedly HMRC has become tougher on enforcement, restricting its discretion on time to pay arrangements and becoming “more aggressive in its enforcement and collection processes”.

This all makes it imperative that businesses are on top of their cash flow and finances.We have a free tool to help you.

You can download it here.

and if you need someone to talk to message us or call.

We’re here to help.

Categories
Employees

Are you hiring?

According to research by Barclays Bank “UK small and medium-sized businesses (SMEs) could hire as many as 3.5m people in the next three months”.

According to the Barclays Business Barometer, nearly three-in-five (57 per cent) reported revenue growth last quarter, marking the highest level in 18 months.

It says, many are turning to innovative “technology investments to increase productivity (45 per cent), as well as future-proof their company (44 per cent)”.

At the same time the ONS (Office for National Statistics) has reported that core inflation had dropped to 6.8% in July, down from 7% the previous month and 7.3% in May.

Staffing Industry Analysts, which researches recruitment trends, has also reported “Employer hiring confidence has grown in almost every sector across the UK, rising by 8% since last quarter to 29%, according to the latest ManpowerGroup Employment Outlook Survey for Q3.

This was particularly true in the communications sector but also in financials and real estate, it said.

Manpower’s real time vacancy data showed “vacancies are down on the year but up month on month throughout 2023.

Are you feeling more confident that the worst may be over after the last couple of difficult years?

Let us know what you think.

If you want to talk to someone about your future growth strategy message, call or email K2.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting Employees Finance

Can you afford to do this?

It was announced today that wages had risen by approximately 8%, the highest rate since records began in 2001.

Recently the CIPD (Chartered Institute of Personnel and Development revealed that of 2000 employers it had spoken to 40% had made counteroffers to keep hold of staff tempted by higher wages from rivals in the past 12 months. 

With good employees in short supply and vacancies at over 1 million in the last 12 months it is no surprise that employers want to hang on to key and valued people.

However, with no sign of any easing of interest rates, costs continuing to rise and ongoing difficult trading conditions is this ever-rising wage rate spiral sustainable for businesses?

Bibby Financial Services has said that over half of the SMEs it surveyed “think the current business climate is worse now than during the pandemic. Four in ten believe trading conditions are tougher now that they were amid the pandemic, while more than a third said the global economy is doing worse than it was after the 2008 financial crisis”.

It is the perfect definition of being between a rock and a hard place for many businesses.

So what can you do to protect your business?

Firstly, keep a close eye on your finances and we have a free tool to help you.

You can download it here and if you need someone to talk to message us or call.

We’re here to help.

Categories
Employees

Burnout and how to deal with it as an employer

The World Health Organisation defines burnout as “a syndrome conceptualized as resulting from chronic workplace stress that has not been successfully managed”.

It has become increasingly prevalent as the lines between work and home have become more blurred and the UK’s economic problems have made life harder for businesses.

In July 2023 the Guardian reported that “More than half of workers (55%) reported that work had become more intense and demanding” according to TUC research.

And in May statistics from the ONS (Office for National Statistics) revealed a rise in the numbers of workers not seeking work for health reasons. It blamed the uplift on “conditions related to mental health, particularly in the young”.

Burnout saps the energy, increases stress and sufferers lose the ability and energy to effectively meet the demands of their jobs.

As a business owner why should you do something to help employees to avoid burnout?

Well as the above statistics indicate it could make recruitment more difficult.

Burnout in employees also reduces productivity. 

You can use a wellbeing plan to identify what good wellbeing looks like for you, as well as what it looks like when things aren’t so good. You can also use it to encourage employees to assess their own wellbeing.

You could also introduce stress risk assessments for identifying a risk, then explore ways of removing or reducing the risk.

Most importantly, communicating these with employees and engaging them in working together on ways to minimise stress as well as looking out for each other’s mental wellbeing could help to minimise the chances of burnout before they can take a firm hold.

Categories
Employees General

Have you taken part in a trial for a four-day working week?

According to the results of a study into trials of a four-day week in the UK, USA, Canada and Ireland productivity was not affected by the reduction in working hours.

“Participants reported a better work-life balance and improved mental and physical health. Kickstarter, one of the companies involved in the trial, saw staff retention rise from 70% to over 90%”.

The World Economic Forum has also reported results from a similar trial and found that in the UK 49% of businesses reported a smooth transition to a four-day week and 29% said it was extremely smooth.

It also found that productivity improved significantly for 15% and improved slightly for 34%.

Of those that had tried it 86% said they were likely or extremely likely to implement the system.

The BBC reported that the numbers were even higher according to results of the UK’s four-day week trial with 92% of employers saying they would continue with the four-day week.

However, it does not work for all businesses, the BBC report continued.

A small proportion of businesses, particularly those in customer-facing enterprises, found that “creating enough slack in the schedule for a four-day week means extra hiring costs – making it prohibitive to move forward with a new model”.

And what about this finding from a survey of 500 SMEs by business insurer Superscript which found that 33% of SME bosses feel that there are not enough minutes in the day to get everything done?

It is all very well to advise people to “work smarter not harder” but that is a tall order for many SME owners.

Clearly the four-day week may work well for some but not for others.

What do you think?

Categories
General

Protect your data and your business!

Businesses are having a tough enough time without adding to their problems.

At least 87% of small businesses have reported cyber attacks that were successful in the past year according to new research.

Some of them had been attacked more than once.

Among the latest tactics is getting someone to click on an image.

The worst kinds of attacks are malware and ransomware.

In malware malicious software invades your system and can cause all sorts of problems from slowing down your operations to stealing your data. 

Ransomware is even more pernicious. It is exactly what it sounds like.

The attacker hijacks your IT equipment, encrypts your data, making it impossible for you to access it unless you pay a ransom fee.

Among the possible explanations for this increase is the number of IT appliances people now use, from mobile phones to laptops, notepads and the like.

It is also possible that more employees are using their personal devices to access company information.

The danger signs are unexpected emails from people the recipient does not know, offers that are too good to be true, spelling and grammar mistakes and “fake” branding.

However, you can protect your business by using strong passwords that are only available to those who absolutely need them, keeping software up to date, regularly training and updating staff on cyber security and what to look out for and most importantly what NOT to do.

Systems should be regularly backed up and protected by the most up to date antivirus software.

To protect your business be cyber attack aware and security conscious.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting Finance Insolvency

Is life getting any easier for your business?

We’re into the second half of the year and so far the conditions for businesses have been relentlessly gloomy.

A snapshot of what it has been like is shown from the latest insolvency figures just released.

Company insolvencies have increased by 27% in June compared to June 2022. The rate of insolvencies is also up by 44% for the first half of the year.

Businesses have, as we have been reporting, faced rising costs for labour, materials, energy and credit.

There are challenges across all sectors but most noticeably in construction, manufacturing, leisure and hospitality.

The difficulties have been particularly acute for SMEs which generally have less liquidity than larger concerns.

However, it is possible that things might improve as according to Inga West, counsel at the law firm Ashurst, “we have now caught up with the Covid backlog – that is the so-called ‘zombie companies’ that were able to avoid insolvency during the pandemic partly or wholly due to the Covid government support measures, and which subsequently needed to liquidate when the support ran out.”

It remains imperative that businesses keep a tight rein on their cash flow and we have a free tool to help you.

You can download it here.

And if you need someone to talk to message us or call. We’re here to help.

Categories
General Turnaround

Celebrate your failures

Yes, it is embarrassing for an entrepreneur when their business fails but there is a positive side to failure.

Firstly, analysis of what went wrong will ensure the mistake is never made again.

Secondly, sharing the mistakes will enable other entrepreneurs and start-ups to learn and help them to eliminate potential flaws in their own plans.

There is now a global movement, with more than 250 cities now participating which showcases how entrepreneurs and other business leaders have failed and then recovered.

That can only be positive news for other would-be entrepreneurs.

The idea is that it is cathartic to talk about such things, and everyone in attendance can learn from the mistakes, and ask questions.

It is not only useful for tech entrepreneurs, who tend to make up the majority of failures.

There are many reasons why a business might fail and the more willing people are to be open about their mistakes the less chance there is of others making the same mistakes.

You don’t have to re-invent the wheel to be a successful entrepreneur.

If you want to talk over an idea contact K2 Business Partners who have expertise in successful turnaround and business advice.

Categories
General

Is the age of the purpose-built office district dead?

It was recently reported that HSBC plans to move out of its global headquarters in Canary Wharf, London.

Research by property analytics provider CoStar has also revealed that vacant office space is at a record high, with an increase of 68% on the pre-pandemic level recorded in early 2020.

Reportedly Knight Frank and commercial real estate firm Cresa found that 50% the largest businesses they questioned expect to shrink their global workspaces.

Paradoxically the Cresa survey also found that this contrasts with the expectations of smaller firms surveyed – those with up to 10,000 employees – just over half (55%) of whom said they were expecting to increase their global office space.

Is this evidence of an increasing divide between businesses embracing hybrid working and smaller, greener, more flexible headquarters that is more convenient for employees and old command and control bosses mandating staff to be in the office the majority of the time?

Certainly, the move by HSBC and reportedly other large firms has given Canary Wharf some problems and an uncertain future.

Landlord Canary Wharf Group (CWG) has been trying to diversify to make the area more attractive by planning to build a life sciences hub, and courting technology and media companies as well as charities.

It has also added shops, bars and restaurants in recent years, landscaped the areas between its glass-and-steel towers and created a public art trail.

But with fewer workers travelling there and for fewer days and the ongoing problem that it is virtually deserted at night, how long can it last?

What do you think about the future of office work and purpose-built office districts? 

Categories
General Sustainability

Do you care about climate change?

Would you like a job that contributes to helping to improve the environment?

According to LinkedIn demand for so-called “green talent” has risen dramatically and now accounts for 33% of all job postings and demand may even be outstripping supply.

“The LinkedIn 2023 Global Green Skills Report shows that the share of green talent across 48 countries grew by an average of 12.3% between 2022 and 2023, but the proportion of job postings requiring at least one green skill was up by 22.4%. “

PWC (Price Waterhouse Cooper) has estimated that approximately 25% of UK workers are intending to move jobs in the next year.

But how do you gain experience needed for “green jobs” when it is a relatively new market?

According to PWC “solar consultant, energy auditor and waste management specialist are roles in the UK that are growing quickly and are less difficult to break into for those with no green experience”. 

However, you need to be clear where your interests and strengths would be most likely to be useful.

It is also a good idea to look for any funding for training and development relevant to what you hope to do.

If your current employer does not have a budget for career development in sustainability or green initiatives, perhaps you could suggest it, since ultimately it will only be beneficial to the company’s reputation.

Above all, starting conversations with colleagues and managers about the concepts of sustainability and highlighting your own areas of interest can only be good for your reputation.

Categories
General

K2 Turnaround Podcast 🎙️ – First Episode Released

We are very pleased to announce the release of the first episode of the K2 Turnaround Podcast 🎙️

In this first episode Tony Groom interviews K2 partner and fellow turnaround practitioner, Anton de Leeuw, with questions focused on his journey as a turnaround practitioner and what he has learnt along the way.

You can listen to the full episode on Spotify: https://podcasters.spotify.com/pod/show/laurence-groom/episodes/K2-Turnaround-Podcast-Ep-1—Anton-de-Leeuw-Interview-e25vdl4

Discussed in this episode:

  • How Anton first got into turnaround
  • Anton’s journey since joining K2
  • The challenges and successes faced whilst Anton was turning around his first company with K2
  • The 3 most important lessons Anton has learnt about turnaround
  • The 3 most important things that might impact a business (Spoilers: it’s 1. people, 2. people, 3. people)
  • How to build trust early on in the turnaround process
  • What should struggling companies be asking those offering to help them?

This was recorded in November 2022, just before the TRI Turnaround Awards, so if you’re wondering after listening to this, Anton did end up winning Turnaround Practitioner of the Year! K2 also won Turnaround firm of the year so 2022 was a fantastic year for us all around.

A huge thank you Anton de Leeuw for taking the time to be interviewed and for sharing your journey with us.

Hope you enjoy.

Categories
Cash Flow & Forecasting Insolvency Rescue, Restructuring & Recovery

No let-up to difficult trading conditions yet

The Insolvency Service reports that company insolvencies in England and Wales jumped 40% year-on-year in May. About 2,552 companies were declared insolvent last month, largely through creditors’ voluntary liquidations (CVLs).

Clearly many directors are running out of time and patience.

Nicky Fisher, the president of insolvency and restructuring industry group R3, said: “Three years of economic turmoil is taking its toll on businesses.” They are the highest levels seen since January 2019.

