The
Business Bulletin By business owners, for business owners
NO ADVERTORIALS
ENGAGING CONTENT
Focus on Finance Spotlight on Roger Eddowes
PLUS Maintaining healthy cashflow How to make more money in your business Top tips for preparing your own tax return What is an Equity Release and should I consider one?
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PRACTICAL ADVICE
Issue #1
Are you keen to see your business grow? Then you need to keep track of the gures… Building a successful business takes determination, energy, focus, and know-how. But even the best business idea cannot ourish without one additional critical input; information. At Essendon Accounts & Tax, we love nothing more than helping a business thrive. In fact, it’s become our speciality. Are you a Family Business? We can act as your virtual Financial Director providing expert advice through a hands-on approach. Whatever accounting and tax support you need, we can help. Want to make a prot? Let us take on the grind of tracking what’s coming in and going out, so we can then model your cash ow and provide you with the information you need to make swift and critical business decisions. Looking to outsource your payroll and bookkeeping? Payroll and bookkeeping exist in ever-changing complex landscapes that require up to date knowledge and expertise. Would you prefer to spend your time working on your business? We can help.
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Need assistance with a tax issue? Whether you are a sole trader, in a partnership, a director of a limited company, or simply an individual with a regular income, expert knowledge that enables you to maximise the numerous tax allowances and reliefs that are available can save you a fortune. Speak to us. Looking for support from a Financial Director? All top athletes achieve the peak of their career by working with a coach, and we know that every business keen to reach the top needs a team of trusted advisors. We have the expertise you need.
At Essendon Accounts & Tax, not only do we believe that building a long-term relationship with our clients makes a difference, but we do it through taking a practical hands-on approach. Whilst you work on your business, we’ll pour over your paperwork, balance the books, provide you with the information you need, and tackle the tax man on your behalf. We will save you time and stress, so you can enjoy seeing your business grow. Give us a call today on 01908 774320 or visit www.essendonaccounts.co.uk
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The Business Bulletin
A magazine that works for everyone Paul Green Founder & Chief Editor
Welcome to the first edition of The Business Bulletin. Published every 4 weeks, it will cycle through the following themes: ■ Finance ■ Sales & Marketing ■ Operations & Resources ■ Strategy & Personal Development It will bring together a collection of articles aimed at any small business owner who doesn’t have all the answers and is open to some thoughts and advice from some of the leading experts in their fields. So what makes this different to any other publication? I’m glad you asked! For the reader – no more advertorials. All the featured articles have been chosen for their valuable content, not because the author has paid to be published or taken out an advert to get their slot! For the contributor – you can submit articles for inclusion without having to pay for the privilege or having to advertise. If your article is deemed suitable based on its merits – that it is relevant, good and engaging content and not promotional of
All the articles featured in this magazine have been chosen because of their valuable content
your business, then it will be published. For the advertiser – if a publication is more engaging due to the content, then it is more likely your adverts with be noticed. The number of full-page and half-page ads is limited for each edition and there will be a limit on the number of advertisers from a given industry sector. This means your advertisement is more likely to stand out from the crowd and not be lost in a sea of competitors. Your feedback and thoughts on this magazine are welcome – let us know your experience. Thanks,
Join in! Contact us to contribute an article or place an advert for future editions contribute@business-bulletin.co.uk
Design & Layout: Pixooma Ltd. Proof-reading: James Tarry © Copyright 2020 The Business Bulletin. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanic, photocopying, recording or otherwise without prior permission of the editor or the author of the article. Disclaimer – no responsibility can be accepted for any actions that you take as a result of the content provided in this magazine. There is no guarantee that implementing any of the advice contained in the articles will definitely ensure your business success or have a positive impact. They are presented as information based on the experience of the authors working with many different types of businesses in their field of expertise and are provided as a choice for you to consider if they will be useful for your business.
Issue 1 – Finance | 3
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Contents
The
Business Bulletin Some sort of strapline to link into the icon? ea ipsant vel explaut aum add
NO ADVERTORIALS
ENGAGING CONTENT
PRACTICAL ADVICE
Issue #1. Finance
Focus On Finance Interview with Roger Eddowes
This edition focuses on finance and brings
PLUS
together a wide range of topics with a
Maintaining healthy cashflow
selection of quality articles from leading
What is an Equity Release and should I consider one?
How to make more money in your business Top tips for preparing your own tax return
experts in their field.
How to make more money in your business Kathy Bassett
6
Bankrupt, insolvent or in need of rescue? Gavin Bates
8
The state of play of business lending heading into the second half of 2020 James Blacklaws
Spotlight onâ&#x20AC;Ś
26
Roger Eddowes
The world moves towards a sustainable economic future Stephen Limbert
10
Credit searches and the impact on your credit score Wendy Tate
12
Maintaining healthy cashflow Matthew Goude
14
What superpower would you have if you could? Jamie Cochrane
16
Top tips for preparing your own tax return Ruth Chettle
18
5 steps to exterminate the virus of late payment Gary Thorpe
20
23
How to choose your accountant Paul Marks
30
What is an Equity Release and should I consider one? Mark Chapman
32
Ask the experts
35
SME Survey
38
Issue 1 â&#x20AC;&#x201C; Finance | 5
The Business Bulletin
How to make more money in your business…. As a business owner
Sales – Expenses = Profit
and services where your margin is the
I’m sure you’re always
A more comprehensive way to review
of an item that has a low-cost price
looking for ways to
your business and make more money
that has a good profit margin for you
make more money
is by using the Five Ways System
it makes sense to focus on increasing
that I’m about to share with you .
sales of it. Similarly, if you offer training
and in particular profit. One recognised and basic way to do this is of course to focus on
highest. If you have fast-moving stock
and have a series of online courses 1. Concentrate on selling those
then focusing your efforts on selling
products/services that bring you
these is going to increase your profit.
the highest margins/profit.
You’ve already put the effort or
Instead of discounting to increase
expense into creating them and now
sales (and reduce profit), consider
you can sell them over and over to an ever-changing audience.
increasing your sales
increasing your prices. Whilst you
and decreasing your
sales you generate; you will increase
2. Service your best customers
your profits by selling fewer items at a
and remember to up/cross-sell
higher price.
to them.
costs as what you’re left with is profit.
might reduce the total number of
Another strategy that can help you here is to promote those products
6 | Issue 1 – Finance
Do your customers know everything you sell? Most businesses have a core
The Business Bulletin
group of customers from where the vast majority of their revenue comes. It’s worth looking at these in some detail and working out which ones really are bringing added benefit to your business. Which ones have referred business to you in the last 12 months? Which ones have purchased additional services from you? Which ones are consistently telling the people they work with about the great things you’re doing for them? These customers are extremely valuable to you in terms of bringing you new
Most businesses have a core group of customers from where the vast majority of their revenue comes.
leads and helping to spread the word of mouth about your business. Take some time and look at which services these customers are currently buying from you and what additional
understands your sales processes so
you had from potential vendors
services they may be interested in.
that they know what they need to
wanting you to value their property.
Once you’ve done this, contact them
do when a lead comes in and how
and tell them about how else you
they can help you to make that all-
can help. You’d be surprised by the
important sale.
number of conversions clients of mine have got simply by telling an existing customer about another service they offer. 3. Increase your lead conversion rate.
5. Focus on generating more leads for your business. This comes down to your marketing. The more people you can tell about
the word out takes planning and it’s important to look carefully at the
managed to increase the number
resources you have and the tools you
of your leads coming into your sales
have to enable you to do this.
advertising campaign that generated 400 new leads to your business if you then managed to convert 100 of them your conversion rate would be 25%. It can probably be better, so review your processes. 4. Having good systems and processes.
implementing the 5 Ways I’ve outlined above you’ll be able to considerably improve your bottom line. You’ll also find that there are a host of strategies you can implement to increase your profit.
of potential leads you’ll have. Getting
leads into customers. If you’ve
convert them. Say you ran a Facebook
the numbers in your business and
your business the greater the number
Ultimately you want to turn your
pipeline, your next challenge is to
By knowing and understanding
Depending on your business you might consider using flyers and leaflets, social media, online advertising, blog posts and/or PR campaigns. It’s important to make sure you have clearly defined goals for your marketing and measure the results you get. For example, you might be an estate agent with a client who has set their sights on owning a property in a Northamptonshire
To be successful every business
village. Leafleting the villages in your
needs to have good systems and
client’s target area could generate
processes in place. If you want to
a potential property you can sell to
grow and increase your profits it’s
your client. Your results would be
particularly important that your team
measured by the number of enquiries
Kathy Bassett ActionCoach Kathy’s passion is working with owners of successful small to medium sized companies. She can help you to bridge the gap between where you are now and where you really want to be, whether it be to grow your business long term, or to implement an exit strategy. 07952 112432 kathybassett@actioncoach.com actioncoach.co.uk/coaches/kathy-bassett
Issue 1 – Finance | 7
The Business Bulletin
Bankrupt, insolvent or in need of rescue? What happens when you reach out to an Insolvency Practitioner?
