In the Headlines – Summer/Autumn 2017 Edition

In the Headlines Hospitality Newsletter | Summer/Autumn 2017

Are you Using These Five Key Reports to Grow Your Business?

Changes to Personal Injury Law - Is Your Business Covered?

Reduce Your Tax Bill with Capital Allowances

Five key business reports we recommend for any director looking to grow or have a tighter handle on their business’s performance.

The Government recently announced changes to the Ogden discount rate affecting the amount of compensation awarded in personal injury cases.

Business owners incur thousands of pounds in capital expenditure to ensure that their pub, restaurant, bar or venue is up to standard.

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Contents

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PP

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Welcome and Partners

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Special Feature Are you Using These Five key Reports to Grow Your Business?

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Raffingers Foundation Charity Ball 2017

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Upcoming Events

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Employee Spotlight

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Food Waste… Why you Need an Inventory Procedure

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Are Zero Hour Contracts Coming to an End?

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Introducing Planday

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Changes to Personal Injury Law – Is Your Business Covered?

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London Pubs to Receive Further Support

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Partners Perspective Reduce Your Tax Bill With Capital Allowances

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Welcome to our HOSPITALITY Newsletter Welcome to the summer/autumn edition of our hospitality newsletter. This quarter, we bring you all of the latest insights and news hitting the sector.

One of which concerns new, sophisticated methods of measuring and reporting finances. Gone are the days where all you can produce is a profit and loss report (P&L). There are now so many more insights you can gain into your business. On page 4 our Partner, Lee Manning, discusses his top five business reports he recommends for directors looking to better manage their performance.

Managing employees is a difficult area, especially for smaller businesses in the hospitality space. Yet zero hour contracts have helped owners better manage demand and finances. However, with changes on the horizon, we look at Are Zero Hour Contracts Coming to an End? and if so, what impact this will have on the sector. Furthermore, our add-on partner, Planday discuss employee scheduling software for businesses that employ hourly workers. To read more, see pages 10 and 11 respectively.

Staying on the topic of remaining efficient, hospitality businesses can make significant savings on capital expenditure. To find out what capital allowances are and how you can make the most of the benefit, turn to page 14.

As always, if you would like to be featured in our next edition, or have any suggestions for topics that you would like to see discussed, please get in touch.

Raffingers Partners Gary Inglis Managing Partner gary.inglis@raffingers.co.uk

Andrew Coney Partner andrew.coney@raffingers.co.uk

Lee Manning Partner lee.manning@raffingers.co.uk

Adam Moody Partner adam.moody@raffingers.co.uk

Suda Ratnam Partner suda.ratnam@raffingers.co.uk

Barry Soraff Partner barry.soraff@raffingers.co.uk

The Partners at Raffingers Paul Dell Partner paul.dell@raffingers.co.uk

Roy Butcher Partner roy.butcher@raffingers.co.uk

Charity Ball 2017- Page 6

Are you Using These Five key Reports to Grow Your Business?

SPECIAL FEATURE

Technology has advanced so much that long gone are the days when all you can generate is a profit and loss report (P&L). Although essential for the success of any business, there are now so many more business reports you can run and consequently more insights you can get into your organisation, that it is criminal not to make use of them.

Below are the five key reports I recommend for any director looking to grow or have a tighter handle on their business’ performance.

Operational Forecasts Where do you see yourself in two, five or ten years’ time? Accurate and up-to-date forecasts enable you not only to visualise your business’ future, but will show you what is attainable and will help you to develop operational and staffing plans geared towards your future goals.

Running a business is never plain sailing and it is impossible to predict every eventuality, (Brexit anyone?!); However, having an accurate forecast in place enables you to build in contingencies and keep your business protected as best as you can. The ideal way to achieve this is to forecast weekly. This will enable you to constantly tweak your forecast to reflect the current market, new competitors and peaks and troughs in your business.

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Where do you see yourself in two, five or ten years’ time?

Three Way Forecasting Your business needs so much more than a P&L report.

Although this gives you a great indication of how your operations look, it does not show you clearly the relationship between the P&L, balance sheet and cash in your business. Profitability does not always equal cash. You need to know when your cash inflows are.