Interest rates are also being predicted to keep on rising with the FSB (Federation of Small Businesses) questioning the need.

Craig Beaumont, head of external affairs at the FSB, notes that while higher interest rates “are supposed to be painful and take money out of an overheating economy,” they are coming at a time when firms are already struggling.

In these circumstances it is more important than ever to manage cash flow and K2 has a free tool to help you.

Download our free cash management tool

If you would like to talk over your options for possible restructuring give us a call.

Categories
Sustainability

Could your business become part of a circular economy?

The circular economy aims to break the link between economic activity and using up the earth’s resources. 

This may involve reusing, repairing, and sharing materials and products. 

Amsterdam has become the first city in the world to trial the idea after announcing its intentions in 2020. Within seven years it hopes to have halved its use of new raw materials.

The fashion industry is one obvious candidate, where instead of consuming endless new raw materials, disposing of perfectly acceptable clothes, they are recycled.

The component parts of mobile phones, electronics and the raw materials used in construction are other obvious examples.

At the moment, committing to being part of a circular economy can be more costly than sourcing raw materials, but the hope is that as the movement goes this will change with obvious benefits to the environment and the planet. 

It may take some state aid to kickstart the movement, particularly for start-up businesses.

However, if the idea becomes more widespread it is hoped that costs will come down and the resulting products will no longer be only for the richer end of the market.

Categories
Cash Flow & Forecasting

Are you in the construction industry?

It is a mixed picture according to two recent surveys published this week.

Housebuilding activity has reduced according to S&P and the Chartered Institute of Procurement and Supply (Cips).

It is down 42.7 in May, down from 43.0 in April. A reading below 50 is a sign that output is contracting rather than expanding. This is being blamed largely on the rapidly increasing interest rates and consequent reduction in the numbers of mortgages being granted.

However, according to the same survey Commercial building was the strongest performing subsector, registering an index reading of 54.2.

Whether that lasts remains to be seen as another piece of research by property consultants Knight Frank and commercial real estate firm Cresa found that 50% the largest businesses they questioned expect to shrink their workplaces over the next three years.

However, it also found that just over half (55%) of smaller businesses were expecting to increase their global office space.

Clearly it is going to be a difficult few years for the construction industry, where margins are notoriously tight.

It makes sense, therefore to keep a sharp eye on the cash flow in your construction business and we have a free tool to help you.

You can download it here. It will help you know exactly where your business is financially.

Categories
Employees

Monitoring of remote workers can have negative consequences.

The development of monitoring tools to keep track of remote workers began during the Covid lockdowns.

However, as hybrid and remote working have continued the increased sophistication and use of such software has continued.

But in essence it is a number crunching exercise and relying on algorithms and statistics alone can easily mislead managers.

The statistics should be understood in the context of the role, and can lead to unrealistic activity goals. They should be used with caution. 

If they are not, then they can alienate the most dedicated of workers.

Surveillance is not only about logging. It has the potential for it to be used against workers.

Calculating productivity by such things as the numbers of clicks and keystrokes on the computer without reference to quality is counterproductive.

It makes employees fearful and worried about being watched.

Excessive monitoring can be counterproductive for companies too: it is associated with potentially lower productivity and higher staff turnover rates.

Essentially what it boils down to is trust and a degree of understanding about how people manage their time.

Employees need to feel respected, valued and trusted if you want them to be at their productive best.

Categories
Employees Rescue, Restructuring & Recovery

Are you considering restructuring your business?

Are you considering restructuring your business?

Do your employees know?

You may think they don’t but don’t underestimate the efficiency of the staff rumour mill.

At a time when it is proving difficult to recruit key employees it is crucial in a restructure that you retain those employees that are going to be key to its success.

They will be essential to the business’ recovery going forward.

It is important to keep employees fully informed, and not relying on the rumour mill if you want them to put their energies into helping it survive.

Their opinions, feelings and concerns should be actively listened to. If they don’t know what is going on they are likely to be worrying about the future of their career and their jobs and more likely to be a flight risk.

Clarity will do a great deal to help employees to put their efforts into supporting the restructure to help assure their future.

Preparation and planning are vital for a smooth restructure. From the first phase, business leaders should ensure that employees are central to every decision made.

You have legal obligations too.

For contractual changes to be legal in a business that wants to change the contracts of more than 20 employees, a 45-day consultation period with staff must take place. This is also true if there are to be redundancies.

If you don’t comply it could add a delay to the restructuring proceedings.

Keeping your employees informed and engaged will go a long way towards ensuring a successful restructuring outcome and the future of the business.

Categories
County Court, Legal & Litigation General

Directors: are you sure you’re obeying the rules?

There are strict rules governing the duties and responsibilities of directors when a company is insolvent.

But do you know what they are?

The Insolvency Service has reported that investigations into the alleged misconduct of directors of insolvent companies increased by 36% year-on-year last year.

The number of cases referred to the Insolvency Service compliance and targeting department jumped from an average of 528 per month to 1,077 in the same period.

This is not solely down to Covid-related fraud.

The service has reported that of the total 932 director disqualifications in 2022-23 – 459 were cases involving COVID-19 financial support scheme abuse.

In a Supreme Court ruling last year it was stated that “directors’ duties to creditors are triggered only when a company is either insolvent or on the brink of bankruptcy,”

It also said:

Directors must consider the interests of creditors when:
1.      The company is insolvent on a balance sheet basis or is unable to pay debts as and when they fall due and therefore insolvent on a cashflow basis
2.      The company is bordering on insolvency
3.      Insolvent liquidation or administration is probable

You can read the K2 Guide to Directors’ Duties for free here.

After that, why not talk over your situation with a restructuring adviser?

K2 Partners is here for you and happy to have an initial chat to understanding the issues involved in the next steps you may need to take.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting Finance

Is your business struggling with rising energy bills?

Around 93,000 small companies now say they might be forced to close down, downsize their business or radically restructure, according to the FSB (Federation of Small Businesses).

Many of them had taken advantage of the Government’s Energy Support Scheme when prices rose in response to the war in Ukraine.

They took out fixed term contracts that enabled them to better plan their cash flow.

However, the scheme was ended after six months and many small businesses are now stuck with contracts at a higher rate than they need to be as prices have reduced somewhat since then.

The FSB estimates that more than one in 10 small companies signed up to a fixed-price energy deal during peak prices.

It is calling on the Government and the energy companies to allow businesses to revise these contracts to better reflect the reduced energy prices without which many otherwise profitable SMEs could be forced out of business through no fault of their own.

Is your business in this position?

We have a free cash management tool for you to download here.

Would you like to talk through your options with a restructuring adviser?

If so just call or message us through LinkedIn to set up an informal telephone conversation.

We are here to help you.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting Finance

How are your confidence levels?

It would be wonderful to be able to report some good news for business, but it is still a case of hanging on and keeping tight control of cash flow unfortunately.

Latest reports on UK manufacturing from S&P Global and CIPS show the industry’s downturn extended in April as global demand faltered.

In addition, the FSB (Federation of Small Businesses) is warning that the cost of living squeeze is holding back economic growth after two in five company bosses reported a drop in sales at the start of the year.

According to its latest snapshot from its small business index, a record 92% of companies said costs were higher in the first quarter compared with the same period last year. 

A lot will depend on what happens to interest rates, predicted to rise again as inflation remains stubbornly high.

However, it’s not all doom and gloom as the FSB is also reporting a small rise in small business confidence after its reading on its small business index rose to -2.8 in the first quarter, up 43 points from the final three months of 2022.

In the meantime it is more than ever crucial that small businesses do everything they can to keep on top of their financial situation and seek help if they need it.

We have a free cash management tool for you to download here

It will help you know exactly where your business is financially.

After that, the next step is to talk over your situation with a restructuring adviser.

K2 Partners is here for you and happy to have an initial chat to understand the issues involved in the next steps you may need to take.

Just call us.

We’re here to help.

Categories
Debt Collection & Credit Management Factoring, Invoice Discounting & Asset Finance Finance

How do you protect your business from late payments?

According to figures from Bibby Financial Services, which provides financial services to SMEs, the average level of bad debt – where a company suffers because clients fail to pay the full sum invoiced – has risen by 61% in the past year.

Late payments also climbed last year, with nearly a fifth of businesses reporting that they were paid for their services after 90 or more days.

It is not surprising, therefore, that UK company profit warnings for the first quarter of 2023 rose to 75 compared with 72 for the same quarter in 2022.

Meanwhile a promised review of the powers of the Small Business Commissioner which started in 2020 was delayed, like many things, by the disruption of the Covid pandemic and lockdowns and has been resurrected in February this year.

Among the proposed actions was to reduce the maximum payment period from 60 to 30 days for businesses that had signed up to the (voluntary) Prompt Payment Code and to allow the Small Business Commissioner to impose legally binding payment orders, launching investigations and levying fines.

In the meantime what can businesses do to ensure their invoices are paid promptly?

Firstly, when considering taking on a new customer or client ensure that you do adequate credit checks on them.

Make your terms and conditions clear from the start. You can offer a variety of payment methods to make life as easy as possible for your customers.

With new clients it can be a good idea to ask for, say, a 25-30% deposit up front on their first order as a gesture of good faith.

Ensure you have a collection process what can be monitored and checked at every stage of invoicing so you get an early warning of potential problems.

The FSB (Federation of Small Businesses advises: “call the customer before the payment due date to make sure it has been received and there is no query, especially when it’s a large payment. Where payment has not arrived, make immediate contact.”

To mitigate the inevitable occasional late or missed payment it advises keeping a close eye on your own cash flow: “A regularly updated cash flow forecast to ensure you stay within your financing facilities is always a recommended.”

Above all, the advice is to communicate frequently, not only with the customer but with your suppliers and your bank if it looks like a customer’s late payment is going to impact on the smooth running of your own business.

Categories
Cash Flow & Forecasting Finance

6 Creative Sources of Funding

Where can we unlock cash that doesn’t become debt on the balance sheet?

This clip is taken from Tony Groom’s recent business transformation webinar. Download the clip here.

A huge thank you is due to all who attended and for the kind words you shared afterwards.

If you missed the webinar and would like a copy of the full recording then please let us know and we’ll be happy to share it with you.

Categories
General

Get the best from your marketing

At a time when business is facing considerable costs and difficulties it is more important than ever for marketing to pay its way.

It is not a time to cut back but it is essential to ensure business marketing connects with target customers and engages them.

The first step is to compile a customer profile, which defines exactly who the target audience is, everything from ages to income levels and of course their pain points.

Then, of course, businesses should avoid focussing firstly on what they can do and offer.

It is preferable to identify a customer need, or pain, and talk about that first to make a connection and engage potential customers.

Only then should the business outline what services or products it offers to meet that need.

Of course, it all needs to be well written, with no spelling mistakes or industry jargon.

If there are technical terms that are necessary, it is a good idea to also explain them in simple English.

Marketing, done correctly is an essential tool for a business, especially in hard times.

Categories
Employees General Turnaround

The most important lesson the army taught me about turnaround

By Tony Groom

When a turnaround professional arrives at a business, they’re arriving at a business in crisis.

Most people think it’s the big strategic shifts that are the critical piece of a turnaround, but during this initial phase the most important job to do is steady the ship and give everyone some confidence back.

This is best achieved not by barking out orders but by rolling up your sleeves and showing people you’re there to help.

This is something the army taught me at a young age. 

When I was a junior officer there was one senior sergeant who commanded more loyalty from his soldiers than anyone else. This loyalty stemmed from the respect he showed to each and every one of them. One might assume soldiers should salute their sergeant first, but he never missed an opportunity to salute the soldiers first.

One thing that made him such a brilliant leader was he never saw himself as a traditional leader. He wasn’t there to hand out orders to a team that needed guidance. He trusted that his soldiers knew what they needed to do and his job was simply to remove the roadblocks that would stop them getting on with their job.

This is a lesson I apply to every turnaround. 

Whilst the big strategy shift is obviously integral, bringing calm to the crisis usually happens in the smaller moments. It means the turnaround professional should get stuck in and remove the roadblocks that are standing in people’s way.

A road block could be the breakdown of a relationship with a key supplier. Or it could be as simple as not having the correct health and safety form to meet incoming regulations. 

Clearing these issues helps lighten the load on the team and starts building the momentum needed to make the bigger operational changes.

Categories
Cash Flow & Forecasting Debt Collection & Credit Management

Mounting pressure on SMEs

SME struggles continue with warnings from the BCC (British Chambers of Commerce) of added pressures looming.