I doubt any business owner is totally
use to you if you need us. Insolvency
there is a little bit of confusion over
ready for the pressure that being in
advice is not a ‘saleable’ item like
terminology. We will always explain
charge can bring. It’s hard being the
buying a tin of beans because it is
everything in plain English, but a
person at the top, particularly when
only relevant when and if you need it.
few key words are good to know in
it comes to having money issues.
So, when you call a good insolvency
advance. To simplify things down:
Every company is unique in its own
professional, before they do anything
way but if there is one thing they
else, they should establish if you need
have in common, it is the sleepless
them. If you don’t need them, then
nights that come along with the
great news, you no longer need to
realisation that you may be in trouble
worry, or at least not worry quite as
financially. Whether you are struggling
much. If you do need one, then what
with HMRC, unpaid debts, cashflow,
happens next is not as bleak as you
wanting to close your business
would think. Here is an overview of
voluntarily, or one of the many other
how it usually works.
reasons you may need help, taking the first step and calling an Insolvency understandably difficult step to take. You are potentially starting down a
Firstly, let’s clear up a few
life changing road, so naturally there is going to be a lot to worry about, but there may be less than you think and worrying doesn’t really help. The first question most business
misconceptions so that we are all talking the same language. When you contact an insolvency practitioner their first response will be to help keep you in business. The bottom line is that we
owners want answered is whether
are not here to look for a way to close
they should reach out to an insolvency
you down.
practitioner in the first place.
My experience is that a number of
The answer to whether you should
businesses that come to see me can
contact someone is simple. If you think
be rescued and the first approach is
you may be in need the services of
always to look for ways to keep you
an Insolvency Practitioner, then you
trading. This will be true of any good
should contact one. You are clearly
insolvency professional. It isn’t always
worried enough to be thinking about
possible to keep a business viable
insolvency so you definitely must do
unfortunately, but closure is always
something. Remember, we are only of
a last resort. Secondly, sometimes
8 | Issue 1 – Finance
to individuals. Sole traders for example. ■ Insolvency is when you are unable to pay your debts. So, it is a global term usually used to describe the situation where your debts exceed your ability to pay them.
What happens after you contact us?
Practitioner is the best idea. But it is an
■ Bankruptcy is only applicable
■ Liquidation is where a company’s assets are used to pay off its debt(s). ■ Administration is where an Insolvency Practitioner is appointed to try to rescue the business or chose the best course of action for a business which is insolvent. The start point therefore, is with assessing your current situation. depending on which of the above applies to you, (assuming they apply at all) someone will then will work with you to decide the best course of action and what your initial steps should be. Ideally they will be towards recovery. The consultation will take place in a convenient way and location for you.
The Business Bulletin
Some of our clients prefer to come to
They will need to know about your
see us or discuss on a private telephone
business, why you think you need
call and others prefer us to visit them to
them, what your situation is overall
get a feel for their business.
and some other top-level information. Honesty is important of course but
What is the first meeting really about? This first part of the process is not about telling you what to do or criticising you. It should be about: ■ Collaboration and mutual understanding.
they are not there to judge. They are here to help. the prospect of having to put up the
Smart Business Recovery
shutters and call it a day. Why would
For over 30 years Gavin’s helped with
they? For most of us our business is our baby. It is something we have worked on, and usually in, with all our
■ Offering you the best option available. ■ Working ‘with’ you. ■ Building a working relationship help us achieve our goals. ■ And, most of all it, is about practical solutions.
Gavin Bates
No business owner wants to face
heart. Picking up the phone to call an Insolvency Practitioner is clearly going
all aspects of corporate and personal insolvency, and business recovery. He also helps directors deal with solvent companies and S110 reconstructions and believes that taking earlier advice is the key
to be hard. However, if you are in the position where you think your business may be facing difficulties, making the connection with us as early as possible will certainly be a more positive action than lying awake at night worrying.
Is your business in trouble? Whether you have an urgent financial issue, need a plan to deal with growth, or you simply want an exit strategy, we’re here to help. We’ll give you clear, straightforward and empathetic guidance and support.
Call 0116 2967507 (Leicester), 01926 969000 (Warwick), 02476 0179639 (Coventry) or 01604 263179 (Northampton) Or email us on info@smartbusinessrecovery.co.uk smartbusinessrecovery.co.uk
07583 863195 gavin@smartbusinessrecovery.co.uk smartbusinessrecovery.co.uk
The Business Bulletin
The world moves towards a sustainable economic future
The economy has the propensity to bounce back strongly...it is an outstanding opportunity for more sustainable business models. Stephen Limbert Stephen Limbert Wealth Management Stephen provides wealth management advice to clients throughout the Midlands. He has been working in financial services for 30 years and during this time has gained the knowledge and experience so that you can be confident you are in safe hands in an everchanging complex environment. . 07931 349708 Stephen.limbert@sjpp.co.uk stephenlimbertwealthmanagement.co.uk
10 | Issue 1 â&#x20AC;&#x201C; Finance
I can see blue sky and sunshine from
to have commented that today it
where I sit, no clouds or aircraft vapour
is what life must have been in the
trails. Only occasionally do I hear a
1930s and 40s; shopping locally, no
car on the road, it is beautifully quiet,
cars and much more community
and the birds sing without having to
spirit. It seems we look back to a
compete with the noise of everyday
time when our communities and
life. COVID-19 has brought the world
societies were strong, which largely
to a standstill, well almost.
got washed away in the drive for
A major pandemic has long been predicted, but when, where and how
globalisation and individualism. COVID-19 has taken a terrible toll
it would strike was impossible to
and will leave a very deep and lasting
say. It seemed to be the stuff of TV
impact on us, but I am optimistic it will
serials, not real life. People Iâ&#x20AC;&#x2122;ve spoken
also lead to many positives. Perhaps
The Business Bulletin
we are getting a glimpse of the shape
central bank to help push for more
those in the supply chain wherever
of things to come as the world moves
sustainable business models and to
they are in the world, and this is very
towards a sustainable economic future.
invest in environmental sectors. In
much under the spotlight. One thing
time, as we emerge from lockdown as
COVID-19 has done is bring people
COVID-19 recedes, I am hopeful that
together – life has been put ahead
ESG will become more centre stage for
of the economy. If these sentiments
investors – a key aspect of it is “social”;
continue, we may be witnessing a
how companies interact with society
fundamental change in what society
and treat their employees, including
values most.
Staying Clean There have been numerous media reports about the drop in pollution – satellite images from around the world show air quality is much improved. In Bristol pollution levels have fallen by 40% (source: National Centre for Atmospheric Science) and the air is noticeably cleaner most of which is down to a reduction in traffic. This plays into a major theme running through Environmental, Social and Governance (ESG) criteria for investing – the decarbonisation of the economy. A visible aspect of this is the electrical vehicle replacing combustion engines. The drive to electric vehicles is very much underway, but this period of lockdown could well add extra impetus to this move. Power generation is another area where change is progressing well. In 2019, 75% of new power capacity built worldwide was renewable
What is ESG? Environmental, Social, and Corporate Governance (ESG) refers to the three central factors in measuring the sustainability and societal impact of an investment in a company or business. These criteria help to better determine the future financial performance of companies (risk and return) and allow investors to make a choice based on this assessment of a company. Environmental Concerns This looks at the impact a company has on the environment and what actions it is taking to reduce things like: ■ waste and pollution
■ deforestation
■ resource depletion
■ climate change
■ greenhouse gas emissions
(source: International Energy Agency) and with the UK experiencing nice weather recently, some households on renewable tariffs are being paid for the power they generate. Whatever the economy does, the sun still shines and the wind still blows.
Looking to the Future The damage to the global economy will be extensive and people will need and want to get back to work
Social Concerns This looks at the relationship that companies have with other businesses, how they treat their staff and its engagement with communities. Considerations are: ■ employee relations & diversity ■ funding within local communities
■ working conditions ■ health and safety ■ conflicts of interest
as quickly as they can. Many will have
Corporate Governance Concerns
been made unemployed and not
This is concerned with the internal company affairs and its relationships
helped by the gig economy in which
with employees and the shareholders. It covers:
worker rights are few. Most government
■ tax strategy
■ corruption and bribery
businesses through this. Just how well
■ executive remuneration
■ board diversity and
will they work we simply don’t know at
■ donations and political
support packages are designed to help
this stage. The economy I think has the propensity to bounce back strongly but it is also an outstanding opportunity
lobbying
structure ■ Source/further information: Market Business news
to use financial support packages and
Issue 1 – Finance | 11
The Business Bulletin
Credit searches and the impact on your credit score More people are looking at credit solutions to help their businesses navigate these unprecedented times I thought it would be helpful to understand the different types of credit search and the impact of each on a credit rating.
