Will Social Media Help or Hinder your Business Success?

Now that social media platforms are recognised, not only as opportunities to collect customer data, but also for a super-fast way to spread the word wide about brands and products, how much of your marketing budget will you allocate to social media in 2013? According to some recent global research carried out by Pitney Bowes Software, many businesses in Australia, France, Germany, the UK and the USA are planning to spend about half of their budgets that way.

Is Social Media Helping you?

But those in Australia and the US are ahead of their European counterparts in monitoring the success of their social media strategies. Whilst it may be difficult to get the figures to calculate the actual return on your social media investment, it is easier to find out an engagement rate for your posts by counting numbers of likes, shares and comments as well as fans. Perhaps your outsourced bookkeepers can help with this.

Avoiding a Social Media Backlash

Social media can not only enhance reputations, it can also destroy them. The Pitney Bowes report also indicates that if you upset your audience on Facebook and the like, you’re likely to lose 65% of them. Facebook is still the most used social media network, and is way ahead of its rivals.

It has never been more important to get customer service right. Anyone dealing with marketing should liaise with people and teams dealing with customer service, especially on the complaints side of things. When people call in, you need to catch potential issues before they get on to social media if you want to protect your brand and retain customers. Get any complaints dealt with quickly and give the complainers a positive experience to relate to their social media buddies. It’s also crucial that everyone in your business understands how to use social media and, perhaps even more important, how they should not use it, especially not bad mouthing your competition or anyone else.

What Consumers Respond to

The survey found that consumers respond best to discounts and vouchers for deals at below normal price. They are also interested in forthcoming events and sales. New product launches also get a fair amount of interest. They are less interested in reading newsletters or completing feedback forms and surveys, or even reading about a company’s social responsibility performance. It’s worth taking note of the findings so that you can alter your tactics to get more favourable attention.

Get into the Festive Spirit

It’s really hard for small business owners to take time off and really switch off from their businesses. That said, unless, you need a break as much as any employee. If you do have to work over the holidays, perhaps because you are in the hospitality sector or any other that requires attention 365 days a year, then you need to make up for it with time off afterwards. You need to get into the spirit of the season and be refreshed and ready for the challenges of a new year of business.

So how can you take time off without losing custom? Like most other things, success is all about planning and organising in advance.

Order Fulfilment

First you need to think about how to ensure that all your orders will be fulfilled before the holiday starts. Can you do it with your current staff numbers or do you need to arrange for any temporary workers? Don’t forget to allow a little extra time for those inevitable late orders that arrive just when you think it’s all finished.

Being Responsive

Next, it’s how to manage those all-important telephone calls and emails. To avoid putting prospective customers off with a voice-mail message, can you arrange for calls to be forwarded to another responsible person when you are not available? Hiring a virtual receptionist for a few days may be affordable and could pay for itself in retaining customers or acquiring new business. You could enquire with your outsourced bookkeepers whether that is a service they offer, or whether they know of a reliable source.

Whether or not someone else is fielding your calls, plan a specific hour for each day to check if you need to respond to messages left in the last 23 hours. Having this small window of time for work will make you feel more comfortable about not being available during the working day. The actual time may have to be a bit flexible to accommodate your family or leisure activities. When you do contact your callers, unless it’s a real emergency, don’t commit to anything that will interfere with your planned time off. People will understand if they are told you are on holiday and will get to it when you are back in the office, and they will appreciate you taking the time to inform them. Make a note in your diary of when everything is promised and make those promises a priority when you are back in harness.

Whatever methods you organise to cover your absence; do take our advice about having a break. Whether it is your custom to celebrate Christmas or any other religious festival, take some time off and enjoy it.

Crisis in Flood Insurance

If your business has been affected by flooding this year, you know that insurance is a lifeline, even though excess clause amounts have risen by an average of 1,750% in the last three years. But will you be able to renew it?

Insurers and Government Cooperation

The Statement of Principles is an agreement between government and the insurers to say that you will. This is in return for a pledge to spend on flood defences, although even some plans for these have been affected by recent cuts. The agreement is due to expire in June 2013.