It highlights two new current worries.

The first is that the under proposals being considered by the Prudential Regulation Authority, SME lenders will be forced to hold a higher level of capital against loans to the sector.

This, the BCC argues, will make “credit both less accessible and more expensive for the vast majority of businesses,”

At the same time from 1 April, businesses face an 85% decrease in energy support with the Energy Bill Relief Scheme coming to an end.

The FSB (Federation of Small Businesses) argues that “Access to finance is crucial to increase small business investment.”

It says that “An emerging concern around small business access to finance is the success rate of applications. Since the peak in success rates during the pandemic in mid-2020, the rate of success has halved, with our own Small Business Index data showing it falling to an all-time low of just two-fifths of applications”.

It is more then ever crucial that small businesses do everything they can to keep on top of their financial situation and seek help if they need it.

We have a free cash management tool for you to download here.

It will help you know exactly where your business is financially.

After that, the next step is to talk over your situation with a restructuring adviser.

K2 Partners is here for you and  happy to have an initial chat to understanding the issues involved in the next steps you may need to take.

We’re here to help.

Categories
General

Businesses should be selective in adopting AI for their processes

Almost 80% of UK companies report difficulty filling jobs according to analysis by the Manpower Group.

So is using AI (Artificial Intelligence) the answer to the skills shortage?

In some instances it may be.

Examples include automating CRM (Customer Relationship Management) systems, machine learning for data processing, and in cybersecurity in defending computer defences. AI is key to automating various routine processes in manufacturing.

Most of the above will be familiar to businesses and have already proven their worth but there is a new and much-hyped piece of AI which has been the focus of attention, and that is ChatGPT.

ChatGPT is an AI chatbot system released by OpenAI that answers any questions and can even compose poems.

It has been argued that it useful for generating creative ideas, providing summaries and writing first drafts. It can also produce large amounts of text with a quick response time, So, It can arguably automate routine tasks, provide personalised customer service and it’s particularly beneficial for those in creative roles who spend a lot of time researching and creating content.

But it must be remembered that it uses probability theory to compose its answers and it is not possible to identify all the sources from which it has derived them.

It has also been shown to make up factually inaccurate answers.

Therefore, if a piece of business writing depends on being accurate, factually correct and able to demonstrate its sources ChatGPT is not going to be useful and indeed its use may damage a business’ reputation.

Another problem that may be relevant in CRM situations that require a degree of empathy is that it doesn’t necessarily understand the nuances of conversation, which can lead to misunderstandings.

So while AI can be useful in helping a business to cope with large amounts of data, with routine operations and the like, in situations where integrity of information, trackable sources, and emotional intelligence are needed then AI such as ChatGPT is not necessarily the answer and only a human will do.

Categories
Employees HR, Redundancy & Trade Unions

What can SMEs do to protect themselves from skills shortages?

BCC’s most recent update on the difficulties to find workers highlights shortages in several key areas.

The February 2023 update said:

“Attempted recruitment in Q4 remained virtually unchanged from the previous quarter, with 61% of firms looking to find staff (62% in Q3 2022). 

“Overall, over eight in ten firms (82%) attempting to recruit reported recruitment difficulties, up from 76% in Q3. 

“While the problem is persistent across all sectors, firms in the hospitality sector are most likely to face challenges when recruiting, with 87% reporting difficulties. This is closely followed by the manufacturing sector on 85%, and the construction sector; professional services; and public, education, health sector all on 83%.” 

According to research from fintech provider Nucleus Commercial Finance 68% of SMES with up to 150 employees are concerned about staffing in 2023.

So what can SMEs that are already strapped for cash do to help themselves in the short and medium term?

  1. Are you using existing staff as effectively as possible? Many companies have discovered that they already have the people they need but are not using all their available skill sets, paying close attention to skills that could be transferable.
  2. Be more open-minded when recruiting: New staff members don’t have to be perfect from the start. Businesses could hire applicants with 70 to 80 percent of the right requirements and help them grow into the role.
  3. Use contingent workers, such as freelancers, consultants and contractors to fill gaps.
  4. Encourage older workers to consider working on a consultancy or part time basis instead of retiring.
  5. Make sure the business is an attractive place to work by ensuring there are opportunities for staff to progress their careers with additional training. 

In the medium term if you partner with nearby educational facilities you can offer work experience to their students and create relationships with them so that they are motivated to work for you when they complete their courses.

Categories
Accounting & Bookkeeping Debt Collection & Credit Management Finance

Small business hopes on late payment and the budget

The difficult economic climate has had a significant impact on small businesses as is well known.

But one area that has so far received little attention is the increase in late payments.

The FSB (Federation of Small Businesses) has highlighted its effects in a report titled Time is Money: The Case for Late Payment Reform

It includes some stark figures as well as demands for tightening up both scrutiny and regulation of late payments.

While it is debatable whether the Chancellor will include any measures in tomorrow’s budget it is clear tougher action is needed.

FSB findings in the report included the fact that in 2022 on average 52% experienced late payment and 25% reported increased late payment. As a result 37% of applied for credit to manage their cashflow.

The report included proposals for the Government that included giving audit committees of large firms oversight of payment practices and reporting on progress in their annual report.

The FSB also wants the Government to commit to limiting the maximum payment terms to small suppliers in law by 2027 if the situation does not improve and to banning late payers from public procurement contracts.

It also wants the Small Business Commissioner to be given powers to investigate instances of poor payment practices proactively rather than waiting for a complaint to be made.

While there is little likelihood that any of this will be in Wednesday’s budget there has been very little by way of information about what it is likely to contain.

Small businesses will be looking for more help on their tax and energy bill burdens at the very least.

Categories
Employees

What perks do employees most value and how important are they?

It can be a challenge to recruit and retain the best staff, especially at the moment, but can offering perks really make a difference?

Online recruiters Glassdoor argues that many workers will tolerate less pay if other perks and benefits fill in the gap.

Among the top perks it lists are free bicycle repairs on site, a day off for Christmas shopping,  four free weeks of holiday for four years work, free on-site dentistry and free day-care for new parents.

But although they may be appreciated how important are they?

It is argued that a benefits package can Improve workplace morale, reduce stress and associated staff absences, boost productivity, help set the tone for your company’s internal values and ethos and can also both reduce staff turnover by helping to retain existing staff and make recruiting top talent easier.

But to be truly effective perks and benefits must offer something employees will actually value and which will help them.

In this context perhaps arguably free day-care is one of the most appreciated.

However, the work perks most appreciated by employees vary with age.

According to Glassdoor, again, younger workers (aged 18-24) particularly prioritise retailer and restaurant discounts, free coffee and tea, help with housing, additional holiday days for long service, free taxis if you need to stay in the office late, clothing allowance, phone allowance/work phone and free/on-site gym and classes among other things.

As they get older, their needs change and are likely to be reflected in their choices of most valued perks so for 35-45 year-olds the choices are likely to prioritise flexible working hours, enhanced pension contribution, unlimited holiday days, free coffee and tea, additional holiday days for long service, private health care, dental care and free eye tests.

By the time they are over 55 their highest priorities include flexible working hours, enhanced pension contribution, private health care and additional holiday days for long service.

The point about offering perks and benefits to employees is that they can not only demonstrate that the employer values its people and understands the pressures on them.

This can only help with both recruitment and retention.

Categories
Employees General

Is CEO pay a fair reflection of what they do?

In the context of rising costs of living with more and more ordinary workers struggling to make ends meet this is a question many would be likely to ask.

FTSE 100 data shows CEO pay and bonus packages average £3.4m each which equates to 103 times the £33,000 average salary for full-time UK workers.

But according to a recent survey by the High Pay Centre, more than 60 per cent of people think that chief executives should be paid only 10 times the average salary.

So it is fair to ask what makes them worth such enormous sums when Britain’s productivity, judged by output per worker, is 20% to 30% lower than most other industrialised economies.

CEO remuneration packages are made up of a combination of salaries, bonuses, and stock option packages, according to Investopedia.

In theory the package is designed to align executives’ actions with company success, in other words to make it performance related.

However, this only works if the package is reduced when the company is doing less well.

Performance can be gauged by any number of things such as profit or revenue growth, return on equity, or share price appreciation. 

But, arguably, using financial metrics and annual share price gains is not always a fair measure of how well an executive is doing their job. 

Perceived fair pay depends on many factors, with an important one being company value. If value has increased due to CEO effort, directors and investors believe it is fair to reward the CEO for this increase. Arguably the converse should be true.

But this suggests that company value is entirely within the CEO’s control when in fact other factors such as interest rate rises for example may come into play.

According to the independent Centre for Economic Policy Research (CEPR), however, “intrinsic motivation and personal reputation are the primary drivers of CEO effort. CEOs are intrinsically motivated to do a good job or to be seen by their colleagues, their peers, and wider society as having done a good job”.

CEO remuneration is a complex issue and the concept of fairness is likely to arouse considerable passion on all sides of the debate.

Categories
General Turnaround

Turnaround guru Anton de Leeuw scoops double honours in national awards

Turnaround expert Anton de Leeuw is celebrating scooping double honours in the prestigious TRI awards 2022. 

Anton beat dozens of entrants to become Turnaround Practitioner of the Year for his work with K2 Business Partners. One of his main projects involved spearheading the complex turnaround of a struggling kitchen worktop company, and returning it to profitability. 

K2 Business Partners, of which is he an associate, was named Turnaround Firm of the Year for its work with several companies which needed a range of support from marketing initiatives, financial advice and, occasionally, total restructuring. 

The national TRI Awards, sponsored by CAPA, seek to champion innovation, vision and excellence in the field of turnaround, restructure and insolvency.  

Anton has been an independent consultant in the field for more than 10 years. 

He missed the black-tie awards dinner in London due to family commitments at home in Gloucestershire. 

“My phone started pinging late at night to tell me we were double winners. I was speechless, especially as we beat international firms with unimaginable amounts of resources,” he said. 

“It’s great to receive the accreditation of our peers in a very specialist area of business. 

“With a possible recession ahead, the practice of turnaround is vital. Viable companies get into difficulties for all sorts of reasons and the pathway to turnaround is filled with denial and insecurities because no one wants to admit to failure. 

“But many struggling companies can become successful with the right support. It’s therefore encouraging to see the skills of good turnaround practitioners recognised.”

He added that K2 seeks direct investments in businesses where it can add value due to its years of experience in both operational and financial matters. “We run companies to achieve sustainable profitabilty and long-term value by doing things right and by managing our businesses in a financially judicious manner.” 

In his private life Anton is an extreme sport enthusiast and former Chair of Gloucester City Hockey Club. The grit and determination shown competing in the Adventure Racing World Championships is reflected in his attitude to business. 

“The skill is being able to set one’s fears aside and find the courage to seek help. A successful turnaround outcome starts by making that decision early enough to buy the time needed to make a difference.” 

Categories
Insolvency

Can you think a business into insolvency?

Insolvency Service figures show that total company insolvencies registered in England and Wales jumped by 57% year-on-year to 22,109 in 2022.

While there is no denying that conditions for businesses are currently extremely tough is it possible that at least some insolvencies have been the result of the CEOs’ mindset?

According to research published in the Harvard Business Review a CEO needs to have five essential qualities:

Foresight: critical thinking when it comes to future planning

Adaptability: the ability to adapt to changing markets and technology

Reliability: A steady hand on the controls

Teamwork: the ability to engage with the team and show them they are trusted 

Decency: essential quality to show trustworthiness in cementing relationships with shareholders, investors, employees, and the public

But what happens when the CEO is suffering from mental health issues?

According to a study in the Applied Journal of Psychology, mindsets are contagious so if the CEO is suffering from depression or anxiety it will be passed on to the rest of their team and the business will follow their lead.

In other studies this has been emphasised: “no other emotional expression can cripple a venture like depression in a CEO”.

 It affects their decision making, shifting their perspective from a reliance on data, expert input, trends, peer advice, and astute observation to using gut feelings.

A CEO who doesn’t prioritize their mental health may soon notice their company’s financials starting to reflect their mindset.

It is logical, therefore, given the infectious nature of the CEO mood described above, that without expert intervention from a qualified mental health expert it would be perfectly possible to think a business into insolvency.

Categories
Business Development & Marketing General

Can collaboration strengthen your business?

With trading conditions as difficult as they currently are anything that can help to safeguard your business would seem like a good idea.

One such suggestion is to collaborate with another business.