What is a credit search? In simple terms searches, or credit checks, as they are sometimes called, are when someone looks at your credit report to find out about your borrowing history. There are two types of searches, known as soft searches and hard searches, it is important to know the distinction between the two
Sometimes other types of companies
when a lender takes an in-depth look
report, such as a potential employer
at your credit report and associated
or landlord, if they want to see how
credit score. This type of credit check
well you handle your finances. Debt
leaves a mark on your credit report,
collection agencies may also check
for 12 months, there are exceptions
your credit report if they’re trying to
to this which I will come back to.
find out more information about you.
The prospective lender can not only
Now we have looked at who could
of these as the impact they have on
ask to see your credit report, I want
your credit file is quite different.
explain the two different types of
A credit report allows potential lenders to look at your credit history, with your permission, to enable them to decide on whether or not to lend to you. Lenders will use your credit report to assess the level of risk they will be undertaking. The things they will look at include some obvious ones: for example if you’ve paid back your debts in the past, how you’ve paid it back, was it on time or were some of the payments late. They will also look at how much debt you currently have. All of these factors will give you a credit score, which they will look at too, but since a credit score only gives an indication of what’s in your credit report, they won’t use this alone to make a lending decision. It won’t always be lenders that want to look at your credit report.
12 | Issue 1 – Finance
A hard search, on the other hand, is
may ask your permission to check your
see what credit you applied for, but
checks that can be carried out on your credit report, and which of these might affect your credit score. Firstly, the soft search. This is a preliminary credit check. It means a lender will search for some information about you, but will not see all of your credit report information. These types of credit checks are only visible to you. You can have unlimited soft searches on your credit report without it having any impact on your credit score. You can see these on your credit report for 12 months. Soft searches include when you check your own report, when your report is accessed for the purpose of an identity check, or when a lender wants to show you your eligibility for a new financial product (always check this carefully, to avoid a mark on your report).
Wendy Tate Bean Counters Bean Counters is a forward thinking Accountancy practice, specialising in Xero Cloud-Based Software and have been a Xero certified practice since 2014. Whether your business is new or old it needs efficient accounting services for growth and sustainability, we offer an outsourced accounting solution tailored to your needs. So speak to us about your bookkeeping, payroll, VAT and compliance needs. 07810 562295 wendy@bean-counters.co.uk bean-counters.co.uk
also whether you were accepted. As previously stated most hard searches stay on your report for 12 months. However a debt collection search is visible for a period of 2 years. Some of the common reasons for a hard search on your report include but are not limited to: ■ Applications for a loan, a credit card, or a mortgage. ■ Opening a new utility account ■ Changing mobile phone contracts.
If you make too many applications for credit in a short period of time, this can have an even greater impact on your credit score
It is important to check with your provider to find out whether they carry out soft or hard checks on your account, as a hard search will have an
current debt. Even though this may
before you apply, knowing which
impact on your credit score. However
not be the case in reality, this makes
product you are likely to be accepted
as long as you keep borrowing
you appear to be a riskier person
for, will enable you to make smarter
responsibly, then this impact should
to lend to, which may mean you’re
decisions about which products to
only be short term.
rejected for credit altogether, or you’re
actually apply for, and which to avoid
only offered credit at a higher interest
altogether. Eligibility checkers only
for credit in a short period of time,
rate. Frustratingly, you won’t know
use soft searches so you can do this
this can have an even greater impact
the exact interest rate or credit limit
as often as you need to and some
on your credit score. Having several
you’ll be offered until the hard search
lenders will also show you the credit
hard searches carried out in quick
has been carried out on your credit
limit you’re likely to get offered before
succession may appear to anyone
report, which isn’t at all helpful if
you apply, which means you can also
looking at your credit report that
you’re trying to avoid making multiple
make applications based on products
you’re desperate for credit, or that
credit applications. There is a solution
that you know are likely to give you
you’re suddenly struggling with your
to this — use an eligibility checker
the credit limit you want.
If you make too many applications
Issue 1 – Finance | 13
The Business Bulletin
Maintaining healthy cashflow Cash is king. knowledge is power. You wouldn’t believe the number of business owners we meet who misunderstand the concept of cashflow. They often confuse it with turnover.
■ bank transfer
Surely, if your business is busy and
The tradition of 14, 30 or 60 days
you’re sending out loads of invoices,
goes back to the days of supplying
then your cashflow will be great.
goods for re-sale, otherwise known
That money will just flow in. Hmmm
as retail. It made sense to allow the
■ via Direct Debit
… are you sure? Think again. What if
retailer some time to move some of
your lovely, friendly customers aren’t
the stock through before demanding
■ processing card payments
quite so lovely and friendly when it
payment. But look at your own
comes to paying their bills? What
sector. Surely, if your client reaps
happens when it’s time for you to
instant benefit from your goods
pay your bills – from your suppliers
or services, why give them time to
or utility companies … and there’s no
pay, just because it’s the tradition?
money in the bank?
Provided they know from the outset
When you lie awake at night, wondering when (or if even) those customer invoices will be paid, that’s when you’ll realise what cashflow is all about … and why it’s so important.
Here are few tips to keep the cash coming in
what your terms are, they’ll have no
that you offer options. Make sure
move on the payment terms without losing any margin.
clients. Do you have a repeat late payment offender on your books? Then you could try shortening your payment period.
invoices within 30 days, but you’ve allow all your customers a generous
Make it easy for your clients
60 days.
If you make your payment terms easy, you’re more likely to be paid
standard payment terms. Do you
on time. Offer your clients a range of
really need to give any credit at all?
ways to pay –
14 | Issue 1 – Finance
your clients will appreciate the fact
to accept your prices, you can then
based on what you know about your
Think carefully about your
These might not all suit you, but
If your new client steadfastly refuses
When setting up contracts for your
if you agree to pay your suppliers’
■ Paypal
have something to negotiate with.
Try setting your payment terms
suppliers. Imagine the trouble ahead
online
for immediate payment, you now
Set your terms … clearly
terms you’ve agreed with your own
over the phone, in person or
cause to complain. Also, by asking
Know your client
clients, keep in mind the payment
■ by cheque
Matthew Goude Zinc Books Matthew is a chartered accountant and tax advisor based in Northampton. By taking the time to understand client’s short and long term objectives, Matt is able to provide solutions and advice to help meet those objectives. Zincbooks has invested heavily in the latest accounting software in order to make clients’ lives easier and to give them time back. 07498 202281 info@zincbooks.co.uk zincbooks.co.uk
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that the options are detailed on your invoices, as well as a description of the services or goods supplied. Get yourself organised The sooner you invoice, the sooner you get paid. Why wait for a particular day in the month when you send out all your invoices? You’re just slowing your business down. Ideally, as soon as you’ve completed work or supplied the goods, send the invoice out. Your bookkeeper will help you to set up an efficient system for sending out and keeping track of your invoicing.
It’s far easier to ask for payment (and chase it) if you know who in the accounts department makes the decision.
Build relationships Get to know who makes the payment decisions in your customer’s business. It’s far easier to ask for payment (and chase it) if you know who in the accounts department makes the decision. They’ll see you as a real person, rather than just a name in their inbox or on the top of an invoice. This way you’ll find it easier to send polite reminders about payment. If chasing payments really isn’t your thing, talk to your bookkeeper. It could be that invoice chasing is a service they offer. Alternatively, you could go to a factoring house, who will pay you when your invoice is issued and then do the chasing themselves. This way you’re guaranteed to get your money promptly, but, of course, there will be a cost for you to weigh up. Act now Between them, Brexit and the Coronavirus pandemic have made the economy more unpredictable than ever. Now is a key time to keep your cashflow robust. So – if you’re unsure about your control over cash, don’t lie awake at night worrying. Act now! It’s always worth speaking to a specialist who understands all the implications – your accountant.