Through seeing these three key points visually you can achieve more advanced insights, such as whether your receipts exceed your payments and single out costs that are eating up your profit.

The key cause of business failure is not having enough cash in the business. These forecasts enable you to see how sustainable your business is and give insights that basic P&L reports simply cannot do.

Scenario Planning If you are looking to grow, what is the best way to do this? Should you take on a new employee? Should you increase the services you offer? Do you have the

capacity to grow into a different region?

Scenario planning enables you to see into the future.

For example, taking on employees is a gamble, yet with scenario planning, you can see when the best time is to hire and how many people you can realistically hire without stretching your cash too far. Whatever ideas you have, scenario planning helps you to see if they are worthwhile and achievable before you commit time and money into putting your plans into action.

What-If Scenarios What-if scenarios allow you to tweak different variables and elements of your business to measure your performance. As with any business, there will come a time when you need to make a difficult decision; what-if scenarios can provide you with clarity on the options available to you now and how your business will be impacted depending on which option you choose. For example, if you are negotiating prices of your stock, you can create multiple scenarios to see how your profit will be affected. You can even see how your business will be affected by sales remaining steady, projected growth and projected loss.

Alerts It is all well and good having up-to-date reports, but you need to ensure you are tracking them and using them to benefit your business. Alerts are the

best feature of reports that can keep you focussed and ensure you do not miss any negative impacts or opportunities. On all reports you can set alerts that notify you when something significant happens, for example if you are over trading and are not getting enough cash in. Something all businesses need to take more control of if they wish to succeed.

In this instance, you can set up alerts for cash and get notified if your bank goes below a set level or if any costs increase. Through alerts you can be confident that your business is protected and you will have enough time to respond should you get into difficulty.

If you are serious about growing your business, there is no excuse not to have up-to-date reports. There are now countless pieces of software that can help you achieve all of the above, such as Futrli, allowing you to set up reports and forecasts without taking vast amounts of time to do so.

For help creating business reports and forecasts for your business, contact me using the details below.

For further advice: Lee Manning 020 8418 2772 lee.manning@raffingers.co.uk

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Registered Charity Number: 1171885

Charity Ball 2017 Saturday 16 September | 6:30pm-12am | Black Tie Waltham Abbey Marriott, EN9 3LX Tickets: £75pp or table of 10 for £700 Sponsorship Options: Charity Ball Brochure

£75 half page advertisement £100 full page advertisement - 9 LEFT £150 back page advertisement - SOLD £125 inside front cover advertisement - SOLD £125 inside back cover advertisement - SOLD

Raffle/ Auction

We are in need of Raffle and auction prizes. Anyone who donates a prize will be mentioned in our Charity Ball brochure given out to all 200 Raised so far attendees.

To sponsor our Charity Ball or to book your tickets contact lauren.aston@raffingers.co.uk.

Raising Funds For:

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To attend any of our events contact lauren.aston@ raffingers.co.uk.

Upcoming Events How to Make Your Business More Efficient • Date: Tuesday 18 July 2017 • Where: WeWork, 1 Primrose Street, London, EC2A 2EX

• When: 6:30pm-8:30pm If you want your business to work smarter and faster, cloud accounting software is a wise investment.

What’s more, with Making Tax Digital just around the corner too, now is the time to begin thinking about implementing processes that will make you compliant.

In a few years’ time it will be compulsory for you to keep your accounts digitally and to submit these to HMRC quarterly. Thinking about this change now, gives you more time to adapt and implement the new processes into your business.

New Service Launch • Date: Autumn 2017 • Where: WeWork, 1 Primrose Street, London, EC2A 2EX • When: 6:30pm-8:30pm Join us for the launch of two new services that can help you: • System Improvement - as businesses grow they often become overburdened and inefficient processes begin to creep in. To ensure you are running the most efficient business possible we will review all of your processes and suggest improvements to make them more effective.