A successful collaboration will depend on several things, which can be summarised as doing the careful research before you go ahead:

  • Are the two businesses a good fit, in other words are they genuinely complementary
  • Do they share common values and ideals
  • How sound are the finances of those involved
  • How much will the set up costs be
  • Don’t overestimate the time and money saved and the potential profits

Individual businesses can face several limitations when trying to compete in global markets. This may include scale and expertise.

So there may be financial benefits to collaboration in enabling the partners to tender for larger contracts and to benefit from a wider range of skills among the companies involved.

Swapping skills can also be highly valuable and cost-effective for start-ups on a budget.

Joining forces to cross-promote each others’ products or services can be a powerful way to build awareness and break into new markets.

Here comes the note of caution: the false assumption that the more employees collaborate, the better off the company will be. In fact, collaboration can just as easily undermine performance.  The problem is not the collaboration itself but determining when it makes sense and, crucially, when it doesn’t.

In summary, be very clear about the costs and the projected return, when setting up the collaboration.

In other words, do the research carefully and then make sure there are formal documents of the details of the collaboration and the roles and duties of the businesses involved.

Categories
Employees HR, Redundancy & Trade Unions

There are good reasons to employ older workers

It has been calculated that there are around 300,000 fewer people in the workforce than there were before the pandemic.

At the same time as employers complain about recruitment difficulties, research carried out in the autumn of 2022 by CMI (Chartered Management Institute) found that there was considerable reluctance to consider taking on older workers.

In a survey of more than 1,000 managers working in UK businesses just four out of 10 (42%) were open “to a large extent” to hiring people aged between 50 and 64 while just 18% of managers said they were open to a large extent to hiring people aged over 65.

Ann Francke, chief executive of the CMI, said the findings pointed to cultural and leadership failings in businesses of all sizes.

Yet there are many benefits to employing older workers.

Older workers are likely to be more settled as well as having better problem-solving, productivity and output, and smarter decision-making skills.

They are usually able and willing to learn new skills and, thanks to their accumulated life skills, are often better at dealing with customers. This often also makes them positive role models for younger employees as well as potential mentors.

Ideally, a business will benefit from a mix of older and younger employees combining both the steadying influence and wisdom of the former with the innovative skills of the latter.

Can your business afford to miss out on any of this?

Categories
Insolvency Rescue, Restructuring & Recovery

Restructure now rather than later

Corporate insolvencies rose by 32%, 1,964 in England and Wales in December 2022, according to Insolvency Service data, compared with the same period the year before.

A combination of high inflation and rising interest rates, poor consumer sentiment and increasing raw material costs is putting ever-increasing pressure on businesses and is expected to continue throughout 2023.

But insolvency, as we have said many times, does NOT have to be the end of your business.

However, you need to take action.  Ignoring the problem will not make it go away.

You can get help but you must be willing to be honest about the situation.

To help we have a free cash management tool for you to download here.

It will help you know exactly where your business is financially.

After that, the next step is to talk over your situation with a restructuring adviser.

K2 Partners is here for you and  happy to have an initial chat to understanding the issues involved in the next steps you may need to take.

Just give us a call.

We’re here to help.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting

An option for reducing business costs?

Flexible and remote working is now considered acceptable by many businesses according to research by two UK universities.

York and Birmingham Universities found that the two years of Covid lockdowns had changed managers’ attitudes and many now believed that it actually improved productivity.

While three quarters of managers were now of this view 62.5% of them also believed that it boosts motivation, the research found.

It also found that there was a growing use by businesses of surveillance software to monitor remote workers, monitoring emails and time spent working.

Given the cost pressures that businesses are under these findings could benefit them in other ways.

The Government’s recent announcement that energy support schemes for businesses will be scaled back by switching to a new flat rate per unit discount, which is claimed to be six times less generous than the current scheme it may be that businesses could downsize from their current premises if they are happy for their employees to work remotely.

Doing so would reduce their energy costs significantly and mitigate the effects of the ending of the current energy price cap in March.

The director of the BCC (British Chambers of Commerce) has urged the Government to consider other support measures to help businesses “otherwise we’re going around in circles.”.

She added that 2023 is going to be a “critical year for the UK economy”.

If you are considering restructuring your business for survival and would like to discuss options with a restructuring advisor please contact us for an initial chat.

Categories
General

Director wellbeing: pay attention to your mental health

Welcome to the New Year.

We hope you all had a peaceful Christmas with time to refresh yourselves, restore a positive mindset and are now fully focused on your business after the first week in January.

It is particularly important that CEOs and directors pay attention to their mental health in times of economic stress such as are currently prevailing.

In fact, according to some experts the well-being of directors is a crucial indicator of corporate health.

How can they hope to motivate their workforce if all is not well with their own mental health?

Our recent post explores some of the issues greeting businesses in the New Year, why a motivated workforce will be essential to weathering the ongoing storms and why K2 is people-focused when we get involved in helping a business in difficulties. You can read it here.

Another post you might find useful, on the subject of mental health and the importance of having someone to talk to, is here.

We’d like to remind you that restructuring advisers, like K2 Business Partners, are very experienced in supporting, helping and understanding the worries and fears of those facing possible or potential insolvency.

The name says it all. We are your partners in times of difficulty.

It only takes one call or message to start the process.

Categories
General

We won! 🏆

A massive well done to everyone at K2 Business Partners after winning Turnaround Practitioner of the Year at the TRI Awards last night.

We are so proud of the company we have built together and of the work we’re doing. This award feels like a well-earned cherry on top.

Congratulations are also due to Anton de Leeuw for winning Turnaround Practitioner of the year. 

It has been a privilege to work with Anton since he joined us and we can think of no-one more deserving of this award right now. 

Categories
General

This is not the time to be worrying about imposter syndrome

Imposter syndrome is when a person doubts their skills, talents and accomplishments despite external evidence and lives in fear of being exposed as a fraud.

It affects both high achieving men and women, particularly in business and while we would not suggest that it is anything other than a very real condition, in the current circumstances we would argue that it is not a good time to be trying to assess it.

Why?

Because there are so many headwinds besetting businesses from supply chain issues and shortages, to escalating energy bills and the difficulty of recruiting sufficient staff that conditions are anything but “normal”. 

All this in a context where various sectors of the workforce are taking strike action.

Consequently, many businesses are struggling and it would be understandable if their CEOs and senior management were to doubt themselves.

However, many of these factors are outside of their control and it would be foolish to blame themselves for the current situation.

Even if people lack confidence that is a long way from believing that they are imposters or suffering from imposter syndrome.

As long as executives make sure they are aware of the current state of their business and where they can go for help if they need it that is all they can do.

We have a cash management tool that can help you keep track and it is free to download.

In the meantime with the festive season on the horizon perhaps it is a good time to take a step back, try to relax and refresh mentally, reconnect with loved ones and return to full business activity in the New Year. 

Categories
Employees Sustainability

How can business sustainability help with recruitment?

The Harvard Business School definition of business sustainability is twofold.

It says there are two things that should be measured for business sustainability. They are the effect a business has on the environment, and the effect a business has on society, with the goal of sustainable practice being to have a positive impact on at least one of those areas.

At the moment businesses are reporting difficulty in recruiting suitable candidates so anything that can help to increase applications is important.

This is where sustainability comes in.

Adobe recently surveyed its US workforce and found that almost a third of people said they would only work for an employer that prioritised sustainability

About a third of employees thought it would boost productivity rates (35 percent), position their company as a leader (31 percent), and open more opportunities for innovation (37 percent). 

Forty-three percent thought it would improve workplace culture.

Albeit this is just a snapshot of employee attitudes in one business in the US, there is no reason to suppose that they do not apply to candidates elsewhere.

But it is not enough to just talk the talk. A business must be able to demonstrate its commitment to and active initiatives to make itself sustainable.

Categories
Finance General

Business responses to measures in fiscal statement are lukewarm

Before yesterday’s fiscal statement from the UK’s Chancellor, businesses via the CBI had been calling for the Government to reconsider the planned April 2023 rise and for ‘urgent reforms’ to the business rates system.

Business rates had been expected to go up in line with inflation from April 2023, when a rate revaluation would also be started.

The Chancellor announced that the business rates multiplier would be frozen for another year, meaning that rates will no longer be increased in line with inflation from April but the revaluation exercise would still go ahead.

He also said there would be an extension of a rates discount for retail, leisure and hospitality businesses worth £2.1bn.

The Federation of Small Businesses (FSB) stated that freezing thresholds will ‘hit small businesses’, and that the Chancellor’s growth measures ‘will not be enough to spark the needed economic recovery’.

The British Chambers of Commerce (BCC) said that the Statement is ‘unlikely to boost business confidence’.

Categories
General

Will this Thursday’s Autumn Statement bring good or bad news for businesses?

The signs are not good as the Chancellor of the Exchequer warns of the dire state of the UK’s finances and the likelihood that taxes will have to rise to repair them.

One thing that will be of particular interest to businesses is what will happen to business rates.

The Government published the findings of its latest consultation on business rates in October 2021 and among the key announcements were that:

Business rates will go up in line with inflation from April 2023, which could mean a rise of 10%.

There will be a 50% discount for small retail, hospitality and leisure businesses in 2022-23 up to a maximum of £110,000. This is due to expire on April 1 2023.

Revaluations will now take place every three years, rather than every five years starting from the April 2023 revaluation.

The CBI (Confederation of British Industry) has already called for the Government to reconsider the planned April 2023 rise and for ‘urgent reforms’ to the business rates system and to the ‘inflexible’ Apprenticeship Levy’.

Businesses in the retail sector, among them Greggs, Tesco, Sainsbury’s and Iceland, have also called for rates to be frozen in view of escalating energy prices and inflation, which are hitting their customers, and therefore sales, hard.

According to Altus Group, British firms are facing a near £3bn annual hike in business rates in April if inflation stays above 10%.

It remains to be seen what Jeremy Hunt announces on Thursday, but it’s not looking good. Meanwhile to help you stay on top of your finances why not download K2’s free cash management tool here.

Categories
Cash Flow & Forecasting

What can you do to protect your supply chain in the current economic climate?

In the UK businesses can use a number of legal tools if faced with a dysfunctional supply chain.

They include

  1. Price adjustment clauses to pass on some of that additional cost to the customer
  2. If a supplier is refusing to supply, the customer can seek to enforce its contractual rights to require ongoing supply
  3. If a supplier refuses to supply unless payment above the contract price is made, the customer may agree the price increase under protest, with the option to recover the price increase via a subsequent claim for economic duress 
  4. A customer may have the right to terminate for failure to supply

All the above, however, could be seen as the “nuclear” option, especially if the business has had a good relationship with the supplier. 

If the primary aim is to keep suppliers on board, then initiate communications with supply chain partners at an early stage once a potential problem is identified.

Nevertheless, the threat of these remedies can have the effect of bringing parties back to the negotiating table.

Another possibility in dealing with supply chain problems is to focus on short-term, day-to-day actions, such as expedited delivery services to meet demand or speeding up production by purchasing components on an emergency basis.

A cross-functional team to identify and manage supply chain issues is also a good idea. It could be used for testing financial stability under a range of scenarios and for planning for extreme supply-and-demand disruptions by identifying and ordering components earlier than usual and allowing extra time for delivery, accounting for the higher cost of energy, materials, and transportation; and checking inventories of critical materials to reprioritize production should shortages seem inevitable.

It may also be wise to reconsider whether just in time strategies are still appropriate. 

Finally, to help mitigate longer-term, more permanent damage from supply chain disruptions is to maintain a strategic priority on customers.

Past economic downturns suggest that customers tend to stick with companies that stay closest to their core offerings.

Your first step in any situation is to know exactly what financial position your company is in.

I have a cash management tool that can help you and it is free to download.

Download my free cash management tool.

Turnaround advisers, like K2 Business Partners, are very experienced in supporting, helping and understanding the worries and fears of those facing possible insolvency.

If you want to know more about how we approach turnaround and restructuring this recent post will help you.

Categories
Insolvency Rescue, Restructuring & Recovery

Can your business weather the current economic storms?

Should you restructure your business when it is not insolvent?

According to an article in the online publication The CFO restructuring should be viewed as a positive.

It suggests: “Companies where the underlying business is sound should look to navigate through the restructuring environment to mitigate against unsustainable debt burdens which have been brought about by the incredibly challenging economic headwinds…”

At the moment the economic situation is changing rapidly, thanks to the war in Ukraine, the energy crisis, rising interest and borrowing rates and increases in the costs of raw materials.

In the last week alone, one piece of research carried out by ACP Altenburg Advisory has revealed that interest rates over the next nine months are expected to cost businesses an extra £13.6bn annually in loan interest payments.

