The Pros and Cons of Bitcoin

Throughout the recent recession, entrepreneurs have been constantly looking for ways to improve efficiency, cut costs and ensure their businesses survived. Although we are told that the economy is recovering, this is not the time to relax efforts in this respect. One of the innovative ways that some owners of businesses operating beyond their own localities is to use Bitcoin as an option for payments and receipts. For most people, though, Bitcoin and how it works is still something of a mystery.

Some outsourced bookkeepers have been intrigued by Bitcoin and looked into it so they can discuss it knowledgeably with their clients. While there are a number of advantages to using the Bitcoin system, there are also risks that need avoidance measures. As long as robust security policies and procedures are in place, a Bitcoin system could be a valuable asset to many small businesses.

Advantages of Using Bitcoin

If you decide to add Bitcoin to your payment options for customers, it’s still a rare enough phenomenon to be a perfect opportunity to get some publicity. When you let your local press know and announce it on social media platforms, it will be followed up and your business will get plenty of exposure. You will be recognised as innovative and up-to-the-minute.

To take advantage of this, you need to make sure you have the knowledge to answer questions about it and can provide helpful quotes. Adam Twidell, founder of private jet firm PrivateFly, said, "The private jet market is all about fast turnaround, and processing bank transfers or clearing credit card payments at short notice can slow things down. With Bitcoin we can easily make a £20,000 payment at midnight when the banks are shut … For us, offering Bitcoin is about increasing customer choice, improving efficiency and embracing the latest technology…”

As well as being fast, Bitcoin is an economical system that cuts out the cost of currency exchange and card processing. You just need to sign up online for a Bitcoin wallet, which acts like an online bank account. This is linked to your physical bank account so that transfers can be made. Then you should sign up with a payment processor to manage your transactions. Fees for this are much cheaper than bank charges or those from credit card companies.

Risks in Using Bitcoin

The most obvious risk is that of computer hackers. That’s why you need to take really robust security measures. Bitcoin transactions are transparent and publically available, and will leave a really good audit trail. If you want privacy, you should learn how to use different Bitcoin addresses with this in mind.

Another risk is that the value of Bitcoins is still constantly fluctuating so you are advised not to keep them for long. Most transaction processors will convert them on receipt and pass cash to your bank account.

As long as you take the measures to avoid these risks, Bitcoin should bring business benefits. Many small businesses have taken the plunge as you will see if you search online via CoinMap.org or similar sites. Your outsourced bookkeepers will be interested to discuss Bitcoin and see what you think about it.

Making the Most of your Time

How do you organise your working day? Do you make a list of things to do and religiously follow it? Or do you find that most activities roll onto the list for the next day?

To avoid this you have to discipline yourself. There are so many tempting distractions right in front of you on your desktop. Of course you know all about this, but it’s worth giving yourself a pep talk about it every now and then. Here are some of the worst time wasters that your outsourced bookkeepers have recognised in their clients’ work habits.

Compelling but Unnecessary Distractions

If you stop what you are doing each time an email pings in, read the new missive and then take more time to reply to it, you then have to get back into the mind-set of the job in hand, by which time you’ve probably lost 10 or 15 minutes out of your day. It is far more efficient to concentrate on one thing at a time, so get on with the job and make time for emails later. If something is really urgent the sender would be more likely to telephone than email.

That brings us to those phone calls. If you don’t have the luxury of a secretary to field your calls, it’s sensible to use an answer-phone system. If you are concerned about missing any urgent calls, use one which allows you to hear the caller and decide if the call should be answered immediately. Schedule time for the ones you need to make but never pick up the receiver without knowing what you want to achieve from it. If necessary take a few minutes beforehand to think this through. Time invested like this can make the call briefer and more productive.

Social media can also be a huge time waster. While it’s necessary for some businesses to use it for marketing purposes and to follow trends that will help you make informed business decisions, it’s also easy to get sucked in while the minutes tick by. You really should plan the time you can give to it, and make sure you stick to it.