• MBA - For start-ups and high growth businesses we give you the opportunity to attend our MBA programme. A twelve month course composed of monthly meetings, which guide you through all of the essential topics needed for business success, including marketing, finance, HR and time management. Through case studies and guest speakers we will give you and your team the tools to run a highly successful and growing business.

Employee Spotlight In this slot we introduce you to a valued member of our team, allowing you to put a face to a name.

This quarter we speak to our Cloud Management Accountant, Imran Shahzad.

Name: Imran Shahzad Email: imran.shahzad@raffingers.co.uk Career: I was working in retail when one day me and my friend were discussing where we both see ourselves in 10 years’ time. This discussion got me thinking and shortly after I took on a voluntary position at a local accountancy firm. After only working there for three days voluntary, they offered me a full time paid position. This gave me confidence, as I thought I must have some kind of talent, and I started my ACCA qualification.

After working at the practice for a few years, to further my experience I moved to Raffingers in 2016 as a Cloud Management Accountant where I am helping clients with their reporting and showing them how they can access more from their finances. I still have four ACCA professional exams to complete which I am hoping to achieve

by March 2018.

Interests: I have a soft spot for Chelsea and enjoy watching cricket. I also like to keep myself active and regularly hit the gym. I would love to travel more and am hoping to visit Australia at the end of 2017.

Partners Report: Imran has been a pleasure to work with since he started and has delivered a huge amount of support to our clients using Xero.

He is our management accountant guru and has got to grips with our new forecasting tool, which helps clients manage their finances in a systematic way.

YourBusiness BusinessOur OurPassion Passion Your

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Food Waste… Why you Need an Inventory Procedure SPECIAL FEATURE

Food waste is a growing issue for many businesses and one that is a continuously discussed in the hospitality space. But what many fail to realise is that poor management of stock will have a negative impact on your finances and here is why…

According to WRAP UK, in 2016, hospitality businesses contributed massively to the 10million tonnes of food waste produced in the UK, more than any other industry outside of manufacturing. This costs the sector £2.5billion each year. Furthermore, 60% of all food wasted could be easily avoided and monitored.

With this in mind, under the Hospitality and Food Service Agreement (HaFSA) owned by WRAP and collectively delivered by signatories, two targets were set in place: • Prevention Target: To reduce food and associated packaging waste arising by 5% by the end of 2015. In January 2017, this was reduced by 11%, exceeding the target.

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• Waste Management target: Increase the overall rate of food and packaging waste recycled and sent to anaerobic digestion or composted to at least 70% by the end of 2015.

This target was not met and in fact, the rate has increased by 14%.

WRAPUK have now set a 10-year plan, known as the Courtauld 2025, which will improve the sustainability of food waste in the UK. The aim is for a 20% reduction in food & drink waste to be made in the UK by this date.

The results indicate that not only does food waste contribute negatively to society, but it also has adverse effects on a business. Improper management of stock can be extremely expensive to a business, stagnate profits and promote underutilisation. Yet one way to control this is through implementing an effective food waste procedure. This can be done by: • Measuring and tracking your current wastage: If your businesses is currently not

doing so, it is necessary that you monitor and track the amount of inventory ordered and food wasted, periodically. This will give you a strong indication of what areas need to be reviewed and assessed and give you an overall view of your spending.

• Waste Mapping: On average, waste accounts for 4% of an entire business’ turnover. Waste mapping is a popular and growing concept for hospitality businesses as it allows you to access all the departments and where they may be ineffective. The mapping method allows you to plan and effectively monitor and review your business’ processes.

• Introducing a waste management solution: Implementing a waste management procedure will allow you to better manage your inventory and reduce the amount of waste in your business. Ensuring that your employees are on board and are aware of the procedure will be a huge contributing factor to its success. Yet, introducing software like Vend can help you to monitor your:

• Food recycling: Food recycling is a great way to save your business money whilst helping the environment. Dispensing your food in landfills or failure to recycle can cost businesses thousands each year, yet recycling can help businesses saves thousands a year. Find out more about food recycling here: www.wrap.org.uk/content/ sme-food-waste/1-why-recycle • Utilise cost saving resources: There are many cost saving resources that are available for businesses to utilise. Ensuring that you utilise your tax reliefs or allowances can help you save significantly on costs, and/or reviewing your supply chain process, can allow businesses to better stay on top of their expenditure.