The Association of Business Insurers (ABI) is currently in discussion with the Department for Environment, Food and Rural Affairs (DEFRA) about what will replace it. The insurers propose a new fund to cover flood payments and keep premiums down to affordable levels. Property policy premiums would contribute a token amount of around £20 to help get it started, but it would also need what is described as an ‘overdraft facility’ from the government.

ABI requires the government to share the risk and says that we are the only country that does not have some form of government intervention on flood insurance. But DEFRA has not agreed to the overdraft facility, and if no deal can be reached, it is unlikely that affordable flood insurance will be available. Accountants PricewaterhouseCoopers estimate the insurance bill for flooding in June and November 2012 will top £1 billion.

As in so many areas, it seems inevitable that small businesses with limited resources have to be hit hardest? Sole traders working from a home on a flood plain have double the anxiety.

Ways to Reduce Flood Damage

The University of Salford’s Centre for Disaster Resilience thinks we rely too much on insurance, anyway. After a recent survey of small businesses in Cockermouth, their lead researcher, Dr Bingunath Ingirige said: “Climate change and rising insurance costs mean that SMEs need to begin investigating other ways to reduce the impact of flooding.”

The survey found that only very few had installed flood resilient wall finishes or moved vital equipment above the ground floor. Their survey report calls for businesses to consult trained professionals such as chartered surveyors, and to follow their recommendations for effective mitigation and prevention improvements to their properties.

If you are in a risk area, you should be considering whether you could divert or raise funds, and how much you could afford to invest in this type of protection. Your outsourced bookkeepers would be happy to discuss this with you and may have fund raising ideas you haven’t thought of.

A New Method of Invoice Financing

The government’s Supply Chain Finance Scheme (SCFS), announced by the Prime Minister last month, has had a mixed reception. The scheme provides that, if you send an invoice to a large corporation, the recipient can respond with a promissory note informing your bank that they intend to pay it. You can then draw on the amount promised from your account, but you will have to pay interest on it until the money comes in, albeit a smaller amount than on other types of loan.

SCFS has been quietly piloted and among the first major companies to sign up for it were Vodafone and Rolls Royce. In his announcement, David Cameron said, “ In the current climate, viable businesses can struggle to get the finance they need to grow – this scheme will not only help them secure finance and support cash flow, but will help secure supply chains for some of our biggest companies and protect thousands of jobs. It can be a win-win, with large companies and small suppliers both benefiting from this innovative scheme.”

A Positive Reception from the Federation of Small Businesses

Chairman John Walker’s response was “The new Supply Chain Finance Scheme could help smaller firms in two key areas - improving their working capital and tackling the issue of late payments. Nearly three quarters of small businesses report that they have been paid late in the past year, placing a huge strain on cash-flow and meaning they struggle to realise ambitions to grow.”

On the Other Side of the Fence

Some critics say it’s a way of enforcing invoice financing on small businesses. Everyone knows that small businesses can charge interest on late payments, but they don’t because they want to keep their customers. In this scheme, instead of charging interest, you’ll be paying it on the money you are owed, while big business can legitimately ignore your terms and pay you when they like.

Sitting on the Fence

Some who already operate in the invoice financing industry are undecided but cynical, wondering about the detail: the amount of interest, the documentation; the guarantees; dealing with the risk; and so on.

Matthew Fell of the CBI said, “Boosting the use of supply chain finance is an innovative way to ease the funding squeeze for many smaller businesses, but it is dependent on the nature of individual supply chains to work effectively so is not a one size fits all solution.”

Why not discuss your cash-flow problems with your outsourced bookkeeper before you decide to borrow from the bank in this way?

The Small Business Personal Touch

One of the advantages of being a small business is that your customer base is probably small enough to make good communication and a personal touch relatively easy. Of course, this might mean yet more tasks to add to your endless all-round list, but they are really important to maintain profitability and grow your company. You’ll be well aware that what keeps customers and clients loyal is not just what they buy from you, but also how it is packaged and delivered to them, and what happens next.