Investors have reportedly pulled a record £27.9bn from UK funds in the last month and according to the Insolvency Service insolvencies have risen by 40% in the last quarter compared with the same time last year.

It is a fortunate business that is not struggling in the face of this dire situation.

But if yours is one of them, it might be worth considering, as the CFO advises, restructuring in order to be in the best possible position to weather the coming storms.

“Early engagement and a proactive approach to restructuring options, even for the healthiest of companies, can result in very positive outcomes for a business. Such efforts do of course also form part of directors’ duties,” It says.

K2 Business Partners has many years of experience in helping companies to restructure and are always at the end of a telephone when you need us.

But your first step is to know exactly what financial position your company is in.

We have a cash management tool that can help you and it is free to download.

Download free cash management tool.
Categories
Employees General HR, Redundancy & Trade Unions

A disconnect in perceptions of productivity?

The results of a recent survey of more than 20,000 people in 11 different countries has identified two completely opposite views about productivity in relation to working from home.

While four out of five bosses surveyed felt their staff were less productive when working remotely, the majority of employees, around 87%, felt they were more productive.

There could be a number of explanations for this.

At a time when, according to the latest Begbies Traynor Red Flag report, more than 600,000 UK companies are in critical financial distress it is possible that anxious bosses are desperate to increase their firms’ productivity and this is distorting their perceptions.

There can be little doubt that less commuting and a better work/life balance as well as enabling employees to work for longer periods. Perhaps there is a little distortion of perception going on here too? 

However, for the findings to be a more accurate reflection of the reality, there are a number of questions that should be asked.

  1. How well have the bosses communicated their expectations to remote workers and do they give feedback on performance?
  2. Do employees have measurable goals?
  3. Do employees have the right tools and technology to allow them to get things done?
  4. Are their devices suitable for the job they are doing?

In assessing, and hopefully improving, productivity there needs to be an established baseline from which to measure.

Categories
HM Revenue & Customs, VAT & PAYE

Can you justify your R & D tax credit claim?

As reported in Accountancy Today, HMRC has shifted its focus from dealing with Covid fraud to R & D claims.

The shift in focus will examine more closely the technical justification of the R&D submission.

According to specialists at Markel Tax: “between 2020 and 2021, HMRC have increased the volume of its inquiries into R&D claims by around 450% year on year.”

Furthermore, where previously HMRC investigated claims in excess of six figures they are now looking at submissions of relatively small value.

The article advises Accountants to thoroughly assess their R&D adviser by looking at track records and the quality and quantity of technical experts able to properly assess what are usually complex technical developments.

According to the Government’s advice on what qualifies as R & D is “work on innovative projects in science and technology.”

 Specifically, it says, the project must relate to your company’s trade, either an existing one, or one that you intend to start up based on the results of the R&D.

SME R&D relief allows companies to deduct an extra 130% of their qualifying costs from their yearly profit, as well as the normal 100% deduction, to make a total 230% deduction.

There is more information here.

There is also a Government-published PDF giving further guidance.

Categories
General Insolvency

Supreme court gives clarity to directors in insolvency

The UK’s Supreme Court has clarified a duty for directors relating to business insolvency.

The ruling says, “directors’ duties to creditors are triggered only when a company is either insolvent or on the brink of bankruptcy, rather than when the first signs of insolvency risks appear.”.

The ruling followed a bid by a debt collection company to get the law changed to force company directors to start taking creditors into account at the first risk of insolvency.

It clarified that the test is not merely when there is a real and not remote risk of insolvency. The trigger is now later.

It also said:

Directors must consider the interests of creditors when: 

  1. the company is insolvent on a balance sheet basis or is unable to pay debts as and when they fall due and therefore insolvent on a cashflow basis.
  2. The company is bordering on insolvency
  3. insolvent liquidation or administration is probable

You can read the K2 Guide to Directors’ Duties for free here.

Categories
Rescue, Restructuring & Recovery Turnaround

Need someone to talk to?

We have been talking for some time about the mental health problems that might be affecting business owners and CEOs under the current stressful conditions.

Now, research by AXA UK and Ireland has found that nearly half of small business owners feel they have ‘nobody to confide in’ about their problems and the stress they are under.

This amounted to 48% of the 500 SMEs the research polled.

Claudio Gienal, chief executive officer for AXA UK and Ireland said: “It can be a very lonely place being an SME owner, which is why it is so important to ensure you can confide in someone who can relate to how you feel.”

While owners and CEOs may be reluctant to share their worries with staff, friends or family, there are people to whom they can turn.

Turnaround advisers, like K2 Business Partners, are very experienced in supporting, helping and understanding the worries and fears of those facing possible insolvency.

The name says it all. We are your partners in times of difficulty.

It only takes one call or message to start the process, but before you do, if you want to know more about how we approach turnaround and restructuring this recent post will help you.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting General

Will the UK mini budget kick start the stagnating business economy?

Against a backdrop of soaring company insolvencies, up by 72% in the last year according to the Insolvency Service, and plummeting business confidence the new UK Chancellor unveiled a package of measures to try to deal with the current cycle of stagnation and rising costs.

The focus, said Kwasi Kwarteng, would be on growth and the measures included reversing the rise in National Insurance payments, freezing corporation tax and cutting stamp duty.

The limit on bankers’ bonuses was scrapped and there will possibly be 38 new investment zones in England.

This hugely expensive package is generally called trickle down economics, whereby the hope is that with more disposable income, investors and businesses will pass on the gains to those lower down the economy.

However, it is not a new idea and dates back to at least 1972, when a similar package ushered in several years of boom and bust.

Will it work this time?

Who can tell. 

Certainly the stock markets and investors were not impressed and the value of the Pound Sterling against the Dollar continued to plummet.

Clearly businesses are a long way from being able to plan their futures with any confidence.

Download our free cash management tool to stay on top of your business finances.

Categories
General

How is your self confidence?

We have been talking for several weeks about mental health and how important it can be to business owners especially given the current perfect storm of financial pressures they are facing.

While over-confidence can be dangerous, so too can another condition, known as imposter syndrome.

Originally thought to affect mainly high-achieving professional women, psychiatrists now believe it is more widespread and can affect up to 30% of business decision makers.

Imposter syndrome is characterised by a feeling of being a phony in some area of your life, despite any success that you have achieved in that area.

It can be undermining liked as it is to a fear that someday the person affected will be found out and exposed as a fraud.

There are several characteristics from the perfectionist, the expert, the natural genius to the super person and they all lead to an inability to be realistic about the sufferer’s achievements, competence and skills.

It leads to constant anxiety and a lack of the ability to believe in oneself. It may also lead to a belief that if as a business owner your business is in difficulties or insolvent, you are solely to blame.

To combat imposter syndrome sufferers should avoid comparing themselves to other people and avoid a constant push to perfectionism. Accept that everyone makes mistakes.

It can help to have a mentor and to talk to someone.

We specialise in offering practical help to businesses in trouble to help them to restructure if that proves to be the best option.

The first step is to book a free strategy and viability review with us to talk through your situation.

You can find out more here.

Categories
Cash Flow & Forecasting General

Agility, innovation and keeping your wits about you…

Agility, innovation and keeping your wits about you…

..will be needed to survive the current storm of financial and other crises.

There is no denying that the ongoing war in Ukraine and the consequent energy price rises have made the conditions for doing business even more challenging than they were before.

UK businesses desperately need help form the Government but have had to wait for weeks while a new leader is elected for the Conservative party.

So what can businesses do?

Passing escalating energy costs on to clients will be a tricky balancing act between remaining viable as a business and risking the loss of customers who are themselves under financial pressure.

Business leaders are going to need to be agile in order to respond to fast-moving changes in circumstances.

They will need to keep a firm grip on their finances and they will need to try to be innovative.

You can download our free cash management tool here to help stay on top of finances.

In terms of innovation, are there any systems you can automate to save money? Could you strengthen your business by collaborating with another, complementary business?

If you consider this, you will have to keep your wits about you and ensure that any agreements are legally crystal clear.

But also, keeping your wits about you means taking care of your mental health.  A stressed, worried business leader cannot hope to make sensible decisions so anything from taking regular breaks to walking in the country to recharge your batteries can help.

You could also find someone, like K2, to talk to about the situation your business is in. Book a free strategy and viability review here.

There is help and support available. Don’t be afraid to use it.

Categories
General Interim Management & Executive Support Rescue, Restructuring & Recovery

One person doesn’t have all the answers

Being the boss of a business can be a lonely place especially when times are as troubled as they currently are.

The temptation is to present a positive front and mask the worries for the reassurance of colleagues and staff.

But the stress of this can take a huge mental toll.

Nevertheless, friends and family will notice signs that all is not well.

They include:

  • Snapping at people.
  • Losing concentration
  • Putting off decisions
  • Restlessness
  • Emotional volatility
  • Anxiety
  • Erratic behaviour

Being supportive, sympathetic and encouraging is obviously important but so is encouraging the person to get help.

Talking to someone can help to bring perspective and reduce a problem like potential insolvency to manageable proportions.

That’s where K2 comes in.

Tony Groom has a wide range of experience ranging from acting as CEO and CRO (Chief Restructuring Officer) of AIM listed companies including the turnaround of a regulated investment company; through to smaller SMEs with turnovers of below £1m

We specialise in offering practical help to businesses in trouble to help them to restructure if that proves to be the best option.

The first step is to book a free strategy and viability review with us to talk through your situation.

You can find out more here.

Categories
Finance General Insolvency Rescue, Restructuring & Recovery

Mixed messages a sign of the times

Mixed messages are abundant right now. For example, when trying to ascertain the health of the construction sector, the following messages have all come out in news reports over the last couple of weeks: 

  1. That there’s an increase in construction firms seeking help from restructuring experts as builders struggle with the soaring cost of materials.
  2. That there’s an increase of companies in “critical financial distress”. Begbies Traynor’s latest Red Flag Alert report that this has increased by 37% in the past year, with construction groups among the hardest hit.
  3. That UK housebuilding activity has returned to pre-pandemic levels, according to industry body, the National House Building Council (NHBC).

Could all these reports be true simultaneously?

Of course they can, given the financial crisis currently affecting the UK economy.

Furthermore, it’s likely that many industries, not only construction, are being hit by this seeming paradox.

It is not looking as though things will get better any time soon, and the stress and strain this puts on the mental health of CEOs, business owners and boards is considerable.

Our message is: look after your mental health whether it is taking time out for a walk in nature or talking to someone about your worries.

That’s where K2 comes in.

Tony Groom has a wide range of experience ranging from acting as CEO and CRO (Chief Restructuring Officer) of AIM listed companies including the turnaround of a regulated investment company; through to smaller SMEs with turnovers of below £1m.

We specialise in offering practical help to businesses in trouble, among them in construction, to help them to restructure if that proves to be the best option.

The first step is to book a free strategy and viability review with us to talk through your situation.

You can find out more here.

Categories
Insolvency Liquidation, Pre-Packs & Phoenix

Directors be warned!

A business no longer has to be in formal insolvency before the Insolvency Service can investigate directors’ abusing their powers over Covid loans.

Since December 2021 the service has been given powers to crack down on company directors who dissolve their firms to avoid making repayments on government backed loans.

These powers are retrospective to allow conduct that took place before the law comes into force to be investigated.

So far the service has banned three individuals from acting as company directors, for dissolving their companies to avoid paying back Covid support loans.

Directors can be banned for up to 15 years under the new powers.

Last year, before the new powers were granted the service successfully petitioned the Courts to wind up five limited companies that have been involved in abusing government loans, introduced to help businesses during the pandemic.

Directors should be aware of their legal obligations to run their businesses according to the various laws and obligations outlined in law.

Directors’ duties in an insolvency are included in various Acts, including, but not limited to the Insolvency Acts 1986 and 2000, the Enterprise Act 2002 and the Company Directors’ Disqualification Act 1986.

See our LinkedIn post here.

Categories
Cash Flow & Forecasting

Shareholder pay-outs, investment and the balance sheet

The Balance Sheet shows the company’s assets and liabilities and how much money the business owes to suppliers at any one point in time as well as how much money it has in the bank. 

Central to this is the cashflow, which needs to be well-managed.

Given the current uncertainties over inflation, interest rate rises and the ongoing and well publicised Ukraine war, supply chain and recruitment issues it is more crucial than ever that businesses scrutinise the relationship between their debts and their equity.

A decade of cheap borrowing has, according to The Economist, resulted in a massive “borrowing binge”, where according to statistics compiled by Bloomberg average business indebtedness has risen to more than three times earnings.