• Seeking Further advice: Reviewing your supply chain process and current expenditure can be a great way to see where the source of your waste is attributed to. Seeking financial advice from an accountant can be a great way to do this.

Your accountant will be able to produce a range of reports that can allow you to see where you spend excessively and forecast your expenditure.

• Inventory Reporting • Stock orders • Order management Software such as Vend allows you to effectively manage and monitor your inventory in real time whilst, automating your orders so you will never have enough or too little stock, making it easier to reduce levels of waste.

Roy Butcher 020 8418 2673 roy.butcher@raffingers.co.uk

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Are Zero Hour Contracts Coming to an End? A recent report from the Office of National Statistics (ONS) announced that in 2016, 199,000 individuals from the food and accommodation industry were on a zero hour contract. Although this is a slight increase from the previous year, overall the UK hospitality sector now holds less zero hour contracts than it did in both 2015 and 2014. Could this suggest a slow end to flexible working in the sector?

For several years, hospitality businesses have used zero hour contracts to manage fluctuations in consumer demand, especially during busier or seasonal periods.

This allows employers to gain access to temporary staff without having to guarantee hours and only ever needing to give minimal notice.

Unsurprisingly, the ONS revealed that overall, zero hour contracts are a popular option for businesses.

The figures show the increase in contracts over the last few years: • 699,000 in 2014 • 804,000 in 2015 • 905,000 in 2016 In 2015, the accommodation and food industry accounted for 23.6% of the entire zero hour employment market. In 2016, 190,000 individuals from the sector were on zero hour contracts, a total of 22%. Yet, this percentage has dropped massively from 2014 where the industry claimed over 53% of the entire zero hour contract market.

Are zero hour contracts becoming less popular?

Without fail, the hospitality sector still employs the largest number of individuals on zero hour contracts when compared to any other sector. Yet one of the largest backlashes that the sector faces is how unbeneficial these working contracts are for the employee. Zero hour contracts are seen as financially unstable, unreliable and too much pressure. As a result, many businesses in the sector offer other flexible working contracts such as fixed term work, agency workers, apprenticeships or internships.

With this being said, there is no getting away from the fact that zero hour contracts are a great way to reduce expenditure. According to the Economist, over 80% of the UK’s GDP comes from the service sector, with hospitality based businesses introducing zero based contracts to more than half of all firms, which enables: • Businesses to manage demand during hectic times of the year • Smoother transition of staff from full time to part time or from part time to full time • Flexibility for businesses and individuals • Benefits professionals or trade industries who regularly move around for work

For further advice: Andrew Coney 020 8418 2710 andrew.coney@raffingers.co.uk

In 2016, 190,000 individuals were on zero hour contracts.

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Introducing Planday

Simplify staff scheduling and save time with Planday

ADD-ON

Find out more at planday.com Email: res@planday.com

At Raffingers, we’re always looking for ways to make our clients’ lives more straightforward. To that end, we’d like to introduce Planday; simple employee scheduling software for businesses that employ hourly workers.

Designed to help managers improve efficiency, Planday provides a centralised hub for carrying out all of the administrative tasks necessary to successfully run a shift-based business.

Communicate effectively Planday simplifies the way in which managers and employees keep in touch by providing a single, formal channel for communication. This means no more calls, emails or texts to keep track of, just one, easy-to-use app that keeps everyone in the loop.

Say goodbye to pen and paper As well as enabling straightforward communication, Planday collates information gathered on availability so that it can be used to create rotas. These rotas can then be distributed and edited with the touch of a button, and any changes made are visible to all staff as soon as managers hit ‘publish’.

Work smarter Planday is much more than a communication and scheduling tool, it also incorporates a number of features that allow for smarter staff management.