A Few Tactics for the Personal Touch

Do you contact them to ask if they are happy with their purchase? Do you make a point of collecting dates of birth, so that you can send congratulatory cards or emails for landmark birthdays or even every year? If they haven’t divulged the information, you can often find out from social media sites.

If they pay on invoice, do they know and accept your terms, so that they will pay you on time? Do you include friendly, personal messages when you send an invoice? Do you email a helpful reminder when the due date is close? Communication is even more vital if the payment isn’t forthcoming when you expect it.

Fun and Usefulness

Staying in touch with your clients is helpful for other reasons too. Enjoying a joke while talking to them on the phone or meeting them at networking events and business functions can put fun and inspiration into your business life. You could ask them for feedback to help you make decisions about developing what you offer. Knowing their circumstances will also alert you to any potential risks of doing business with them.

Some Serious Homework

As well as communicating with them, it can be helpful to do some homework on how they are contributing to your bottom line. Businesses often profit more from some customer relationships than from others. Senior managers and directors need to be aware of where their profits come from so they can make the business decisions that will take the business forward.

It’s worth analysing your customer base to work out which ones bring you the most value so you can at least be sure of the relationships it will be important to nurture. Undertaking or assisting with this analysis is one of the ways that your outsourced bookkeepers could help you. Because nothing remains the same all the time, it’s worth making this a regular project at appropriate intervals.

How would you Cope with a Tax Investigation?

Chancellor George Osborne’s tax yield targets have given HMRC quite a challenge. The revenue department seems to have responded by increasing its focus on investigating the tax affairs of small businesses. In 2011-12 it increased its collection of extra taxes and fines from SMEs by 39% on the previous year. In all likelihood the figures will continue to rise.

Checking on Different Areas

They are no longer just looking at PAYE and VAT, although of course it’s essential you get these correct. Employee benefits are facing greater scrutiny now. Woe betide an employer who slips up on the deductions that should be made. Even sole traders must take care about how much of their fuel costs they can claim as expenses.

Corporate entertainment is another area to be wary of. You can’t just push the boat out for clients and expect to claim all the costs as expenses; only if the tax man agrees it’s appropriate can you claim. Even entertaining staff as a reward for achievements or giving them a Christmas party has limits, and exceeding them can have tax consequences for the staff as well as the business.

Why SMEs are Hit

These are complicated and tricky areas to get right, so larger corporations who can afford to employ an army of accountants and advisers have the advantage. This is probably why it appears that HRMC are targeting smaller businesses and were able to collect £434 million extra from them in the last financial year. Smaller businesses don’t have the wherewithal to challenge their findings and usually succumb straight away to threats and pay up, which is not so often the case with major groups and companies.

HMRC, of course, deny that they have stepped up their focus for business compliance on smaller organisations. A spokesperson recently pointed out that they carry out investigations across the board wherever they suspect a serious risk of tax loss. Since 2006-07 they have also collected an additional £29bn in large business compliance revenue.

Help to Stay Compliant

Still the word is that SMEs are being hardest hit at the moment. Your outsourced bookkeepers can be a great help in making sure you stay compliant. To maintain a good reputation any such supplier will keep its staff up to date on tax regulations and they can also draw on what they learn from their experience with other firms. Only where it’s really necessary to pay the higher fees of involving an accountant will a bookkeeper advise you to do so.

Managing a Less Visible Fire Risk

Do you or your employees bring electrical goods from home into the workplace? Did you realise that, if these goods have not been safety checked, you are not compliant with health and safety regulations and are at greater risk of fire? Personal items of electrical equipment brought onto your premises are subject to the same regulations as appliances that belong to the business.

Worrying Statistics

A warning about this came recently from insurance firm RSA, which conducted a survey of 2,000 employees. They found that 40% of them had connected items like mobile phone chargers, hair straighteners and other personally owned items to the business power sources. More than half of them confessed that they hadn’t had their appliances safety checked before they brought them into work.

Perhaps the most worrying aspect to come out of the survey was that nearly 10 in every 100 who had done so admitted that one of their items had caught fire, causing burns or electric shock in 9% of cases. Over a third of those injured had to be treated at a hospital. These figures clearly demonstrate the importance of having such items safety checked.

