Finance General Rescue, Restructuring & Recovery

Documents, filing and systems – business housekeeping

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

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Do you know how to deal with enforcement officers?

When a business has a judgement debt due to its creditors, or is overdue paying taxes to HMRC, or its landlord for rent arrears or to the local authority for rates, enforcement officers may arrive at its premises to seize property.
Enforcement officers may be bailiffs appointed by the County Court following granting of a County Court Judgement (CCJ) or by Sheriffs if there is a High Court writ. They can also represent HMRC, the landlord or local authority without judgement.
They can seize assets but only if they have lawful entry to the property and the assets are unencumbered. They do not have to physically remove anything from the premises but the seized assets may not be removed or sold without consent.
Unencumbered assets are those owned wholly by the business.  This means any items on the premises that have been supplied under a seller agreement where they no longer belong to the seller. It may be that many goods on the premises are not actually owned by the business and therefore cannot be seized.
This often applies to company vehicles on a lease or hire purchase basis, as may plant & machinery, photocopiers and IT equipment.
Less obvious are those goods bought for resale which are subject to an agreement that they only become the property of the business once they have been paid for, known as Subject to Reservation of Title.
However, the onus is on the business to prove to the bailiffs that this is the case.
It is therefore imperative that the business keeps proper records of all paperwork such as finance agreements, invoices and purchase agreements to prove any supplies that may be Subject to Reservation of Title.
Quite apart from the reason above, all businesses need to keep proper, up to date records, including sale and purchase invoices, purchase orders and contract related documents regardless of whether they are in difficulty or running profitably.  How good is your record keeping?

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Planning ahead? Declutter first

The period between Christmas and New Year is a time when many SMEs plan ahead for the next year.
Something that is often forgotten, however, is that it is difficult to see clearly through a pile of unfinished business that has been put to the bottom of the list because it was not urgent.
Is your book keeping up to date? Have you done your expenses? Does filing need attention? Is it time to cull some of those contacts who might have been useful but with whom you have had no interaction?
Planning ahead is not only about setting new goals and targets but also about becoming more organised so that progress can be monitored and reviewed at regular intervals, and your plans adjusted accordingly.
Preparing for next year is not easy if the information on the past year’s performance is not up to date.
Equally it is hard to think clearly, let alone plan when surrounded by clutter or outstanding actions.
If this is a situation you recognise, perhaps the decluttering process will encourage you to consider how to make life easier next year. There are a number of ways to reduce the build up of clutter, they are however boring since they involve discipline which is something most entrepreneurs lack.
The logical solution is to set aside a specific slot in the diary, every day, week or month to ensure that the low priority but essential jobs such as record keeping and admin get done. It also makes sense to ask why you are doing tasks, indeed your time is valuable so stop doing non essential tasks if they aren’t necessary, or consider outsourcing regular activities such as accounts or filing.
Loud music can help you declutter – I recommend Queen.

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Record keeping and HMRC communication

SMEs should be prepared for HM Revenue and Customs (HMRC) to become more aggressive in following up on late payment and tax avoidance.
MPs criticised HMRC this month after it emerged that the difference between the amount it should collect and its actual collection total had increased by £1 billion (from £33bn to £34bn) in the year to April 2013.
The tax gap is also forecast to increase by a further £3bn for the year to 2014.
The House of Commons’ Public Accounts Committee has also criticised HMRC for not doing enough, quickly enough in tackling tax avoidance schemes.
SMEs are arguably easy targets when HMRC is coming under pressure so they would be wise to ensure that their records are all in order and payments up to date.
It is important to keep copies of all filings and communications with HMRC, preferably confirming phone calls in writing and to not ignore any communications from them.
If you are unable to pay a liability, they are helpful and providing you are proactive they will agree payment terms. If you do agree payment terms then stick to them otherwise they won’t believe any other undertakings you give so make sure your cash flow forecasts are realistic.
Independent of making any payments, make sure your various tax returns (VAT, RTI -PAYE and corporation tax) are submitted on time to avoid automatic penalties.
If it is all becoming too much, remember tax is one area where early help from a professional can be invaluable.