The Planday app: • Tracks who worked when with a customisable punch clock facility • Integrates with leading EPOS software to enable intelligent staff scheduling

• Automatically works out accrued holiday and holiday pay • Synchronises with leading payroll software for improved accuracy

Save time and money Planday’s smart features mean that customers typically cut their admin time by 75% and reduce their salary costs by 5%. The punch clock feature, for example, means that managers are able to easily track swapped shifts and sickness absence so that staff are only ever paid for precisely the hours they’ve worked. In addition to this, by integrating with leading EPOS software, Planday allows managers to forecast revenue and align staff levels accordingly.

Keep staff happy Businesses that use Planday have happier, more engaged staff, as they’re able to work when and with whom they want. If they need to swap shifts, they can do this without fuss, and without feeling like they’re being micro-managed. This ensures they’re able to maintain a great work/life balance, which is great for retention.

“Planday has been a huge success among our employees. It’s created stronger communication and better engagement, which has significantly improved the way we operate on a day-to-day basis”.

Mathieu Durand, Operations Manager, Big Ferdinand.

Try Planday for free If any of the above has piqued your interest, why not take Planday for a test drive? They offer a free 30 day trial so that you can see for yourself just how much time and effort you can save.

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Changes to Personal Injury Law – Is Your Business Covered?

The Government recently announced changes to the Ogden discount rate affecting the amount of compensation awarded in personal injury cases.

These changes will affect the cost of all company insurance policies that cover personal injury claims such as Motor, Employers Liability, Public, Products and Property Owners Liability.

Ian McFadyen, Group Sales Manager for commercial insurance broker, Berns Brett Limited (BBi), summarises the reform and how likely it is to affect your premium.

The discount rate, explained The Ogden rate is a framework for calculating compensation payments. It works under the theory that the party providing the personal injury award (i.e. your insurance company) can discount the sum provided to the claimant by a small amount because the recipient will be able to make up the difference between the actual award and the sum paid by investing the money.

As interest rates have dropped in recent years, there were some calls to review the rate and from 20 March 2017 it was reduced from 2.5% to minus 0.75%.

Although this may seem like a modest percentage movement, it will have a significant impact on the amount of compensation awarded for the most serious claims.

For example, a 30 year-old employee falls from a ladder at work and suffers serious brain injury. He is unable to resume work and requires long-term care.

On the basis of the previous discount rate of 2.5%, the loss of earnings and care claim would amount to £2.24m. The move to the new discount rate of minus 0.75% increases this settlement figure to £6.14m.

Who will be affected?

All policyholders are affected, whether low risk or high risk and whether claims free or not. Unfortunately

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All policyholders are affected, whether low risk or high risk and whether claims free or not. accidents happen, often quite unpredictably, and your claims history is not always an indicator of your likelihood to incur a significant personal injury claim in the future.

The exact amount of increase to your insurance premiums depends on a range of factors such as your company’s trade activities and approach to risk management.

What should I do?

Now is the ideal time to review your existing insurance policies and the level of cover they provide. You should pay particular attention to your limits of indemnity, as these may no longer be adequate in the event of a serious injury.

These changes also serve as a timely reminder of the importance of reducing risks in the workplace and maximising efforts to avoid injuries and accidents occurring in the first place.

We can provide a comprehensive risk management service through our sister company, BBi Risk Solutions.

We can help you review your whole organisation and advise on specific procedures, practice and control measures. As well as helping us to identify the level of insurance you require, this process will help you to reduce personal injury claims – and the cost of your insurance – as a result.

For more advice, please email Ian.Mcfadyen@ bernsbrett.com, call 020 8559 2111 or visit www. bbicover.com.

London Pubs to Receive Further Support New figures show that since 2001 over 1,220 pubs have shut down, an average of 81 pubs a year. As a result, Mayor of London, Sadiq Khan has pledged to protect London’s pubs and to ensure that the number of pubs closing drops significantly by 2030.

Research conducted by Inter-Departmental Business Register (IDBR) and Campaign for Real Ale (CAMRA) shows that the number of pubs in the capital had dropped from 4,835 in 2001, to 3,615 in 2016 – a decline of 25% in under 15 years. Boroughs such as Barking and Dagenham and Newham are worst affected, losing more than half their pubs in this time period, yet the Mayor has expressed his plans to ensure public houses in London receive increased support.