Being Prepared

Gary Long is Risk Solutions Director at RSA. He said that it is important for employers to have relevant policies and checks in place to avoid this. They should also make sure that all employees understand the regulations for electrical items at work, as well as how to react to such an emergency.

Make it a policy that if employees want to bring electrical items to work, they have to have them checked. Tell them when testers will be on site, so they can bring their own items for checking at the same time.

Despite the government’s declared intention to relax the red tape for small businesses, for your own protection, it’s a good idea to keep a record of your electrical testing. You could also keep labels on all electrical equipment at your business premises stating the date of their last check. If the worst happens and someone is badly injured or you have to make an insurance claim for fire damage, you will have evidence of your testing schedule and your proactive management of the risk.

No time for yet another admin job? If you use your outsourced bookkeepers to their full value, and employ them to assist on a variety of back office tasks, they can monitor this for you on a regular basis, make all the checking appointments you need and advertise them to your staff.

Small Changes Can Make a Big Difference

People are still talking about the amazing Olympic successes of the Team GB cyclists both in and out of the velodrome. How did they manage to win all those medals? Chris Hoy, who won two gold medals, said it was about asking the question, how can we get better? And then coming up with answers. Head coach Dave Brailsford famously named these the ‘marginal gains’, because if you make lots of small or marginal changes for the better, when they are added together they make a significant difference.

Marginal Gains for your Business

Why not apply this to your business? Take for example the number of phone calls you make to chase business. This is not something most of us enjoy doing but it usually needs to be done, if not every day or week, at least from time to time. So you set goals. This week you decide to make 9 calls and are elated when three of them pay off. That’s a third of your calls. If you’d got the same percentage when your goal was 12 calls, you’d have had one more customer or warm contact to deal with. So you could get better results if your goal had been higher. Make that a weekly occurrence and you’ll see significant growth.

Saving Time and Effort

There are all sorts of ways you can save time as well, if you think about it. You could get better at being at your desk earlier if you set the alarm 10 minutes earlier. You could devise a system for getting through your paperwork faster or filing it away so that you can find it quickly. Are these the kind of jobs you just can’t find time for? Make a resolve to give them half an hour a day until they are done. Shorten your lunch break on three days a week and use the extra time to your advantage. If you can afford it, pay for some extra help. You should recoup that amount and more before long. Think what you can achieve in all the time you have saved.

Getting Help from your Bookkeepers

The same principle could be applied to chasing late payments. You decide you’ll make that phone call next week, but it’s Thursday before you even think about it, and Friday before you pick up the phone. That’s a week longer to wait for that payment to come in. You can often get help for this sort of thing from your outsourced bookkeepers. Many offer assistance with credit control, employer and tax returns, and office management as well as keeping your accounts in order.

SMEs Making a Vital Contribution

If you are an employer running a small business, you can give yourself a pat on the back. According to a recent report by the Federation of Small Businesses (FSB), you are in a sector which is vitally important to the UK workforce which is making a significant contribution to the economy.

Lobbying Ammunition

Back to Work The role of small business in employment and enterprise was published in September 2012 as part of a FSB campaign to get the government to give more consideration to the effect of its policies on smaller businesses. It indicates that most of the current regulations are imposed across the board, but with mainly large private sector organisations in mind. Initiatives to assist small employers don’t go far enough. The report states the importance of the SME sector, backing this up with some persuasive statistics from the quarterly Labour Force Survey.

The Facts and Figures

Currently, SMEs make up 45% of the UK private sector turnover. Nearly three fifths of people working in the sector are employed by SMEs. Every year since 2005, smaller businesses have taken on more of the unemployed than organisations with 250 employees or more.

Looking at annual averages:

·         Each year 85,000 unemployed people set up a micro business, with many eventually becoming employers

·         367,00 find work in SMEs

·         Only 65,000 are taken on by larger corporations.

Clearly SMEs play the greatest role in getting people off benefits and into work. They are also more prepared to take risks with recruits, taking on young people entering the workforce, the unskilled, and people with family responsibilities. Those with disabilities or who have been off sick long term are often given an opportunity to work in SMEs. Of people with these and other barriers to finding work, 95% end up as employees in businesses with less than 250 employees.