Issue 1 – Finance | 15
The Business Bulletin
What superpower would you have if you could? As a direct result of this, The
evasion. It is not aimed at those who
Association of Business Recovery
have missed the payment deadline
Professionals estimate that future new
for this month’s PAYE (provided you
lending by banks will be £1 billion
do still pay that is) or your overall
less, making recovery and turnaround
circumstances demonstrate, as a
harder. To make things worse, the
director, you have acted honestly and
ability to use a formal insolvency
fairly to creditors as a whole.
vehicle (such as a company voluntary arrangement) may no longer be a
Invisibility? Being able to fly? Teleportation?
viable option as the unpaid taxes rank
Or how about being able to re-write the
likely there will be a significant HMRC
law to suit yourself and ensure you are
debt as generally HMRC are the first
always on the right side? That’s exactly
creditor businesses and individuals
what the government has done with
stop paying – indeed this is one of
two measures in the Finance Act 2020.
the Government’s main reasons for
The first is the position where HM Revenue & Customs rank for
ahead of the general body of creditors, reducing the amount available to unsecured creditors. Furthermore, it is
introducing the measure. The second new measure contained
dividend purposes. For insolvencies
within the new law is where HMRC
commencing after 1 December
can issue personal liability notices
2020, HMRC shall rank as a secondary
against company directors following
preferential creditor for the majority
tax avoidance and evasion penalties
of taxes owed by the insolvent
and repeated insolvencies. There are
party where that party has acted
various conditions which must be
as a collector of taxes. This includes
met before HMRC can issue personal
PAYE, VAT, CIS and employee’s NI
liability notices, but all involve scenarios
contributions (but not any penalties
where the company is insolvent (or
associated with those debts).
likely to be). In the tax avoidance and
“Secondary preferential” means their preferential status ranks after existing preferential claims (generally employee claims for wages and accrued holiday pay) but in priority to the holder of floating charge security. HMRC will remain an unsecured creditor for other taxes including corporation tax and employer’s NI contributions. To
evasion cases, the directors can be held liable for all of the tax avoided (and any penalties as a result). However, in the circumstances following repeated insolvencies, the directors can be held liable for debts of the failed companies as well as for any future tax debt of a new company. Before you come over all Lance
summarise, HMRC have therefore
Corporal Jones (Don’t Panic!) this
jumped to pretty much the top of the
legislation is aimed at those who act in
priority order in one fell swoop.
a deliberate manner of tax avoidance/
16 | Issue 1 – Finance
Having said that, the key message that should be derived from this legislation is if you feel there is an increasing difficulty in managing the company tax affairs or liabilities as a whole, then seek early advice. Creditors, including HMRC, are generally understanding where they learn of a possible issue at an early stage rather than wait until the need for enforcement procedures commences. In addition, the earlier advice is sought the more options there are available.
Jamie Cochrane PBC Business Recovery PBC is a specialist business rescue and insolvency practice that provides practical, helpful advice with financial problems. Our approach is friendly, professional and effective and has resulted in us becoming a trusted and respected firm in the business community. 07525 807225 jamiecochrane@pbcbusinessrecovery.co.uk pbcbusinessrecovery.co.uk
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The Business Bulletin
Top tips for preparing your own tax return As a business owner, a Self Assessment Tax Return is something that you will be required to complete each tax year to declare your income (and pay over any tax owed) to HMRC.
Many individuals and business owners
■ If you have untaxed income
prepare and submit their own tax
such as: money from renting
returns directly to HMRC. If you haven’t
out a property; tips and
done so already, now is the time to get
commission; income from
your 2019/20 tax return prepared and
savings, investments and
submitted well before the 31st January
dividends; foreign income
2021 filing deadline.
Who needs to complete a Self Assessment Tax Return? You are required to complete a tax return if in the last tax year (2019/20) you were: ■ Self employed as a ‘sole trader’ and earned more than £1,000 ■ A partner in a business partnership ■ A director of a Limited company ■ An employee or pensioner and earned over £100,000 ■ Owing Capital Gains Tax from selling assets ■ Claiming child benefit and you or your partners income was over £50,000 ■ Living abroad but receiving an income in the UK
18 | Issue 1 – Finance
Please note that it is your responsibility to make sure you notify HMRC of any changes in circumstances and to make sure you declare all taxable income each year. If you have received a notice to file a tax return you must complete it regardless of whether you owe tax or not.
Ruth Chettle Canary Accounting After spending the previous 12 years working in a number of Northamptonshire practices, Ruth decided to take the leap and set up her own practice in January 2020. Specialising in looking after individuals and owner-managed businesses her aim is to make accounting and tax less stressful, more affordable and
Here are some of my top tips for preparing your own tax return:
make things as easy for you as possible. 07805 973447 ruth@canaryaccounting.co.uk canaryaccounting.co.uk
Make sure you have registered for Self Assessment with HMRC
Make sure you have a HMRC
If 2019/20 was the first year you
online services account
needed to prepare a Self Assessment
To file your tax return directly with
tax return you are required to notify HMRC by 5th October 2020.
HMRC you will need to have a HMRC online services account and have
This will allow HMRC to set you up
registered for the Self Assessment
with a Self Assessment record and they
online service. If you haven’t done
will issue you with a Unique Taxpayer
this already, you can register on the
Reference (UTR) number which will be
HMRC website but a point to note is
required to submit your tax return.
it can take up to 10 working days to
receive your activation code by post
Remember payments on account
from HMRC. You will not be able to file
Payments on account are advanced
online without this — so do not leave this to the last week in January! Get your paperwork together
payments of your tax bill. You’ll need to start making payments on account if your tax bill is more than £1,000 (and at least 80% of
Before even starting to think about
your income is from self-employment).
preparing your tax return make sure
Payments on account are made twice
you have all of your information to
a year (31st January and 31st July) to
hand. This might include your P60
spread the cost of next year’s tax. They
(from your employer or pension
are calculated based on your current
provider), P45 (if you have changed
year’s tax bill and are due in two
jobs in the tax year), P11D (if you
instalments – 50% in each one.
receive benefits from your employer such as a company car), bank interest certificates, dividends from investments. If you have self employment,
For example, if your 2019/20 tax bill is £2,000 you will need to pay £2,000 + £1,000 (50% of £2,000) = £3,000 by 31st January 2021 and then a further £1,000 by 31st July 2021. This will
■ Tax deductible expenses (if self employed) ■ Job expenses (if employed) HMRC have also produced a number of videos showing you how to navigate your way through filing your own tax return online. HMRC do have telephone helplines and webchat available if you have any questions but please be aware there may be wait times especially during busy periods. Use an accountant If you have complicated tax affairs or preparing your tax return fills you with dread each year, it may be worthwhile getting an accountant to prepare your tax return for you.
partnership or rental property income
mean that when you come to pay your
you will also need to calculate your
2020/21 tax bill you will have already
income and expenses to include on
paid £2,000 towards it.
but accountants are much more likely
the relevant pages of the tax return.
The biggest impact of payments
to make sure nothing has been missed
on account will be your first year as
and that you have claimed everything
you’ll have a higher bill to pay, so it’s
you are able to claim.
Don’t leave it until the last minute The tax year ended on 5th April 2020 and although the tax return doesn’t need to be submitted until 31st January 2021 (if filing online) that isn’t a reason to leave it to the last minute to prepare. I would always recommend preparing your tax return as early as possible so that you know what your tax bill will be so that it gives you chance to budget for it if needed. Filing your tax return late by just 1 minute will result in an automatic penalty of £100.
Not only will it take the stress away
important to be aware of them! Use the HMRC guidance to do your homework HMRC has loads of help and support on their website on a variety of topics which may be relevant to you so
Know the key dates
it is worth spending some time to familiarise yourself with these. Some areas that would be worthwhile reading up on are:
■ 5th October 2020: Deadline to register for Self Assessment for the first time for the 2019/20 tax year ■ 31st October 2020: Paper tax return filing deadline ■ 31st January 2021: Online tax return filing deadline ■ 31st January 2021: 2019/20 Tax payment deadline and first 2020/21 payment on account due ■ 31st July 2021: Second 2020/21 payment on account due
Issue 1 – Finance | 19
The Business Bulletin
5 steps to exterminate the virus of late payment Struggling with
Struggling with cashflow? Many SMEs
cashflow? Many SMEs
you’re not able to pay your staff or
are. Maybe cashflow is so slow that
are. Maybe cashflow is
yourself a wage – 32% of business
so slow that you’re not
staff on time and can’t pay yourself a
able to pay your staff or yourself a wage – 32% of business owners can’t. If you’re struggling
owners can’t. If you’re struggling to pay decent wage, that’s scary. One of the top reasons for business failure is slow cashflow – all too often because clients haven’t paid their
could be the difference between survival and failure. In fact, it’s so important that you should have a castiron invoicing strategy, contained within your collections or credit control policy. Here are two things you can do right now… 1. Decide how long you’re
invoices. So, what will enable you
prepared to wait to get your
to get paid on time? Here are a few
invoices paid.
to pay staff on time
pointers that will help…
and can’t pay yourself
The crucial importance of invoicing and how best to send them
It’s always best to send your invoices
The most important document in your
by email, but please make them easy
business is your invoice. Your invoice
for your customer to deal with.
a decent wage, that’s scary.
20 | Issue 1 – Finance
2. Create a simple collections policy for your business to make getting paid as important as making a sale.
The Business Bulletin
1. Create your invoice on the day
your customer to find it, they probably
your work is completed and
won’t bother to look for it, so you can’t
email it the same day.
afford to mention it somewhere or
2. Use the subject line wisely by using it for the invoice details. 3. Make sure you know who needs to receive the email.