According to the Mayor of London’s website, over half of tourists regularly visit a pub during their stay. Furthermore, pubs contribute massively to UK employment with a sixth of 18-24 year olds having worked in one. In 2016, employment increased by 8.7% despite the rapid decline in pubs.

Sadiq Khan pledges “to do everything in his power to make it harder for pubs to shut… The Great British Pub is at the heart of the capital’s culture. From traditional working men’s clubs to cutting-edge micro-breweries, London’s locals

are as diverse and eclectic as the people who frequent them… That’s why I’m shocked at the rate of closure highlighted by these statistics, and why we have partnered with CAMRA to ensure we can track the number of pubs open in the capital and redouble our efforts to stem the rate of closures.”

The partnership with CAMRA aims to conquer and reduce the number of public house closures in the capital. A yearly audit will be undertaken as part of the mayor’s Cultural Infrastructure Plan for 2030 which aims to better sustain and preserve culture within London. The partnership with CAMRA will help to better monitor the activity and will look at ways to reduce the significant number of closures.

With business rates currently contributing massively to closures, Khan’s campaign should throw a possible lifeline to many pubs in London who are struggling with market changes.

For further information: Suda Ratnam 020 8418 2681 suda.ratnam@raffingers.co.uk

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Reduce Your Tax Bill with Capital Allowances Blog by Adam Moody, Partner Business owners incur thousands of pounds in capital expenditure to ensure that their pub, restaurant, bar or venue is up to standard. Many business owners are unaware that they can claim capital allowances to reduce their tax bill.

What are Capital Allowances?

Capital allowances can be a great way for businesses in the hospitality sector to claim relief on their business expenditure. The tax relief allows you to deduct the total cost of assets purchased (subject to the limits below) from accounting profits, enabling you to make a saving on your corporation tax bill. Yet, many businesses are missing out on the relief as they are unsure of the expenses that can be claimed. According to HMRC, depending on the allowance used, claims can be made on: • • • •

Assets Integral features Fixtures Alterations and refurbishment or any expenses that may go towards the building of the property

In some circumstances, allowances may be stretched to include items which impact the ambience and atmosphere if it has a significant contribution on the business. Although a capital allowance can be applied to most expenses that relate to the business, there are several items exempt. Claims cannot be made on: • • • •

Leased items Building Land and structure Entertainment purposes

Types of Capital Allowances There are three types of capital allowances which hospitality sector businesses can benefit from: • Annual Investment Allowance • First Year Allowance • Writing Down Allowance

Annual Investment Allowance(AIAs) The AIA allows you to deduct 100% of the cost of the asset from profits before tax. With most assets that businesses buy falling under this category, the AIA is one of the most common capital allowances available.

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Many businesses are missing out on savings as they are unsure what expenses can be claimed.

Businesses can claim up to the value of £200,000 for qualifying investments made on or after 16 January 2016. VAT registered businesses can also claim the total allowance minus the VAT reclaimed on the asset.

The AIA cannot be claimed on the following: • Vehicles • Assets used or possessed from a previous business • Personal assets

Partner’s Perspective

• Gifted or free assets So what if my capital expenditure does not qualify under the AIA? There are two further capital allowances that can be used.

First Year Allowances (FYAs) For new assets, 100% of the value of the asset can be deducted from profits before tax. This can be claimed in addition to AIA and this is not tapered down from the AIA limit. FYA’s can only be claimed on: • Some cars with low emissions • Environmentally friendly equipment • Energy saving equipment

Writing Down Allowances (WDAs) For assets which are already owned, have been used in a previous business or were gifted. Writing Down

Allowances are divided into three ‘pools’ where a relief of 18% or 8% is applied depending on the asset and pool they fall under.

For hospitality businesses, WDAs can allow you to save on most capital expenditure that cannot be claimed through AIA or through the FYA. It is important to note that AIA must be claimed first.

Further information on the pooling system can be found at Gov.uk.

For further information: Adam Moody 020 8418 2683 adam.moody@raffingers.co.uk

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