Unfortunately small businesses also have a reputation for putting people out of work by going bust, but the FSB’s report puts this in proportion. “Recent evidence suggests that the highest rates of creation and destruction are among the youngest businesses, which for self-evident reasons also tend to be small. On average we can expect approximately 266,000 firms to be established in the UK in any one year, with slightly more starting up during recessions. After five years, just under half (44.4%) of these remain.”

As a successful entrepreneur then, you may be about to receive the recognition you deserve for your hard work, drive and initiative.

Are your Procurement Practices Helping your Business?

There’s a lot of talk about cost cutting these days, not so much about smart spending. Of course, if your spending gets smarter, you’ll cut your costs, but an ongoing smart spending strategy will release cash for business development that you won’t have known you had.

Can you Get Smarter?

So where do you stand on purchasing? Can you see room for improvement in your practices? Things to think about include whether:

·         you have reviewed your buying practices recently

·         you always shop around for the best deals. If you don’t have time for this, do you delegate it? If yes, do you review the recommendations you get

·         anyone in your company had any procurement training

·         you are up to date on the legislation that affects your suppliers

·         you are getting good deals across the board and not just in the main materials you buy

·         you know what you are spending each month, and on what

·         you check monthly spending reports each month. If so, do you investigate any unusual fluctuations?

Having looked at these areas, if you can put your hand on your heart and say you don’t think you can improve your procedures, go to the top of the class. Not many small business owners or managers can say this, so if you can’t, you are not alone.

Should you Invest in Some Training?

Procurement training is something that is commonplace in larger companies, but seems to be low on the priority list for small businesses. Yet finding the best deals consistently, and being able to negotiate more advantageous terms, can make a big difference to your cashflow.

Training can make you and your staff aware of the potential pitfalls for the unwary buyer, the mistakes that an untrained person can make and how they can be easily avoided when you know how. It can serve as a reminder of how good purchasing practices contribute to the business. A short workshop can cover how to maintain good relationships with suppliers so they give you a priority service. It can give you tips on supplier appraisal and market testing, and help you organise and manage bids from vendors of the goods and services you need.

Whether or not you decide to take the training route, it’s worth talking to your outsourced bookkeepers about this. They are well placed to advise you if you could do better in the area. They can also produce the regular reports you need and help you analyse them, so you will benefit from getting them involved.

Real Time Information on PAYE

HMRC is introducing changes to PAYE reporting, currently with volunteer employers. On April 2013 the changes will become mandatory and by October that year, every business will have to be compliant. The changes have been labelled Real Time Information (RTI).

Real Time Reporting

Under the RTI system, information will be collected by payroll software and forwarded electronically to HMRC every time the payroll is run. It means that the tax man will know what tax, national insurance (NI) and other deductions have been made for every employee as soon as they occur. It makes P14 and P35 annual reports redundant, and HMRC will be able to arrange any necessary adjustments through the year, rather than retrospectively after receiving annual reports.

What RTI Means for Employers

The most important aspect of this for employers is that they must have appropriate payroll software. If you have fewer than ten employees, you can use the free HMRC Basic PAYE Tools package, but software suppliers are producing upgrades to accommodate the change.

You would be wise to speak to your outsourced bookkeepers about it now, as you need to plan for compliance in advance to be confident about the changeover. There will, of course, be penalties for non-compliance.

HMRC will let you know the date they expect you to begin, which will be between April and October 2013 unless you make a voluntary arrangement to start earlier. They are seeking more volunteer companies under their pilot scheme.

Starting and Leaving Dates

There will no longer be a requirement to send forms P45 or P46 to HMRC as starting and leaving dates will be reported with the payroll information. However, these forms will still need to be used to pass necessary tax information on employees between employers.

Data Quality

It will be vitally important to hold accurate information on your employees so that HMRC can locate each individual’s account. Full forenames and surnames are required and when you enter a newcomer, you should check an official document to make sure the spelling is correct. A birth certificate or passport will show this and the correct date of birth. The format of dates should match HMRC requirements. The third piece of crucial information is the NI number. These can be checked at the HMRC National Insurance tracing service.

