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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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Finance General

Don't sign business agreements without expiry and termination clauses

It is astonishing how many businesses enter into agreements with clients, partners and suppliers without defining how they can be terminated and when they expire.
In our view it’s like entering into a marriage without having a pre-nuptial agreement, which can be expensive for the partners if anything goes wrong and highly lucrative for the lawyers!
One example is telecoms providers who offer to take over a business number and the business then finds itself still locked into an onerous and expensive arrangement that it can’t get out of several years later.
Another is IT lease and hire agreements that do not expire. We came across a client who was still paying the lease fee after 10 years, 7 years after the equipment had been thrown away and it still needed 3 months notice to terminate the agreement.
Among the worst offenders are printer and copier suppliers.  We have heard of many examples where the machine supplied was not fit for purpose and the rental agreement then tied the business into servicing, maintenance, supply of ink and toners and often also into a defined number of copies made per year.
Even where suppliers do include termination clauses they can be excessive such as a well known employment consultancy that has a 60 month termination clause in its standard contract.
Although a commercial contract does not have to be in writing, it makes sense to have a clear, written agreement wherever possible.
At a minimum, you should agree the main contract conditions in writing to make your respective rights and responsibilities clear.