Creating invoices that are 50% more likely to be paid on time Recent studies show that around half – 49% of invoices are issued with errors. That’s unforgivable and guess what? Invoices with errors may never be paid unless you spend lots of time and effort sorting them out…
other, you simply have to ‘smack them in the face’ with it. You should highlight your terms of business AND your payment due date.
do right now… 1. Get a pre-invoice checklist sorted and use it – every time! 2. Create a ‘Knock-Out’ invoice for your business and use it – every time.
errors, it’s almost certain your customers won’t call to let you know!
People are more inclined to react in a
You will find out eventually. But
certain way if you make things easy for
only when you call to chase up a late payment, which means you’ll spend even more time correcting the error. As film director Michael Cimino once said, “If you don’t get it right, what’s the point?”. ‘Knock-Out’ invoices don’t have errors. ‘Knock-Out’ invoices get paid sooner. Here are two things you can do right now… 1. Work out and write down the 5 key things you need to change to make sure you send out only 100% correct invoices. 2. List the 5 key benefits of a ‘Knock-Out’ invoice.
them. And paying for their goods and services is no different. Preferably, you should always ask for payment direct to your bank as this saves you time and money. Don’t forget to list all the bank information for your customer. You should also list any other payment methods you offer, with full details. If you get this right, you’ll be covering the “We didn’t know how to
Believe it or not, there are still many invoices being sent out with no mention or indication of when the money is due to be paid. And even when the information is there, it’s not always easy to spot. If it’s difficult for
Gary Thorpe has over 40 years’ history and experience in business management, marketing, sales management, credit management, debt recovery and customer service. Armed with this track record, he is able to help you manage your cashflow ensuring that you get paid on time and can better manage your credit control systems; including debt management and recovery. 07963 766052 surgery@debt-doctors.co.uk debt-doctors.co.uk
on Time’ strategy and you have perfect invoicing; this call will enhance your reputation as a customer service hero. But even after you’ve done everything right, there still may be an occasion where you uncover a query or an invoice needs amending. And invoices with queries don’t get paid. By using a courtesy call as part of your strategy, you will get to know
pay it” excuse.
before the invoice is due for payment
How ‘customer care’ before the due date, can save you time & money
it being ‘Paid on Time’.
To be good at collections, you need to stop thinking like a collector. This may seem counter-intuitive but think
Is your customer fully aware of the invoice due date?
Debt Doctors
Here are two things you can
Make it easy for customers to pay you – FAST
…And if your invoices do have
Gary Thorpe
about it this way… …Would you rather make a Courtesy Call or a Collections Call? Your courtesy call is made before the payment is due and enables you to ask the important question… “Is everything OK?”
if there is a problem that will prevent
Exterminate the virus of late payment This is just a simple customer service process, that will make you or someone in your business, a champion of collections. These 5 simple steps will improve your cashflow and improve your business, so you’ll always be able to pay yourself and all your expenses. And your business will grow.
This really is a win-win situation because if you’ve implemented a ‘Paid
Issue 1 – Finance | 21
The Business Bulletin
The
Business Bulletin
Do you have something to say? Are you considered an expert in your field? Then why not submit an article for inclusion in a future edition of The Business Bulletin?
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22 | Issue 1 â&#x20AC;&#x201C; Finance
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The Business Bulletin
The state of play of business lending heading into the second half of 2020 This article would have looked vastly different if I had penned it at the start of 2020! At that time, I would have been talking about a (relatively) booming economy and a very buoyant lending marketplace due to the growth of the peer to peer marketplace and challenger banks offering a real viable alternative to the traditional High Street Bank.
James Blacklaws JB Commercial Finance James, an ex-banker, is a highly experienced and fully Independent Commercial Finance broker, authorised and regulated by the FCA. With whole-ofmarket access. He specialises in helping businesses declined by their banks; businesses looking to grow, survive and
The COVID-19 pandemic has changed all this!
and The Bounce Back Loan (BBL).
Now, the marketplace is dominated
Governments wider stimulus program
by the Government backed loan
to help manage the COVID-19 crisis
schemes – The Corona Business
and was designed to offer 40+ lenders
Interruption Loan Scheme (CBILS)
Government guarantees to enable
The CBILS scheme was launched on the 23rd March as part of the
purchase commercial property. 07722 432128 james@jbcommercialfinance.co.uk jbcommercialfinance.co.uk
Continued on page 24 »
Issue 1 – Finance | 23
Business Bulletin
point of the facility, which is
The CBILS Key Features
to support otherwise viable businesses struggling with
■ For loans up to £5m and terms up to 72 months (a recent announcement has increased this term to 132 months but details are still flimsy at the time of writing) ■ Government cover the interest payments for 12 months ■ No personal guarantees for loans under £250,000 ■ No arrangement fees to apply
COVID-19, not prop up already failing ones. ■ Using the funds for a purpose other than for the benefit of the business. This may be for a personal asset or for a property purchase. This is a technique actively encouraged by several
■ Business must be proven to be viable post COVID-19
property ‘gurus’. It seems that HMRC have finally
them to release funds at preferential
considerably speeds up the
interest rates with various benefits
due diligence process)
attached to these loans which allows businesses to continue to trade throughout the crisis. The number of lenders on this approved panel is now over 100 (as of September 2020). Rather predictably, this initially proved to be very attractive to SME owners. But, after a month, approval rates were very low (under 10% of enquiries) and many business owners were aggrieved at poor turn around times and onerous underwriting conditions from Banks. In response to this failure, The Bounce Back Loan was introduced by The Chancellor, Rishi Sunak in late April and went ‘live’ for an initial sixmonth period in May. This has now been extended, along with the CBILS until the end of 2020. Its key points were broadly similar to the CBILS but the key differences were as follows: ■ Loans from £2000 to £50,000 for UK based businesses (CBILS now £50k+) ■ Available from initially 40+ lenders ■ A fixed interest rate across all lenders of 2.5% per annum ■ No forward viability assessment required to demonstrate serviceability of the loan (a key difference to CBILS which
24 | Issue 1 – Finance
realised the potential exposure to the Treasury and made a commitment to prosecute if the scheme is misused.
■ A business may borrow up to 25% of their turnover to the limit of £50,000 ■ Government to guarantee the full debt for the lender (up from 80% for the CBILS)
The questions remain ■ Has the horse already bolted? ■ Will resources realistically be available to investigate
It was clear that this product was
fraudulent applications bearing
aimed at the smaller end of the SME
in mind the numbers involved?
marketplace and, with the significantly reduced due diligence, it emphasised speed as the priority rather than quality of applicant. To date, over 1 million businesses have taken advantage of the BBL with over £30bn guaranteed by the Government under this scheme alone, and while a majority have taken the finance in good faith, the lack of due diligence and selfcertification of the underwriting process has led to accusations of fraud. There are several ways in which the information under application process or using the funds granted under the BBL could potentially been seen as fraudulent: ■ Falsifying trading turnover when applying to borrow more than you would otherwise be entitled to. ■ Not declaring the business
Time will tell. It seems that Banks and HMRC are already braced for the worst with significant bad debts expected from the scheme. Outside of the Government schemes, the marketplace has changed considerably and may take several years to return to a form of what was previously seen as normality Many peer-to-peer lenders have become exclusive CBILS lenders. This includes The Funding Circle who have been responsible for £6.2bn to 57,000 businesses in recent years. This is a move by these lenders to ensure survival with Government-backed loans making up for the expected increase in defaults and write-offs expected in the market postCOVID-19. The High Street Banks have a significantly reduced lending appetite, especially in relation to considering
was in trading difficulties on
requests from new clients and this,
December 31st 2019 – a key
combined with their focus on the
Government schemes has severely restricted options for clients looking to move banks or take
JB Commercial Finance
on new finance which sits outside the remit of CBILS or the Bounce Back Loan. Despite this, there are still options for client looking to grow in this marketplace. In the absence of â&#x20AC;&#x2DC;traditionalâ&#x20AC;&#x2122; lenders, many have moved to towards lenders previously in the secondary lender, or alternative lender space. Due to this, many lenders operating in this marketplace have seen an upturn in enquiries as
Does your business need cashflow finance?
they fill in the gaps previously held by the High Street lenders. While this is positive as it keeps the market alive, there are medium- and long-term concerns over the lending marketplace. Potential bad debts arising from the Government loan schemes, plus the time taken to investigate them, will inevitably have an impact on the future viability of
Are you looking to buy a commercial property and require funding?
commercial lending for the Banks. While it is impossible to predict the future I do believe we are likely to see a significantly reduced lending appetite for the SME marketplace from Banks along with stricter pricing. It is also likely that lending appetite to certain sectors, primarily
Has your bank turned your business down for finance?
commercial property investment and retail, will continue to reduce, leaving many of those who operate in these sectors on their own. For any further questions regarding anything discussed in this article or in relation to the business finance marketplace, please get in touch.