Either before, or at the time of, your first RTI submission, you have to make an Employer Alignment submission of the details of all your employees during the current year, with dates of starting and leaving where appropriate.

This is a big change to current practices, so do discuss it as soon as possible with your bookkeepers and payroll administrators.

More Ways to Get Value from your Outsourced Bookkeepers

Are you getting the most from your outsourced bookkeepers? You need them to keep your accounts up to date and make sure your business meets all those onerous HMRC deadlines. But they can do so much more than that for you.

Making Sense of the Figures

When they give you the reliable data you need to make the right business decisions, don’t just look at all those pieces of paper, or figures on screen, in isolation. Have a dialogue with your bookkeepers and make sure you know exactly what they mean, and what opportunities and/or threats they represent.

Discuss them in several contexts:

·         your business situation, of course

·         the current market in which you operate

·         your competitors’ performance

·         the wider economy.

Your bookkeepers’ viewpoint can be more objective than your own. They have a breadth of experience, from a wide range of clients, which can often supplement your own.

Helping you Meet your Business Objectives

If you involve them in discussions about your business plans, you might get new ideas in areas like improvements to processes and procedures; boosting the cashflow; raising funds, and so on. They would be invaluable in setting realistic and manageable budgets for proposed projects, and then overseeing them and alerting you to any potential overspends with possible solutions to problems.

Helping you Save Money

One of the most important ways that bookkeepers ease your finances is by making sure you don’t incur any late payment fines or penalties. For some this saving makes up for the cost of the service. Again, there are other ways they might help you save money.                                              

Your bookkeepers can often see new possibilities for cost cutting, but unless you ask them or provide opportunities for dialogue, they might not pass them on. It’s really important to talk to them. While you are the expert on your business, what it offers and how to offer it, their expertise lies in administration and finance. And these different aspects of commerce have to go side by side in any business for it to succeed.

You could get their help in installing a new accounting system, overcoming teething problems and getting it running smoothly. They could give your staff training in using systems and following accounting practices, and then take on a supervisory role.

Good bookkeepers can also save you some of the more expensive time of your accountant. When they produce everything needed for the year end accounts package in a way that is easy for the accountant to check, it will just be a simple matter to compile your Annual Accounts and confirm your tax position.

If you are not receiving all these benefits from your outsourced bookkeepers, it’s time you did something about it.

Olympic Inspiration

The incredible efforts of the 2012 Olympic athletes are inspiring both the young and the mature. Of course what we spectators have been watching is just the culmination of years of training and interim achievements. The achievements come when they succeed in meeting their goals, and there will have been many of those in the build up to the ultimate objective of winning an Olympic medal.

And unless they decide to retire, their efforts don’t stop there. After a well-earned break, they will be setting more goals for the future and working towards them.

As business people, we may have lessons to learn from that. Whether your ultimate goal for your business is set for five years or twenty years on, you will have to build and develop it to get there. You need to set interim goals in realistic time frames, and give yourself time to celebrate when you have met them. Then you’ll be motivated and enthusiastic about moving on to the next goal.

The Right Goals Point you in the Right Direction

Effective goal setting is a skill that entrepreneurs need to acquire. If you get them right, you will be directing your efforts in the right direction and less likely to be side-tracked into unprofitable activities.

Most business people have heard about using a SMART technique to set a goal, making it specific, measurable, achievable, realistic and timely. But there is more to it than that. The most important aspect is that you really want to achieve it, and it’s not just something you think you ought to be aiming for. If you personally don’t have a passion for it, it will be very hard to summon up the drive you need to achieve it.

Goals Must Remain Dynamic

You will, of course, need to review your goals from time to time to make sure they remain appropriate if circumstances change. For this reason, goals should always be set out in writing which will also help you make them detailed and precise, so they they can’t be dissipated by vagueness. When you write up your goals, don’t include anything you don’t want that needs to be avoided. Keep your text positive and just leave the negatives implicit.