At the same time, according to The Economist “The share of operating cashflows reinvested by American firms in new capital expenditure and research and development has declined over the past decade to 27%, from over 40% in 2009”.

Clearly, as Central Banks raise interest rates in order to try to control inflation, businesses need to be even more scrupulous in scrutinising their monthly management accounts, of which the balance sheet is one part.

They are likely also to need to adjust the ratio between investment, shareholder pay-outs and paying down as much debt as they can.

We have a free tool for you to download that can help you keep a watchful eye on your business’ financial performance. Download it here.

Categories
Employees

It is still important for businesses to protect their employees from Covid

Infections have been climbing again thanks to new variants and reportedly cases have risen by 29% in the UK in the last week.

The NHS is also struggling with large caseloads at a time of year when it usually has a respite.

Yet reportedly one in four people who have Covid are going to work.

While it is understandable that businesses facing a perfect storm of rising costs, supply chain issues and recruitment difficulties may be reluctant to let people take time off work, there is still much they can do to protect people.

Firstly, after two years of survival during lockdowns by using remote working, businesses can still allow people with Covid to return to remote working.

While regulations regarding Covid may have been removed, businesses should still be ensuring their workplaces are as safe as possible.

This means ensuring there is plenty of fresh air circulating, providing hand sanitisation stations and asking people to wear masks to protect themselves and others, especially in customer-facing roles.

Given the current difficulties in recruiting staff it makes sense for a business to demonstrate that it has employees’ wellbeing at heart.

Our Board Briefing is still worth a read.

Categories
County Court, Legal & Litigation Finance

Tough trading conditions are no excuse for fraudulent behaviour

According to the law firm Pincent Masons more than a third of UK company directors disqualified in April and May 2022 had abused the Government’s coronavirus loan or job support schemes.

37 directors were banned by the Insolvency Service for fraudulent claims in the two-month period and 140 had been banned for abuse of Covid schemes in the year to March.

Now the Chartered Institute of Internal Auditors is warning that ongoing tough trading conditions are creating the “ideal environment for fraudulent activity”.

And Financial Reporting Council (FRC) chief executive Sir Jon Thompson has warned of the “devastating impact fraud can have, including bringing entire companies to their knees” and called on directors to review and strengthen their internal controls to prevent financial losses.

During the Pandemic we published a Board Briefing to help directors to understand their duties and liabilities and at the time we made the point that it applied whatever the current situation.

It is worth having another read:

https://www.linkedin.com/pulse/directors-need-understand-duties-liabilities-whatever-tony-groom/

Categories
Employees

Keep your valued employees by giving them a stake in the business

The numbers of employee-owned businesses have more than doubled in a year, according to the Employee Ownership Association (EOA).

There are now more than 1,000 Employee Owned businesses in the UK, it says, compared with 500 in 2020.

As trading conditions become increasingly difficult thanks to a combination of factors, including the war in Ukraine, post-Covid supply chain disruption and the difficulty in recruiting skilled people, employers have turned to EOTs (Employee Owned Trusts) as a way of both spreading the risks in business and in keeping and rewarding staff for loyalty during the pandemic.

There are also tax benefits from turning a business into an EOT.

But there are a number of things to consider in structuring and formalising an EOT and it is important to understand exactly what a business is getting into.

The questions, according to accountants Price Bailey include:

  • What is the commercial purpose of an EOT?
  • Is it suitable for my business?
  • Who will be the controlling party?
  • Who will manage the EOT?
  • What is the market value of the company and what are the value of shares to be sold?
  • How will the share purchase be funded? And if the company is going to fund it, over how many years?

Businesses that have successfully converted to EOTs reportedly say that it improves social responsibility and keeps staff informed and engaged. It can also improve productivity.

If you are struggling with managing your business might an EOT be the way forward?

Categories
Cash Flow & Forecasting Insolvency Liquidation, Pre-Packs & Phoenix

Don’t give up!

According to PwC the number of UK firms filing for insolvency in the first quarter was broadly similar to the same period in 2021.

But they also reported: “when the smallest firms and companies that were liquidated when solvent are stripped out, the figures show those filing while insolvent more than doubled in the first quarter…”  (our italics).

But why would a solvent company go into liquidation?

Well, there could be a number of reasons, perhaps related to family or lack of successors.

However, given the number of economic headwinds, including inflation, supply chain problems, labour shortages and energy costs, as BDO has reported business optimism has fallen by 4.82 points to 101.93, for the second consecutive month, perhaps it should not be so surprising that patience is wearing thin.

Don’t throw in the towel just yet!

We would advise businesses to hang on in there, especially if they are still solvent, conditions will eventually turn around as they always do.

It can’t hurt to ensure that you take regular breaks to refresh yourself, perhaps go for a long walk, take time out with family, or indulge in a hobby.

Even for those that are insolvent there are alternatives to liquidation.

Firstly, get a grip on tracking the company finances with our free downloadable Cash Management tool.

Perhaps your business could pivot to meet these needs and at the same time strengthen its own future for growth?

Give us a call or message if you would like to talk to someone about restructuring possibilities for and investment in your business.

Categories
General

Lessons for business leaders from the Platinum Jubilee

70 years is a long time to have remained head of an organisation and to be dedicated to the duties it requires.

Yet the Queen has achieved this and retained the respect of most people, regardless of whether they support the idea of a monarchy or not.

She has often referred to the royal family as “the firm”, so are there lessons for business leaders who want to see their businesses thrive and endure for a long time?

The world has changed dramatically over this period, not only in terms of technology but also in terms of people’s attitudes and behaviour.

So, mastering the skill of adaptability while retaining core values is a skill business leaders should aspire to.

There may be times when it is necessary to pivot a business in a different direction.

Of course, leadership requires both dedication and hard work, but another attribute recognised in the Queen is courtesy. 

No matter to whom she is talking this is an attribute that she shows and one that business leaders perhaps could emulate.

Being treated with fairness, courtesy and kindness is likely to be rewarded with loyalty from colleagues and employees and encourages them to go the extra mile.

Of course, there is a considerable difference between ensuring the longevity of the monarchy and that of a business and one of the crucial aspects is being aware of a company’s financial position alongside its competitors at all times.

We have a free, downloadable tool to help businesses to keep track of and manage their finances.

It is available here.

Categories
Banks, Lenders & Investors Debt Collection & Credit Management Factoring, Invoice Discounting & Asset Finance Finance

Walk away!

The most recent survey of small businesses carried out by the FSB (Federation of Small Businesses) has found that at least a third of small businesses have seen late payment of invoices increase over the last three months.

Its new chair, Martin McTague, has called on the Government to include in the long-delayed audit reforms a requirement for a board-level role with responsibility for payments.

Small Business Commissioner Liz Barclay has urged small firms to be more “brave” and reject unreasonable payment terms.

She said: “Some small businesses are beginning to say, ‘No, I’ll walk away. I’m not accepting 90 days’.”

Ms Barclay argues that small businesses have more power than they think because they drive the success of larger companies and the latter “are putting their reputations on the line by failing to pay smaller suppliers on time.”.

Fine words, but can you afford to walk away?

Perhaps the question should be “can you afford not to walk away?”

After all, if you have done work for a larger company and they are delaying to pay for it, then you are effectively giving away your services for free, and your business still has all its own costs to pay.

Why should you risk insolvency in order to prop up a larger business?

Of course, you still need to manage your own costs and finances, and we have a free tool to help you.

Download our Free Cash Management Tool.

Categories
General Rescue, Restructuring & Recovery Turnaround

There are opportunities in even the grimmest situations

Research by the UK organisation Make UK has found that almost three quarters of UK manufacturers have reshored their supply chains as a result of the disruption caused by the Covid pandemic and more recently the war in Ukraine.

“Nearly half (42%) of manufacturers have increased the proportion of suppliers based in Great Britain, with further reshoring in the pipeline for over two-fifths of companies,” according to their report.

This, together with the change in consumer purchasing habits moving to more online shopping has dramatically increased the demand for warehouse space.

According to latest research by Colliers, industrial occupiers are in a race for space as the UK is experiencing the lowest level of supply ever recorded, with only 18.1 million sq ft left, due to demand for logistics units continuing to be driven by the structural change in consumer spending patterns. 

Colliers states that take-up in 2021 for industrial distribution warehouses of 100,000 sq ft+ reached 50.7 million sq ft, up 3.6 per cent year-on-year, a new record for the sector.

The Make UK research also found that “manufacturers are looking to increase or maintain their current investment into supply chain technologies over the next two years.”

Despite the almost-daily dire news on costs, recruitment, raw materials prices and so on it is clear that there are opportunities in adversity for some businesses.

Perhaps an existing business could pivot to meet these needs and at the same time strengthen its own future for growth?

Give us a call or message if you would like to talk to someone about restructuring possibilities for and investment in your business.

Categories
Employees General

Are there situations where process automation produces a worse result?

A shortage of candidates amid a high demand for staff has for some time been a complaint made by businesses.

The competition for suitable people has led to their offering higher starting salaries for new staff.

But the question has to be asked: how are they going about the recruitment process?

For several years now, candidates have been assessed using AI (Artificial Intelligence).

This method has become increasingly sophisticated as candidates are now being asked to answer standard interview questions in front of a camera while the software behind it notes thousands of barely perceptible changes to posture, facial expression, vocal tone and word choice.

Some companies selling AI recruitment tools even offer a reactive, AI-powered chatbot that will conduct the entire interview process.

But there have been examples of eminently qualified people being rejected at the first hurdle by these methods and in one recently-reported case and employee with a long track record of work with various high profile publications dis covered his application had been rejected because he had not reached the required score in a test that seemed to bear no relation to the skills needed for the position.

He queried it unsuccessfully and after filing a claim with the Information Commissioner’s Office in the UK was awarded £8000 in compensation. In his view the fault was in the software that was “weeding out good candidates”.

There have been reports of candidates who scored highly on most tests but found themselves excluded perhaps because of age, or an employment gap of longer than six months or because they were missing just a couple of skills from a very long list.

It must be remembered that software is written by human beings and human beings have inherent biases of which they may be unaware, not to mention that they can make mistakes.

At the moment there are no standards for checking whether an AI-based selection process is fair and unbiased although there are reportedly plans in both the UK and USA for bringing in national standards.

In the meantime, while the use of AI tools in the recruitment process may be useful at some stages potential employers should think carefully before applying them too widely.

Categories
Cash Flow & Forecasting Insolvency Rescue, Restructuring & Recovery Turnaround

Insolvencies are rising fast

Insolvencies are rising fast

But don’t give up now when help is at hand

The insolvency service figures for the first Quarter of 2022 make grim reading with totals at their highest since 2012.

Of the 4,896 insolvencies in England and Wales in Q1 4274 were creditors’ voluntary liquidations.

The Begbies Traynor Red Flag alert put the number of businesses in “critical distress” as up by 19% compared to the same quarter in 2021.

All this makes grim news for businesses that have survived the two years of disruption due to the Covid-19 pandemic and despite considerable ongoing cost, recruitment and supply issues have been hoping for at least some improvement in their activity levels.

The most vulnerable, according to Begbies Traynor, are the hospitality and construction industries.

But businesses should not give up when there is help at hand. The sooner you act the higher your chances of survival.

We are experienced in assessing every aspect of a business and coming up with workable plans for restructuring your business to survive.

Why not book an initial call to talk through your options.

Contact us

Categories
Employees

Taking the longer view

Could taking on apprentices be a better business solution to the staffing crisis during the current economic uncertainty?

It is understandable that following the easing of all the Covid pandemic restrictions businesses should be keen to go all-out for growth and therefore recruiting qualified staff.

But recruitment itself is currently a problem and in the face of all the other pressures including supply chain issues, rising energy prices and of course the Ukraine war, perhaps a slower, steadier approach would be more sensible.

Consolidating the current business and planning ahead would ease some of the pressure and this is where taking on apprentices may be a better way forward.

For businesses that are below the threshold of a £3 million payroll there is no apprenticeship levy and there is financial help for both taking on and training apprentices. There is a £1000 incentive payment for taking on an apprentice.

Then, depending on the size of your business, you pay just 5% towards the cost of training and assessing an apprentice and the government will pay the rest up to the funding band maximum.

If you employ fewer than 50 employees, the government will pay 100% of the apprenticeship training costs up to the funding band maximum for apprentices aged 16 to 18 or 19 to 24 with an education, health and care plan provided by their local authority or has been in the care of their local authority.