Dont know where to turn for business funding?
Useful links British Bank: CBILS scheme Mortgage Solutions: Landlords look to bounce-back loan scheme
Call JB Commercial Finance for a free initial consultation
The Times: Property guru uses BBL to snap up property Yorkshire Post: Misuse of schemes could lead to prosecutions Funding Circle FT.com: UK Banks warn over 40% of loans could default
Telephone: 0116 3440 322 Mobile: 07722 432 128 Email: info@jbcommercialfinance.co.uk Website: www.jbcommercialfinance.co.uk @jbcommercialfinance
James Blacklaws
The Business Bulletin
Spotllight on…
Spotlight on Roger Eddowes
Roger Eddowes of Essendon Accounts & Tax – a leading accountancy practice in Bucks and the surrounding area – shares his journey, what makes his practice different to the competition and also what impact the COVID-19 pandemic had on his business – both staff and clients.
So how did you get into your
So I went back to college and
position. It was just by chance one
business? When did you start it and
started the accountancy exams and
day I was reading the accountancy
how did you end up in this industry?
looked around for some work as well,
rag and noticed that there was an
I actually started my working life as
because the course was part time. I
opportunity going in Towcester in
ended up working for small family
South Northants. There was a retiring
businesses in a Market Harborough
accountant who had been let down
who understood my position given my
by his successor.I went for a chat and
illness and were very kind supporting
before I knew it, I was in the building
me with getting qualified.
taking over his client portfolio and
a quantity surveyor (QS) and you can imagine I like numbers! I enjoyed my time as a quantity surveyor – it only lasted about two years, as in my early twenties I became ill. As I was coming out of that illness, it was right in the
I’m quite a loyal person, so I
recession of the early nineties. The
stayed with them for a few years
construction industry was dead and
after getting qualified; to pay them
QS jobs were disappearing and there
back for the investment they put in
was no chance of me ever getting
me. Because it was a family firm, I
back into a suitable role.
was never going to get to the top
26 | Issue 1 – Finance
finding myself self-employed running a business! So it all happened quite quickly; that was back in 2004 and time’s flown by. Like all these people who become self-employed, you don’t look back –
I love what I do. I love helping my clients seeing those clients thrive and getting through the bad times as well as good aspiring to some of that of course!
give them full time support with all
Seriously, one thing that taught me,
their processes and systems; but I can
particularly around my illness, was the
effectively be a non-executive director.
amount of support I got from everyone: family, friends and the people who gave me my first job in accountancy. That business had several clients who they treated almost as part of their family - it wasn’t just about doing the numbers. I’ve always wanted to give something back and they taught me how to look after family businesses; notice the foibles and things like that that people have. I really wanted to create an accountancy practice where we weren’t just doing the numbers but we were there on the end of a phone guiding and helping them; through I’m probably unemployable now. I love what I do. I love helping my clients. So what’s your “why”? What gets you out of bed in the morning and motivates you to do what you do?
all the good times as well as the bad. At the moment we’ve been going through the COVID-19 pandemic and a lot of clients have not been able to do what they’ve been doing for the last few years and have had to reinvent themselves. They needed
Well - I look back to my childhood
someone there to say to: “Are we
and I always aspired to have my
being stupid? Is this a sensible thing
own business. I could see my friends’
for us to now be doing?”
parents, who were business owners,
I get the satisfaction from being
It’s giving back that’s what I enjoy doing - seeing those clients thrive and getting through the bad times as well as good. You’re known as the Business Godparent – how did that name come about? Well, back at a networking meeting, I was called the “hugging accountant” after I told a story of going out to client who had had a stressful fortnight and the first thing she said when I walked into the building is “I’m going to give you a big hug!” She had been introduced to me by another client. They were friends and they were out for dinner and they were talking about me – all good I trust! – and one of them said: “Oh – he’s a bit like our godparent – he keeps us out of trouble!” They told me about it and I had a lightbulb moment, thinking that is another term we could use for business adviser but wanted to bring in this “caring and looking” after aspects and “godparent” seemed to sum it up.
they had the luxury trappings -
there and giving that advice. I’m not a
expensive cars and boats and things
trained mentor and I don’t profess to
We now do a regular newspaper
like that. So that ticked all the boxes!
be a business coach, and sometimes
called The Business Godparent and an
I’ve always wanted to run my own
these clients need proper business
website: thebusinessgodparent.co.uk.
business and earn a fortune; still
coaches who can go in there and
The idea is that brings in all our
Issue 1 – Finance | 27
Spotllight on…
The Business Bulletin
The Business Business Bulletin Bulletin
Spotllight on… collaborators that we work with as well
provide us with the data - what the
obviously! What I think businesses
– so if you’ve got a small family business,
client wants is someone to interpret
want, particularly at the moment and
you’ve not just got me, but access
that data and help them make those
it’s been highlighted with COVID-19
to marketing, HR, a bank manager –
financial decisions. Accountants
pandemic, that lots of businesses have
anyone a small business needs.
need to embrace all this technology,
been comfortably trundling along and
but they need to learn how to
it’s not been a problem; they would be
Do you think that accountants
communicate it to their clients.
making profits. But all of a sudden, if
need to reinvent themselves in
Here’s an example - I’ve got a
the new world?
chef I look after, there’s no point
Absolutely. And it was an interesting
in me turning up with a 16 page
article I read the other day, it was in
accountancy document telling me
our Institute magazine. Someone
what his profit is or what he spent his
was referring to the change that’s
money on, because he’s not going to
happened in the last five months,
sit in the room for more than a five
saying it was equivalent to five years!
minutes. I’ve got to get my message
Businesses don’t just want a number
over to him in a clear, concise way.
cruncher, we’ve got software and
Accountants need to be able to have
we’ve got all sorts of tools that can
that skill – yes they need to add up
they haven’t got up to date information and advice now, they can’t make a decision for the rest of the year and that might be crucial for them. The day of turning up with your carrier bag full of receipts and 18 months later getting a tax bill is long gone. What has it been like coping with a pandemic from the client’s side and also your employees? From our side, we were prepared for it; for lockdown. At the beginning of
The day of turning up with your carrier bag full of receipts and 18 months later getting a tax bill is long gone
the year I had a detailed conversation with our IT supplier exploring how we could continue to support our clients. In March, we literally just picked up our computers and our telephones, went home and worked from there and we’ve been able to work ever since. Recently we have opened the office having done all the various COVID-19 assessments and putting screens up between people’s desks, as well as having policies about when
28 | Issue 1 – Finance
clients can visit, etc. I took the decision
clients. Actually we got client pressure
get wrapped up looking after everyone
to open up the office and I know a
to open as the clients wanted to get
else but not looking after themselves.
lot of companies haven’t opened, but
out and about as well! Zoom and the
I’ve even done my own tax return!
I noticed that, particularly younger
like are ok – we’ve all heard of Zoom
members of my team, they were
fatigue – and it is not the same as
Given your many years of experience
suffering in lockdown from home.
face-to-face meetings.
working with small business owners
It might be okay for me. I’ve got a nice house, nice garden - I can escape out to garden. But two of my team are
Other than COVID-19 - what’s been the biggest challenge that you’ve
– if you were to give one “top tip”, what would it be? Take a step back and plan. It doesn’t
living in apartments confined within
faced in your business?
four walls. They can’t detach or find it
Time to be honest. It’s trying to plan
whatever you do, you need to plan
difficult to detach work from leisure.
your time to cope with running the
your finances around it. If you need to
It was all becoming blurred and that
business and the numerous clients that
make investments, then look at your
was affecting productivity and just
you have to look after. It’s very easy to
cashflow and work out how you can
their whole demeanour. We opened
get carried away looking after your own
support it. Likewise with any bills that
the office as quickly as we could, but
clients and you forget about your own
are coming up, don’t let them catch
obviously as safely as we could. We are
business. I now have Friday mornings as
you by surprise – manage the finances
fully open throughout the week but
a “Roger sorting out type day”! This time
in your business. Don’t bumble along
don’t have everyone in at the same
is ring-fenced for me to focus on the
hoping for the best!
time, so we’re there to respond to our
business needs. I think a lot businesses
matter what your business is,
Like what you have seen? Spread the love and share!
Spotllight on…
The Business Bulletin
The Business Bulletin
How to choose your accountant Whether you are relatively new to the world of business or have been trading for many years, it’s important to make sure you have a good accountant in place to advise and support you. But there are a lot of accountants out there, so how do you know which one is right for you?