For each of your goals, you need a schedule that sets out the steps you will take to get you there, and when you will take them. This also can be changed at review stage if your plans are not working out as you hoped. External changes out of your control can make this necessary, and you shouldn’t ever blame yourself. You just have to take them in your stride and decide on other strategies to help you reach your goal.

Remember that your outsourced bookkeepers are on hand to discuss your financial goals and may have useful tips on different ways to reach them.

Good News on Bank Lending

When Mervyn King, Governor of the Bank of England, announced the £80 billion Fund for Lending scheme at his Mansion House speech in June this year, he said it would be a ‘joint effort’ between the Bank of England and the Treasury. On August 1^st, the Fund for Lending made cash available to high street banks at low interest rates specifically to be passed on to their small business customers. The aim is to encourage the banks to lend and businesses to gain the finance they need for growth which will help the economy. 

The First Response 

Banks involved included the Royal Bank of Scotland (RBS), which badly needs to lift its image following the technical problems that recently delayed incoming payments to the accounts of many of its customers. 

RBS has now announced that it will cut its rates on loans to small businesses by up to 1.6%. It will make £2.5 billion available for these loans to small businesses with a good business plan. This is really good news at a time when the rising costs of finance have been putting off many SMEs from borrowing to expand. It is especially welcome in London and the South East where finance under the Regional Growth Fund Scheme is not available. 

More Good News 

RBS has also decided to remove arrangement fees which can add an extra £1500 or so to a £100,000 loan. This plus the lower interest rates could result in savings of about £4,000 on the loan repayments. 

According to Chris Sullivan, Chief Executive of RBS and NatWest Corporate Division, this is the best ever offer for SMEs, and the best available in the UK. He said, “RBS and NatWest are determined to play their part in supporting the economic recovery. The clearest and strongest way we can do this is by letting people know that we are open for business and ready to support their ambitions on the best terms available.”

John Cridland, Director-General of the CBI also commented, “Rising borrowing costs have held back the growth ambitions of many small and medium-sized firms. This scheme should support banks to make finance more affordable to businesses and consumers, while also encouraging banks to lend more.”

Tips for a Smooth Running Cash Flow

This aspect of your business is so important that it’s worth looking at over and over again. The economy is still in the doldrums with more negative news recently, and it’s never been more vital to make sure the cash is flowing in as your products and services flow out. 

Regular Cash Flow Reviews 

You really need to review your cash situation regularly, once every week or two unless you are so confident that monthly will do. Sit down with your bookkeepers to see where you are at that moment and work out what cash you will need when. What will ensure you have it at the right time?

Do you have the right stock and resources, or do you need to buy in? Can you afford to or do you need to find more cash? Are your cost figures normal or do you need to investigate hikes? Can you cut costs? Most important: are payments coming in when they should? 

Consistent Credit Control Activities 

Consistency in this area is a must. It’s no good sending out a statement and not following it up for six months. Set up a credit control procedure of regular contact with debtors, and follow it to the letter. They will at least push you up their priority payment list to get you off their backs more quickly. If they are really stuck for the total amount, you might be able to negotiate staged payments and get your cash in that way.  

You could also talk to your outsourced bookkeepers about whether factoring arrangements are suitable for your business. That would take the credit control burden from your shoulders and guarantee at least some early income, although it will add to your costs. 

The Importance of Credit Checks 

Of course you would never offer credit to a new customer unless you were confident of their ability to pay. Or would you? People can do unwise things when they are desperate for business. While some are lucky, others are not and just get taken for a ride. Don’t be one of those. Always check their credit rating. 

It’s wise to keep tabs on existing customers too, especially in the current economic climate. You need to know who is in trouble, so you can make sure it won’t be you next. 

If you get a whiff of negativity, don’t ignore it. The next step is to talk to your customer and renegotiate your terms. In an extreme case, you might need to stop doing business with them. You may not want to add to their troubles, but you certainly don’t want to land yourself in a cash drought. 

Don’t forget to discuss things with your outsourced bookkeepers; they may be able to offer ideas you haven’t thought of yourself.