You must pay them the national minimum wage for their age group but if they are under 25 and on an approved Government apprenticeship scheme you don’t pay NI.

The FSB has a lot of useful information on its website to help smaller employer considering the apprenticeship route.

Thinking longer term could be a good way of protecting your business and preparing it for future growth.

Categories
Employees

The post-Covid restriction dilemma for bosses and employees

Restrictions may have been lifted but Covid levels in the community are still high and this can cause problems for both employer and their employees.

If someone contracts Covid the advice still is to self-isolate for at least five days.

However, this could result in employees losing three days of the statutory sick pay available from the Government, leaving them with just two days sick pay if they abide by the rules. SSP in the UK is just £96.35 per week.

To make matters worse, lateral flow tests are no longer free, so there is also a risk that someone with mild symptoms that are similar to a cold may not test themselves at all, carrying on working and risking spread of the illness to other colleagues.

In a previous post we advised employers to complete a health and safety risk assessment that includes the risk from COVID-19, provide adequate ventilation, clean more often and to ask people with COVID-19 or any of the main COVID-19 symptoms to stay away and enable them to work remotely.

But is there more employers can do to protect their businesses and their workforce in this situation?

Here are a couple of suggestions:

Firstly, employers can protect their workforce and help individuals to isolate if necessary by buying stocks of Lateral Flow Tests and making them available to employees.

Secondly, if they have a workplace sickness scheme, it may be worth introducing sickness pay from day one in the specific case of a Covid infection.

The benefits are obvious albeit you may have to pay a little to reap them.  

It will encourage employees to do the right thing while protecting their income.

It will protect the rest of the workforce and ensure minimal disruption to production and at the same time will send out a message to employees that you do value them and care about their welfare.

Given the difficulties businesses are having in recruiting and retaining staff, it will help you to keep loyal employees.

Categories
Rescue, Restructuring & Recovery

A New Industrial Revolution?

How feasible is it to reshore our industries?

The Office for National Statistics has reported that the UK has suffered “significant challenges when acquiring and maintaining their stock”.

Well, no surprise there as businesses have been well aware that a combination of Covid, Brexit, higher energy prices, events like the blockage of the Suez Canal and, of course, now Russia’s ongoing war in Ukraine has disrupted the global supply chain.

But this week the paper CityAM is asking whether now is the time to bring manufacturing industries back into the UK, aka “reshore” them to ensure not only supplies of essential but also growth.

While not underestimating the challenge, the paper points out that the UK “is still the ninth largest manufacturing country in the world, producing £183bn of products and employing 2.5m people”.

Reshoring, it argues, will have benefits, including reducing products’ carbon footprint, reducing lead times and delivery costs.

It quotes the organisation Made UK which says that already “40 per cent of reshoring is returning from China, over 30 per cent from Eastern Europe and almost 20 per cent is returning from India.” 

All this is, of course, easy to say but much harder to turn into a productive and practical reality, not least how to finance it.

But if you think your business could benefit from a restructure or pivot to bringing it back on shore and eventually growth why not call us for a preliminary chat?

You can message us via LinkedIn or email or call for an appointment.

Categories
Cash Flow & Forecasting Insolvency Rescue, Restructuring & Recovery

Don’t despair, do what you can

How you can protect your business in the current difficult climate

As increased taxes, war in Ukraine and Covid staff absences continue to make the business recovery climate difficult there are worries that insolvencies will increase dramatically in the coming months.

Indeed, Begbies Traynor reports that the number of company insolvencies in February was 23% higher than the same month last year with county court judgements against firms doubling.

But there are some things you can do to mitigate the risks.

  1. Know your financial position. You need to be able to keep track of your finances to be able to take action. Our free, downloadable cash management tool will help you do that. Find it here.

2. Covid has not gone away. All the restrictions may have gone, but the pandemic itself has not. Protect your staff by 

  • Completing a health and safety risk assessment that includes the risk from COVID-19
  • Providing adequate ventilation
  • Cleaning more often
  • Asking people with COVID-19 or any of the main COVID-19 symptoms to stay away and enabling them to work remotely

3. Be aware of your responsibilities, especially directors’ liabilities. As of March 31 temporary restrictions on the winding up of companies were lifted. This means the legal regime governing insolvency has returned to its pre-pandemic approach. Our article here is not only about surviving during the pandemic, it contains details of directors’ duties in insolvency

And finally:

4. Share your worries; You can call or message us via LinkedIn or call for an appointment to discuss your business situation and find out how we may be able to help you.

Categories
HM Revenue & Customs, VAT & PAYE Insolvency Rescue, Restructuring & Recovery Turnaround

A problem shared…

The start of April sees a number of additional burdens placed on businesses.

In addition to increased National Insurance contributions, there are the ongoing problems of supply chain issues and higher energy prices.

Also, the remaining temporary measures to protect insolvent businesses by restricting winding up processes have now ended and as of this month, businesses now have to pay back all VAT deferred in the period to June 2020 under pandemic reliefs.

As if all this were not enough, changes made to the Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Act 2021 in February this year put directors under increasing scrutiny from the Insolvency Service by extending its powers to investigate the conduct of directors of dissolved companies. 

This makes it harder for businesses to use creditors’ voluntary liquidation (CVL) process to close down an insolvent company.

a problem halved?

Many CEOs and directors struggle on in silence sharing none of their worries about the state of their businesses perhaps for fear of being seen as weak, or of encouraging predatory creditors to take action, or because they simply don’t know where to turn.

Whatever the reason, doing nothing is really not an option.

Talking to somebody trustworthy who is on their side can often help to reduce a problem to more manageable proportions and help to come up with solutions.

Insolvency does NOT have to mean the end of a business.  It is possible it can be saved by a radical overhaul and restructuring.

That’s where we at K2 Partners come in. Restructuring is what we do and we have many years’ experience of successfully turning around companies even where their directors have almost given up hope.

That’s why we say:

A problem shared is a problem halved.

To find out if there is a way you could pivot your business to survive and grow why not message us, email or call to discuss and clarify your ideas? 

What have you got to lose?

Categories
General

Promises, promises but not much help right now

Hard-pressed businesses already facing a perfect storm will hardly have been cheered by the 5% reduction in fuel duty announced in the Chancellor’s Spring Statement.

There will also be business rates discounts of 50% for eligible retail, hospitality, and leisure properties from April 2022.

These were the only measure to be introduced immediately and, as has been pointed out, the cut in fuel duty is unlikely to make much of a dent in fuel costs given the price rises already seen in recent weeks.

Apart from these, everything else was promises for the future.

Among them were future possible tax cuts on business investment, uprating the employment allowance, adjustments to the Apprenticeship Levy and extensions to R&D tax credits. 

The director general of the BCC (British Chambers of Commerce) said the announcement “falls short of the action businesses needed to see” and one local county Chamber director said: “it’s almost as if they [business owners] and the trading realities they face aren’t being fully comprehended in Whitehall and Westminster.

While it may be true that there is limited room for manoeuvre thanks to the effects of the ongoing conflict in Ukraine that have added to the price and supply chain issues as a result of the Covid pandemic, businesses, upon whom the country’s economy and prosperity depend, needed to see much more decisive action to support them.

With insolvencies almost doubling year on year, many companies are on the brink right now and need urgent help.

K2 Business Partners are there for you as restructure and turnaround professionals. Contact us if you’d like to talk.

Categories
Cash Flow & Forecasting

Being in business is a risky business

Businesses have been operating within a very uncertain climate ever since the beginning of the Covid-19 pandemic but now their stresses have been compounded by the war in Ukraine.

According to a report in CityAM the majority of investors managing around $1trn in assets are expecting an equity bear market this year and are slashing their exposure in response.

Risk management and building resilience: 

Dr Gianluca Pescaroli is a global expert in risk management, and more specifically in how businesses and other organisations can best plan for, and cope with, the impact of a crisis.

He says: “You need to have a very, very clear idea of your critical processes and services. These are essential, independent of whether it is a pandemic, or Ukraine, or climate change. The better you prepare, the better you adapt and react.”

The little things are important:

While pricing and supply issues need to be addressed you should also have a checklist of vulnerabilities for everything needed to keep operations flowing smoothly.

These can be such simple things as whether your top managers still a landline at home as a back-up in case mobile networks fail. In the office, have back-up generators in case of power supply loss and more than one staff member trained in operating them.

Alternative/back-up suppliers are essential especially with so many Russian providers now sanctioned.

Costs: can you Reduce overheads – by System automation, Outsourcing or Innovation?

It may be that you can renegotiate payment agreements with your existing regular suppliers to your mutual benefit. Remember they too will be hurting thanks to all the disruption so having reliable agreements in place may suit them too.

Cash reserves – can you increase them?

To answer this question your board needs to know exactly what the business finance position is at any moment in time. You can easily keep on top of this if you download our free cash management tool here.

Categories
Debt Collection & Credit Management HM Revenue & Customs, VAT & PAYE

There’s no place to hide!

Don’t ignore communications from the tax man

From the end of June last year, as I reported, HMRC has resumed its pro-active approach to tax collection and enforcement.

Since then, it has collected more than £5.8bn and prevented a further £11.2bn in revenue being lost through its investigations activity, according to newly published research by Pinsent Masons.

This represents a total collected of £30.8bn, an increase from £28bn collected in 2020.

The research found “HMRC has been taking a “tougher stance” on tax errors and avoidance in the past year and ramping up compliance activity as it looks to make up for the shortfall.”

HMRC also has recently acquired greater powers to give joint and several liability notices to directors, shadow directors and certain other individuals connected to a company if it becomes insolvent. This means that people who do not appear on the director register can also be pursued. 

HMRC has always been known to favour issuing winding up petitions on businesses with significant tax liabilities, particularly when it receives no response to its communications despite repeated attempts.

While there is no denying that times are tough for businesses as they struggle to return to normal activity following the pandemic, supply chain shortages, rising energy prices and now the instability produced by Russia’s invasion of Ukraine, it is still better for a business to discuss its situation with HMRC and if possible try to negotiate time to pay its liabilities.

You need to be able to prove the financial difficulties you are having and that’s where our free, downloadable cash management tool can help.

You can find it here.

And if you would like to talk over the options for restructuring your business K2 can help. Just message or call us.

Categories
Banks, Lenders & Investors Cash Flow & Forecasting

Is your bank manager supportive?

Now, perhaps more than ever, a business’ relationship with its bank is going to be crucial.

With interest rates rising along with inflation and energy prices, there is even more pressure on businesses than there was at the height of the pandemic.

As restrictions ease and Covid loans have to be repaid, at the same time businesses are keen to return to full production and activity.

It is likely you will need your bank manager’s support and if you haven’t previously taken the trouble to cultivate a good relationship it is time to start doing so.

Key to this is convincing them that you are on top of your business finances, and our free to download cash management plan will help you to know your situation and demonstrate it to your bank.

You can download it here.

But to convince your bank that you are on top of things the manager will want to see evidence of integrity, that you have a plan setting out clearly what support you need and that the plan is convincing, not only that it can work but also that you can deliver it.

Latest figures from the Insolvency Service for January this year showed that the number of corporate insolvencies had doubled compared with January 2021. Moreover, there was a prevalence of liquidations rather than companies going into administration, suggesting that these businesses had no way forward for their survival.

To protect your business it makes sense to ensure it has access to funds for survival and growth when it needs them and key to that is the relationship your business has with its bank.

This article from K2 looks at what you can do to ensure the bank’s support.

Have a read and message us if you’d like a chat.

Categories
General HR, Redundancy & Trade Unions

Could your business handle a four-day week?

The UK is launching a four-day workweek trial from June to December 2022 (a six-month period where participating employees will see no loss of pay.

It has also been reported that 30 UK businesses had already started a trial of four-day weeks from January 2022.

But is it a practicable proposition for your business?

The results of the trials that have been carried out so far in other countries have shown that it improves workers’ quality of life, giving them more time for other priorities.

They have also, so far, shown that there was no loss of productivity and in some cases businesses have increased sales, reduced absences from illness and improved employee retention.

There is also an argument that the system could have environmental benefits from reduced commuting and traffic congestion.

However, it is questionable whether the four-day week can be applied in all businesses, not only because of the primary consideration of their customer’s needs but also because of the nature of the business.

According to the website Investopedia “it may not be possible to increase productivity enough in service or logistics jobs to achieve the same results in fewer hours just by working smarter. There’s a physical limit to how many items Amazon Warehouse employees can pick per hour or how many delivery locations a UPS driver can hit in a day.”