There are many factors to consider
if they don’t that should ring alarm
what business entity is most suitable
bells straight away).
for you such as a limited company, a sole trader or partnership. A good accountant will be able to advise on this, so get them on board as soon as
Paul Marks Michael Paul Accountants Paul specialises in onsite services for our clients in particular management accounts preparation, accounts software implementation and training, VAT returns and general business advice. 07761 465120 paul@mpaccountants.co.uk mpaccountants.co.uk
should offer a free initial meeting (and
when starting up in business, including
possible to make sure you are getting the best advice right from the off. So, you are ready to find yourself
It’s very important to have an accountant that you feel you can build a rapport with, after all they will hopefully be supporting you and your business for many years to come. Visiting their premises gives you a chance to get a feel for them
your first accountant or need to find
and at this point in the process, you
a new one to replace your existing
are very much relying on gut instinct.
accountant. But where do you start?
How professional do they seem, how
If possible, I would always start by talking to people you trust who already have an accountant and asking if they would recommend them. If you
approachable are they, do they make you feel comfortable and as if your business is valued. Alternatively, you could arrange
don’t have anyone to ask, then you
a video call but (and call me old
might just have to rely on a Google
fashioned) I still think a physical
Before we get to the nitty-gritty of
search. If you are using accounts
meeting is better in the first place.
how to choose an accountant, if you
software, you could also check if they
Even if you never actually meet them
are just setting up in business then
have a directory of accountants who
in person again.
it’s important to say that you should
are knowledgeable in their software.
appoint an accountant as soon as
When you have your shortlist of
accountant is very important, however
possible. Don’t leave it until you have
potential accountants (I would suggest
you also need to make sure they
been trading a while and need your
considering at least 2 or 3 to start with),
know what they are doing. Many
first set of accounts preparing.
go and see them at their office. They
people don’t realise that anyone can
30 | Issue 1 – Finance
Feeling comfortable with your
The Business Bulletin
set themselves up as an accountant, even if they have no accountancy
To summarise
qualifications whatsoever. So, ask if they are qualified and who their governing association is. If you are still unsure then ask for a couple of their client’s details who you can contact for references. Any accountant worth their salt will always have clients who are more than happy to be contacted and sing their praises to potential new clients. Once you have got a general feel for your potential accountant and have found out whether they are professionally trained and qualified there are a few other specific questions worth asking: ■ Find out who is your point of contact. Particularly with a large firm of accountants, the person you see initially may not be the person you will be dealing with, so ask who will be. There is nothing worse than contacting your accountant and speaking to a different person every time who doesn’t know you or your business. ■ Ask for a timeframe of how quickly they will turn your accounts around. Don’t expect anything too unrealistic though. If they say they will do them as soon as you provide them with the records, then I
■ If possible, get recommendations from other business owners ■ Initially go with your gut instinct. Does this accountant feel like someone you can communicate with and build a good business relationship with? ■ Make sure they know what they are doing. Are they qualified; can you get a testimonial from an existing client? ■ Make sure they are clear and upfront about their charges but be prepared to pay a fair price would question whether they
be paying over the odds. However,
are being honest. Accountants,
be careful, a cheap accountant will
unless you catch them at a
probably be cheap for a reason. It
very quiet time, will have other
doesn’t take long to just take the
clients work to do as well as
figures from a client and produce a
yours.
set of accounts without any thought
■ Following your meeting make sure you get a written quote for all the services you require. Confirm with your accountant that this covers everything and there are no hidden charges or extras. There may be occasions where your accountant may need to carry out extra unforeseen work for you. Confirm with them that in this situation they will inform you first and let you know how much this is going to cost before they proceed. Finally, price is an important consideration and you don’t want to
or consideration. A good accountant will be doing more than this. They will be taking the time to review the figures and questioning whether they look right. Does the bank balance agree to the bank statement, are there any costs which the client could be claiming but aren’t? Are there any outstanding sales or purchases invoices which should have been paid, and if so, then why? Have they been duplicated or has the client forgotten about them? This is a very important role of your accountant and can end up saving you money and keeping you out of trouble but be prepared to pay a fair price for it as this all takes time.
Issue 1 – Finance | 31
The Business Bulletin
What is an Equity Release and should I consider one? Equity Release a way for homeowners over the age of 55 to unlock some of the money (the equity) that is within the value of your home. You don’t need to have fully paid off your mortgage to do this, but you will need to repay any existing mortgage from the money released. As a rule, you can take the money you
loan. This may be at a fixed, capped or
release in one lump sum, or in several
variable interest rate.
smaller amounts. The amount released is yours to spend on what you want. Common uses would include, repaying the remaining amount of a traditional mortgage, home improvements, repaying debts, helping children on to the property ladder, a once in a lifetime holiday or just to provide money to top up income.
Whereas, with a Home Reversion plan a provider pays you a tax-free lump sum for a portion of your home value. You can then live in the property (rent-free) until you
In simple terms, you borrow money against the security of your property. Normally interest is added to the loan and is repaid when the property is sold. Generally, on death or if you move into Long Term Care. Equity Release comes in two forms, lifetime mortgages and home reversion plans
Cathedral Independent Financial Planning
are split based on the percentage you own and the lender owns. So, if your property value rises significantly in value your beneficiaries will only
How does Equity Release work
Mark Chapman
die. When it’s sold, the proceeds
receive a fixed percentage. Therefore, with lifetime mortgages
Mark has over 30 years experience as a financial adviser. He offers independent financial advice to individuals and corporate businesses; whilst providing a friendly, efficient and professional service.
you know the amount owed with
07780 610363
interest, generally home reversion
markchapman@cathedral-ifa.co.uk
plans are better if property prices stay
cathedral-ifa.co.uk
flatter, worse if they rise substantially.
What are the advantages and disadvantages of Equity Release?
what’s more, you can take your money as a single lump sum, in several smaller chunks as regular income giving you more flexibility.
Advantages:
Flexibility
common type of equity release
Financial options
One of the most popular reasons
plan, there are typically no monthly
No one tells you what you can or
people choose an equity release plan
repayments to make. Your equity
cannot do with your money. Whether
release plan is only repaid through the
you want that new kitchen or holiday
sale of your property when you die or
you’ve always dreamed of, or want
move into long-term care. Here you
to help your children buy their first
borrow some of your home’s value, at
home, it’s up to you how you spend
an interest cost which is added to the
your cash. Your money is tax-free and
A lifetime mortgage is the most
32 | Issue 1 – Finance
is because they are so flexible. For example, if you take out a lifetime mortgage, what you use your money for is entirely your decision. It’s also possible to release your money as and when you need it via a
The Business Bulletin
drawdown scheme, rather than in one
chunks over time (what’s known as
make sure that you are aware of all
lump sum. Moreover, you can reduce
drawdown) or by making regular or
the potential pitfalls of equity release.
the amount of interest accrued in the
one-off capital repayments: or both!
If it isn’t right for you and you have
long term by releasing less equity, less
With Equity Release Supermarket, you
other financial options to achieve your
frequently or, if your income allows,
can be sure that your local adviser will
goals, we’ll tell you so.
you can make regular or one-off capital repayments. No negative equity guarantee
Equity release tips
All the equity release schemes come with no negative equity guarantees.
If you’ve read the above and you’re sure equity release is right for you,
What does this mean? If, at the time
here are a few tips:
that your plan is repaid, your house is worth less than the amount you owe, your loved ones won’t be expected to repay the difference to the lender – and so they will never be out of pocket.
Disadvantages ‘Roll up’ interest
1. Don’t borrow the full amount you need in one go. The sooner you borrow, the more expensive it is, as the interest has longer to compound. So, borrow as little as you need now, and wait as long as you can to do it again. For example, if you think you may need £40,000 from your home to cover 20 years, only take what you need now and wait to take more until needed. Drawdown lifetime mortgages are set up to make this easier. 2. Wondering whether equity release is a good idea? It certainly
Lifetime mortgages allow
isn’t something to be taken on lightly, so before you dive right
homeowners to borrow money
in, first evaluate whether downsizing your property could be an
against the value of their property
option. If you can sell up and move on to a smaller home, and
at a fixed rate of interest. Because
live off the excess cash you have made, great. You may also find a
many people choose not to make
property more suitable as you age – fewer stairs, perhaps.
any interest repayments over the life of their plan, this means that the interest is ‘rolled up’ and added to the
3. If downsizing is right for you, don’t put it off. You can always take out an Equity Release loan on the new property if needed.
final repayment when the plan ends.