Finding Alternative Funding

It’s still horrendously difficult for SMEs to prise funding out of the banks. Despite the government’s best efforts, they just don’t seem to be cooperating. Even Vince Cable, the Business Secretary, appears to have given up. Last month, at the Investec Entrepreneurs’ Summit, he said that the banks have their own problems and entrepreneurs should stop blaming them and find alternative funding for survival and growth.

When they are battling to survive or move forward because of late payments, small businesses may only need short term loan arrangements. There are several options for these.

Wonga.com

Originally a pay day loan company for individuals, Wonga recently began offering short term business loans. These have a very high APR but as short term at Wonga means a month at most, it doesn’t add up to much unless you default on the repayment, which could be very costly indeed. Don’t use Wonga unless you are completely confident that you will have the repayment funds in your bank account by 5am on the date you have chosen for the end of the loan. The amount will be collected from your debit card on that day. Your loan can be up to £400 initially. After that the ceiling may be lifted by negotiation.

Invoice Finance

If you use a factoring company, you send them copies of your invoices and they will release up to 85% of the amount payable to you straight away. This is particularly useful if you have your own suppliers to pay and can avoid interest being added, or take advantage of discounts for early payment. In some cases it’s been known to make a difference to whether or not an employer could pay wages and salaries on time. And because they will do the credit management work for you, you have the time and money to concentrate on other aspects of business success. The downside is that they will take a cut of the balance when the invoice is paid, or there may be a monthly fee to pay whether or not you use the service.

Market Invoice

If you are in the business to business sector, you might be able to avoid the monthly fee by using marketinvoice.com, which acts as an invoice auctioneer. The buyer of your invoice pays you the agreed percentage at the close of the auction and once your client has paid the invoice amount to Market Invoice, you and the buyer will be paid the appropriate amounts less a small fee. Market Invoice typically deals with large invoice amounts and will scrutinise your company before accepting your invoices for auction.

These are just a few of the alternative funding options available. If you are having cash flow problems, your outsourced bookkeepers should be pleased to discuss these or tell you about others they know about.

Consultation on Business Insurance Law Reform Proposals

Have you ever had a claim rejected by an insurance company because you failed to disclose an element of risk before signing the contract? This is a fairly common occurrence that has been the cause of many disputes which have been resolved in and out of court. It can have a devastating effect on organisations of any size, but small businesses are naturally less able to cope with the losses.

It has happened so often that the English and Scottish Law Commissions have been jointly reviewing insurance contract law. They recently issued their third consultation document focusing on this aspect, which they say will be the last one before they pass proposals to Parliament.

The Law as it Stands

Insurance law is governed by the Marine Insurance Act of 1906. Originally designed to insure ships and their cargoes, in the absence of a more general law, the Act has been applied by the courts to all forms of insurance.

It places a duty on the business to disclose all possible risks to the insurer before the premiums are decided and a contract raised. Business policy holders rarely understand the importance of this disclosure, but insurers are not required to intervene even though they are much better placed to know what questions should be asked and answered. Even some insurance brokers have little understanding of what is needed for a good presentation of risk.

An Unfair Balance

It means that the letter of the law supports insurance companies to collect premiums and then refuse to pay out following a claim on the grounds that they were not made aware of a particular risk. Policy holders may believe they have disclosed everything relevant when they have actually missed something that would have made a difference to the premiums charged. In these circumstances, even if the non-disclosure is not relevant to the specifics of the claim, they will not be entitled to benefit from the policy.

Small businesses may actually have a slight advantage here, because insurers are often more wary of doing business with them than they are of the business giants or even medium sized organisations. They may therefore ask questions and be more probing than the law currently requires them to be before setting premiums and issuing policies. If a claim is disputed, though, they are likely to be less able to pursue it and reach a favourable solution.

Redressing the Balance

So an implied suggestion in the consultation is to place a duty on insurers to follow up disclosure with their own investigations where they are not completely comfortable with a risk area. Another is that the remedy should no longer be an automatic withholding of claim payments. All the circumstances should be considered so that some benefit can be received by a business that has acted in good faith.

If you would like to take part in the consultation, you can find it at http://lawcommission.justice.gov.uk/consultations/business_disclosure.htm.