This is echoed in research carried out by the Henley Business School, which found that 82% of employers “believe ensuring employees are available to the customer outweighs the need for flexible working practices” and 73% felt it would be difficult to implement logistically.

Clearly, any business considering introducing a four-day working week will have to consider the implications carefully and be prepared to make radical changes to their business practices and ways of thinking.

Investopedia lists strategic changes businesses may have to make. These are just some of them.

They would have to prioritise and re-evaluate tasks, minimise interruptions and distractions, increase automation, limit work-based social events, reduce and shorten meetings, define clear goals that are achievable within a shorter workweek and measure outcomes, not hours.

It will be interesting to see how businesses react once the various proposed trials have been completed but it is already clear that there will be no “one size fits all” solution.

Categories
General

Do you really need all your employees to return to the office?

The guidance to work from home was one of the restrictions that was recently lifted along with several others that had been introduced to try to control the spread of Covid 19 infections.

The signs are that many have resumed the road or rail commute to the office as traffic numbers are steadily rising.

Was this a knee-jerk reaction by businesses desperate to return to normal? Or was it actually necessary?

Did they ask themselves whether they really needed all their employees to return to work in their centralised office locations?

Given that the economy of the country, and by extension of many businesses, is facing severe pressures as they seek to recover from the damage of the pandemic it will be crucial for businesses to keep a tight control on costs.

There are two factors in particular that are important to assessing whether a return to office-based working is actually necessary.

They are levels of productivity and business expenditure.

The LSE (London School of Economics) researched the effects of the pandemic work from home rule on productivity and found that not only can it actually improve productivity but can also reduce cases of burnout by as much as 26%.

But it stressed that businesses should take measures to ensure the model thrives including creating remote-work policies that detail expectations for employees, managers, and teams and training managers in managing remote teams inclusively.

Hitachi Capital was one of many organisations that researched the effects of working from home on business costs.

It identified five areas for potential costs savings during the period when employees were working remotely which included employee food and drink, employee travel, cleaning services, catering client meetings and rent and utilities.

Of the 250 SMEs surveyed it found “on average SME businesses (70%) saved up to an impressive £840 monthly. This is a cost that could total up to £10,000 annually for these companies”.

Such savings could make a significant difference to business survival in a time or rising costs.

When K2 Business Partners acquire a company or start working with directors to make improvements, one their early tasks is to take a fresh look at all the business systems and practices.

This is because every business falls into habitual ways of working that might have worked for years but if they are not updated, they become a costly burden.

The first step is to have an accurate picture of the business cash flow and this is where K2 can help. We have a free Cash Management tool that you can download here.

Take a look, apply it to your business and see where you could make savings and if you’d like to talk your ideas through message us on LinkedIn or give us a call.

Categories
Business Development & Marketing Cash Flow & Forecasting Insolvency

Keep your nerve and stay patient

As restrictions imposed to control the Covid pandemic are lifted it would be tempting for businesses to ramp up their activity in order to return to pre-pandemic normal.

But problems remain. Materials and components costs have been rising, and still are. The global supply chain is still broken. Recruitment difficulties and labour shortages are still an issue.

Getting all these components right and working smoothly is a bit of a jigsaw puzzle.

We have talked about this before but it seems to be relevant again now.

There is a danger in ramping up activity too quickly as the situation eases. Accountants call it over-trading.

This is when a business runs up a big rush of sales on credit without the cash to pay its suppliers and it can rapidly become insolvent.

It is easy to be misled by the figures on the balance sheet, which may paint an over-optimistic picture of the cash flow forecast, especially when some of this is predicated on fixed assets and on the prospect of new investment from lenders or investors.

Instead, the business should focus on cash management, which gives a much more realistic picture of assets and liabilities.

You might be interested in this blog written some time ago about the psychology involved.

Categories
Insolvency Rescue, Restructuring & Recovery Turnaround

Insolvency is not the end of the business story

Figures just released by the Insolvency Service showed a 33% increase on the number registered two years ago, just before the pandemic.

The IS report also identifies a 73% two-year increase in creditors’ voluntary liquidations, where bosses elect to place their company into liquidation in order to pay its debts.

But is insolvency really the end for a business?

There are four main definitions of insolvency:

  • Unsatisfied statutory demand: failure to deal with a statutory demand
  • Outstanding judgement: failure to pay a judgement debt
  • Cashflow test: when the company is unable to pay its debts on time
  • Balance sheet test: when a company’s liabilities are greater than its assets

But no, this doesn’t mean the end of a business although it is an indication that decisive action is needed. This can involve either turnaround, transformation or possibly a pivot of the business.

Turnaround usually involves making an existing business more efficient and generally this will involve cutting costs which can involve brutal downsizing if a company is losing money. The focus is on existing activities that are profitable and perhaps returning to the core business.

Transformation involves revisiting the business model or product/market mix.

The pivot process involves keeping some essential elements but everything else will be changed.

Deciding which is the best for your business will involve a close examination, a strategic review. A business needs to be sustainable and profitable so firstly you need to identify the resources that are already available to you and these can be divided into physical resources, human resources, intellectual resources and financial resources.

There is more on this in our post here.

Banks and other secured lenders are always significant stakeholders in any company and the loss of bank support usually represents an existential threat to the business.

So your relationship with your bank may prove to be crucial and our Board Briefing may help you assess this.

K2 Business Partners are hands-on investors and turnaround specialists whose aim is to ensure your business’ survival and growth. Obviously, there has to be at least a possibility that your business can be made viable, so our first step is to do an exhaustive review of every aspect, from finances and liabilities to processes.So don’t despair. If you would like to find out more why not book a discovery call to talk to us. Book a call.

Categories
Accounting & Bookkeeping Debt Collection & Credit Management

Two heads are better than one

As the deadline approaches for the submission of annual tax returns it has emerged that some businesses are realising that they have claimed incorrectly for covid support.

Law firm Pinsent Masons has analysed data that showed around twenty-five professional services partnerships have admitted to overclaiming furlough, with the total amount wrongly claimed coming to £309,588.

It is not surprising given the various modifications that were made to the scheme during the height of the pandemic, they suggest. It is also likely that these numbers will increase as more returns are submitted.

According to HMRC there are over 1,200 staff currently investigating 23,000 cases of suspected fraudulent Covid claims.

It says “Work to recover fraud and error began almost as soon as the schemes launched. We recovered £500 million of overpayments in 2020 to 2021”.

Do you know whether your business has claimed legitimately for covid support?

At a time when businesses are facing rising energy, payroll and materials costs and are still a long way from being back to normal operations the last thing you need is to be adding to the financial burden is having to pay back wrongly-claimed moneys.

Can your accountant help you? It is worth getting them to check the fine print of any claims you have made and verifying that they were legitimate before you put in your tax return. An early warning is always better than a sudden shock!

If you have been using our free, downloadable cash management tool you should be able to give your accountants a clear financial picture of the state of your business.

It’s available free here.

Cash management is going to be essential in helping businesses to both know where they are in 2022 and to help them move forward.

Categories
Accounting & Bookkeeping Cash Flow & Forecasting

Happy New Year!

We hope you all enjoyed the festive break and were able to refresh, regroup and think ahead for your business in the year ahead.

Unfortunately, there will still be a lot of pressure as there has been over the last two years because the pandemic is not yet over.

Among these are:

Costs – from the impact of rising inflation which has led to the Bank of England increasing interest rates.

Costs – due to the current high price of energy supplies.

Costs – due to businesses having to start to replace loans granted in the earlier stages of the pandemic.

Costs – due to late payments by other businesses, something that the Federation of Small Businesses (FSB) has highlighted as a problem for 30% of the SMEs it surveyed recently.

Costs – due to impending increases from April in National Insurance contributions, the living wage and dividend taxation, something the FSB has also highlighted.

Can you see the recurring theme here?

Is it affecting your ability to put into action any new plans for your business that you identified at the end of the year?

If you need an accurate picture of exactly where your business is financially in order to identify whether you have the room for manoeuvre to take your business forward, we have a tool that can help you.

It’s free to download here.

Cash management is going to be essential in helping businesses to both know where they are in 2022 and to help them move forward.

Categories
Cash Flow & Forecasting General

How does your supply chain stack up?

Materials, parts, products; they have all been subject to delays and shortages over the last year thanks to a combination of factors from a shortage of lorry drivers to the effects of pandemic lockdowns.

It has all made running a business more stressful and expensive.

Is it time to rethink your supply chain?

Many businesses switched to buying from suppliers further afield because of the financial savings this brought them, but perhaps given the more recent difficulties it might be worth looking for sources closer to home.

It may end up costing a little more but if it improves your business’ continuity it may be worth it.

Reshoring is also becoming increasingly important for improving UK manufacturing resilience and ensuring that its manufacturing supply chains are fit for an uncertain future.

Perhaps you need a back-up plan?

It is also worth looking around for alternative suppliers and using more than one, again to ensure the continuity of your own business operations.

Giving orders to a back-up supplier as well as your main one could minimise disruption to your own business.

There have been some welcome indications that materials supply issues have eased a little in the construction sector with the November PMI data from IHS Markit and CIPS showing total activity for November at 55.5, compared with 54.6 in October. Fewer respondents were reporting longer than usual delivery times, down to 47% from the previous month’s 54%.

The end of the year is the time for reflection, recharging the batteries and a little planning ahead.

So once the Turkey has been eaten and the presents opened perhaps the run-up to the New Year is a good time to think ahead to make your business more resilient.

Categories
Banks, Lenders & Investors

Is it time to rein in the Rentiers?

Businesses have now faced more than two years of uncertainty thanks to the constantly-changing environment caused by the Covid 19 Pandemic.

It is estimated by Begbies Traynor in its latest Red Flag analysis that in the third quarter of 2021 562,550 businesses were in “significant financial distress”, with a 17% rise in “more serious critical business distress”.

What businesses need, therefore, is some measure of calm and steady progress as far as any business can ever rely on these things.

Investors are among the most important in providing these conditions.

But for years now, many investors have been what are called “rentiers”, interested only in short term gains from the money they put into a business without being particularly invested in the future of that company.

Rentiers are deemed to be willing to shift their money elsewhere if they feel their rewards are not large enough or fast enough.

While no business would deny that it has obligations to deliver results for customers, shareholders and other investors, it is reasonable in these uncertain conditions to ask that investors show some patience and understanding.

The Government, as reported by CityAm, has invested in this idea by creating “British Patient Capital (BPC)” to which has committed more than £1bn of commitments itself.  This has so far attracted further £4.8bn of investment from third parties.

Ultimately, supporting a business and paying attention to its longer-term survival can only benefit investors looking for some security and stability on their returns.

It is a philosophy upon which K2 Business Partners is founded and acts whenever it gets involved in supporting any business in difficulty.

Of course, our involvement depends on a thorough analysis of the state of the business, but you can be sure that once committed K2 is with you for the long haul.

Categories
General

Are you really listening?

The difficulties businesses are having in recruiting staff at the moment have been widely publicised and two recent pieces of research may have some clues as to the reasons.

Firstly, the most recent quarterly survey run by Future Forum, a research group backed by the business communication platform Slack has found that management are keener to see staff return to their offices rather than to continue working from home.

While 44% of executives were anxious to get back to what they saw as “business as normal” more than three-quarters (76 percent) of employees said they wanted flexibility in whether they work from home or the office.

The second piece of research, carried out by the online magazine Wired in conjunction with orgvue, which analyses workforce and HR issues, found that attitudes to work and the behaviour of the workforce is rapidly changing, with many employees re-evaluating their careers post-pandemic and choosing to resign from their existing positions in search of more favourable conditions.

One theme that emerges from these pieces of research is that there is a disconnect between executives and their employees as the former’s working conditions, remuneration and freedom of manoeuvre are considerably greater than they are for employees.

Clearly, working from home during pandemic lockdowns has prompted the formerly office-based employees to look more closely at these issues for themselves and the result has been that many want a change, that there will be no return to pre-pandemic normal if they can help it.

Essentially, the message is that there needs to be a change in the attitudes and behaviour of the bosses to demonstrate that they are concerned for their employees’ welfare.

This is not only about money.

People need to feel valued, listened to and that their wider concerns and responsibilities are understood, that their knowledge and skills are important and incorporated into the company’s structure and organisation.

Businesses can expect there to be less certainty going forward and will need to incorporate more flexibility into their operations.

For this they will need to rely even more on the skills and adaptability of their employees.

While there is certainly a need for strong leadership, the best leaders are those who consult and really listen to what their employees, those “on the front line” of their businesses, can tell them.

There is a reason why we have two