4. Get advice before you do it.
The longer the term of the plan, the
5. It can affect your benefits. Having cash rather than a property
greater the amount of interest that will have to be repaid. As previously mentioned, the
can affect the benefits you’re entitled to, for example pension credit, universal credit and others. So, if you’re entitled to those, check the impact first.
amount of interest to be repaid can be kept to a minimum by either withdrawing equity in smaller
Issue 1 – Finance | 33
The Business Bulletin
Early repayments charges
important to you, make sure you talk
been for a number of years – yet
Lifetime mortgages are so-called for
this through and any inheritance tax
still higher than those for most
implications with your Equity Release
standard mortgages. (As the lender
adviser.
is committed to lend you the money
one very good reason – they are not designed to be repaid during your lifetime. Consequently, plans can potentially have hefty early repayment charges if you want to repay it early. That said, many recent plans come with fixed-term early repayment charges, which means that a few years in, you have the option to repay without significant penalties
Equity Release – what are my options if I’m under 55? These types of loan are not available under age 55, so you would need to explore a traditional mortgage/remortgage to potentially release any
for your lifetime, so they do not know when they will get it back.) Generally, the lower the amount you borrow as a percentage of the value of the property, the lower the rate will be. As well as the actual cost of the interest, you’ll have to pay
equity.
arrangement fees. These can typically
Reduced inheritance
tally £1,500-£3,000 in total, depending
reduced inheritance for loved ones.
What are the costs in taking out an Equity Release Plan
That said, it is possible to safeguard
For the lifetime mortgage equity
any surveyor fees.
a proportion of your property with a
release the rates start at under 3%.
guaranteed inheritance plan. If this is
This is cheaper than rates have
Because equity release reduces the value of your estate, it will mean a
on the type of plan being arranged. This would include such costs as solicitor & application fees, along with
Are you getting the most out of ? We
provide
affordable
outsourced
bookkeeping
solutions as well as Xero training & remote support
enabling you to xero in on your business numbers.
Give us a call, we'll help you get the most out of Xero & a clear view of the financial health of your business
01933 71 72 73 wendy@bean-counters.co.uk
The Business Bulletin
Ask the experts Do you have a burning question that you would like the answer to? Or maybe you’re looking for some advice to help your business? In each edition some questions will be shared and answered by some of The Business Bulletin experts.
If you have a question – then email us and these experts will set about answering it for you. It can be on any business topic you like, be it finance, sales, marketing, operations, resources, strategy or personal development. If you would like a more immediate response, then raise your question on the “Ask The Expert” forum. Q. What is cashflow and how do I go about managing it? A. Cashflow as the name suggests is the money that flows in and out of your business each month. If the cash coming in is greater than the cash going out, your business is probably in good financial health. In short, by looking at cash inflows and outflows across a certain period, you can see precisely where cash has been generated and where cash has been spent. Cashflow should not, however, be confused with your profit, which is
or spent through a company’s main
Financing cashflow: Cash received
business activities, in the case of the
through debt (customers with credit
garage this would be for the MOT’s,
accounts with the garage) or paid
servicing and repairs. The money spent
out as debt repayment, such as a
at cashflow in more detail, it is
on parts, labour etc, compared to the
business loan.
generally broken down into three
money charged to the customer.
areas, namely operating, investing
Investing cashflow: Cash received
manually on a spreadsheet or using
or spent through investing activities,
accounting software the end result is
like assets such as high value tools
a pool of financial data which reveals
and equipment purchased for use in
cash situation of your business.
the business or investments in other
Wendy Tate Bean Counters
the surplus you’re left with at the end of accounting period. When companies start to look
and financing activities. Here’s a quick look of what that would mean in practice from the perspective of a local garage. Operating cashflow: Cash received
business ventures.
Whether transactions are entered
Issue 1 – Finance | 35
The Business Bulletin
Q. How can I better manage
profitability per building. The day of
Q. What finance KPIs should
my finances? I currently use
the metal filing cabinet has gone!
I be measuring?
a spreadsheet to manage my
Roger Eddowes
A. The key ones for me would be
Essendon Accounts & Tax
sales, gross profit and net profit. Then
business, are there any free to low cost accounts software packages I could use? A. Yes, there is some great new technology out there and its not too expensive when you put it into context and the time it will save you. You probably should look at not just an accounting package but add on applications. Most people have now heard of Quickbooks Online and XERO and accountants will be able to
Q. I need to cut costs in my business – where do I start? A. I’d always look at going for the big wins first. Where do you spend the most money? Have you approached other suppliers for quotes? When contracts are due for renewal, shop around to get the best deals. Look through everything you pay out – do you still use everything you are paying for? If you don’t use it or it adds no
recommend what’s good for you.
value, get rid!
They are likely to have access to
Ruth Chettle
“partner editions” which are cheaper that the standard licences. They will also be able to recommend bolt-on applications such as Fluidly which will give you three months cashflow projections at no extra cost. The joy nowadays is the integration with other software so you can go paperless. For example many property landlords use Arthur which integrates with Xero and Quickbooks and exchanges data both ways. All of a sudden they can have effectively
Canary Accounting A. I would recommend sitting down
I would be looking at more specific ones for your business. Examples might include: Sales mix which products or services do your sales come from? Is that because you market the popular ones more or people aren’t interested in your other items? Gross profit per sales items – if you have a few products I would want to look at the gross profit of each. This will help decision making to see what makes you the most/least. Likewise if you have different locations you might want to track how each location is performing. If you
and thinking to yourself, if I was to
have stock I would be looking at how
start again what do I actually need
much stock is being held, how quickly
to trade. For example: Do I need a
you can turn stock into sales and how
computer? Probably yes, but do I need
much dead stock is being held.
that subscription or is it a luxury? Once you have identified what you
My final and most important one is cash. Keeping an eye on cash levels
definitely need think about using an
and upcoming cash requirements can
expert to source the product/service.
make or break a business.
Your time is valuable and someone
Ruth Chettle
doing it every day is likely to get the
a CRM system issuing tenancy
best deal more quickly.
agreements, sending out rent invoices
Roger Eddowes
and chasers whilst reporting on
Essendon Accounts & Tax
Canary Accounting
Contributing experts
Wendy Tate
Ruth Chettle
Roger Eddowes
Bean Counters
Canary Accounting
Essendon Accounts & Tax
36 | Issue 1 – Finance
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The Business Bulletin
SME Survey What impact does the current climate have on the turnover and profit for small businesses? Just before lockdown, a survey was
profits to grow, 14.9% to stay the
undertaken of small business owners
same, 10.6% were unsure and 12.8%
asking for information about their
thought their profits would shrink.
historic performance and the future outlook – at the time only Brexit was
Once again, this is not too bad
Get involved To take part in the next
– 76.6% of businesses not being
survey – What marketing
impacted by a profit loss. As all
channels work for you? –
businesses should focus on bottom
visit here: https://forms.gle/
was undertaken to explore what
line profits, this is encouraging given
kqUrVJDMdUjY5gJc8. The
impact the pandemic had in the
all the uncertainty ahead. Even more
results will be shared in the
results. As the survey was anonymous, it
interesting, combining the surveys
next edition of this magazine.
was not possible to go back to exactly
that considered turnover performance
the same people who responded
over last 12 months, the outcome is
first time around. However the same
shown in Figure 1.
upon us. Six months later, a similar survey
demographic was approached.
Here is a summary of the findings. In the initial survey, 77.9% of those surveyed (68 respondents) expected their business to grow over the next 12 months. This is encouraging given that it was just Brexit was looming on the horizon at that time. For the latter survey (47 respondents - see Figure 2), this dropped to 51.1%. However, 25.5% expected their turnover to stay the same (22.1% in the original survey),
This implies, comparing this data from the results of the two surveys, that surprisingly less businesses are expected to shrink over the next 12 months than did in the previous year. One in five shrank historically, but only one in eight are expecting to going forward. And a similar percentage to the most recent survey (73.1% versus 76.6%), around three out of four businesses either growing their profit or staying the same.
situation facing small business has had an impact, it seems there is still light at the end of the tunnel. The next hurdle to face is a recession, however small businesses are in the best position to adapt to meet the challenges ahead. SMEs (small and medium-sized enterprises) account for 99.9% of the business population (5.9 million businesses) in the UK. Of that number, 4.5 million are businesses with no employees (source: ONS). This is a significant contribution to UK plc, so going forward, it is the
Whilst not a statistician and no
small business owner that can make
doubt holes can be found in the
a difference to the economy going
analysis, it is clear that the current
forward. Onwards and upwards.
14.9% were unsure and 8.5% thought Unsure 5.2%
their business would shrink. So this isn’t too drastic in outcome given the impact of Covid-19 and the
Unsure 14.9%
Shrink 21.7%
Shrink 8.5%
unknown outcome of Brexit; with less than 1 in 10 small business expecting a drop on turnover. A supplemental question, not asked in the first survey, asked about the impact on profit over the next 12 months. The results of this survey were 61.7% indicated that they expected
38 | Issue 1 – Finance
Grow 51.1%
Grow 54%
Same 25.5%
Same 19.1%
Turnover performance last 12 months
Turnover performance next 12 months
(115 respondents)
(47 respondents)
Figure 1
Figure 2
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