Planning to Make the Most of your Time

Those clients your outsourced bookkeepers note are the most successful are those who review their achievements at the end of the working day and draw up a plan for the next one before they leave. If you are not one of them, give it a try. You’ll start tomorrow well prepared for the day to come so that you can get even more out of it.

New Ideas to Combat the Late Payment Problem

Many small businesses are still having difficulties caused by late payments for goods and services supplied to other organisations. If this is a problem for you, you may, like many other small business owners, be reluctant to charge the interest and compensation that is legally allowable by the Late Payment of Commercial Debts (Interest) Act 1998. This is understandable because you need to maintain relationships and get more business.

According to Simon McVicker, director of policy and public affairs at the Association of Independent Professionals and the Self Employed (IPSE), late payment to small businesses “jeopardises financial security and damages reputations”. Recognising the severity of the ongoing problem, IPSE has recently launched a report with their proposals for solving it.

The Voluntary Code is Ineffective

Some of it will seem very familiar to your outsourced bookkeepers. With them, you probably recognise the argument that the Prompt Payment Code is not currently effective, and it needs a much stronger commitment from both the public and private sectors. For example, why is it not mandatory to have signed up if you are a supplier to the government or a local authority, or are trying to become one? Those at the end of the line supplying them are so often the ones who have to wait the longest for their remuneration.

Making Late Payment Illegal

Other aspects of the IPSE report are more radical. Some large organisations will only take you on as a supplier on their own terms, which may be 60 or even 90 days as standard, regardless of the terms and conditions normal to your business. IPSE would like to see this outlawed. Current legal sanctions have little power, so it proposes that no payment terms should be longer than 30 days, and that it should be illegal to pay more than 30 days late.

Not only that, but another proposal is to have an automatic fine applied if a payment remains due when it is 60 days late. This could be up to 10% of the total cost of the contract.

IPSE also proposes a Small Business Conciliatory Service to help resolve disputes out of court, providing free advice, or formal mediation services for an economical price. Your outsourced bookkeepers are not the only ones to recognise that small businesses desperately need help when they are up against major enterprises with so much more in financial and human resources.

If you agree with these proposals, you should add your voice to that of IPSE whenever any lobbying opportunities come your way. 

New Rules on Consumer Data Imminent: Are you Prepared?

The changes to data protection laws are expected to be ratified by the Council of the European Union by the end of 2014. The new rules will mean big changes for businesses that collect consumer data. They are designed to protect individuals from aggressive marketing techniques and give them more control over where and what information about them is held.

How the Changes Will Affect Small Businesses

All businesses should be reviewing the data they hold, how they currently manage it, and what they do with it, so that they can plan how to respond to the changes. Even if your small business has a small customer database, if you sell products or services to the public, you could be affected, and compliance may cost more than you expect.

People already have the right to see what information you hold about them, but the new rules will mean you can’t charge a fee for this. It has to be free, and you have to pick up the tab for the time and effort involved. Having accurate data is important for many reasons, but never more than now.

Whether or not the information is accurate, customers may then want their data deleted completely, and you have to comply. You can no longer just mark the record, ‘do not contact’; you have to delete everything about a customer who requests it. If you have records held for different purposes in different areas within your organisation, the deletion exercise must cover them all. If one is missed and a person is contacted and complains, you could face a fine based on your annual turnover. The percentage of this imposed as a fine will depend on the perception of the severity of the offence. Your outsourced bookkeepers could be one source of assistance for this.

The Questions to Ask

Every new customer must be asked if their data can be kept. No longer will it be sufficient to have a tick box for them to opt out. They must respond about whether they want to opt in. Customers must also give their permission for you to use their data for customer profiling – working out what they are likely to be interested in based on their purchasing history. Many will agree, so that they can receive relevant offers, such as money off vouchers for items they have been purchasing before. Others will not, preferring to keep their buying habits, and their lifestyles, private.

Whatever your activities, if you need to keep records of customers for marketing or other purposes, you need to work out how to respond to the new rules. There are likely to be cost implications that need to be factored into your cash flow projections. If you discuss it with your outsourced bookkeepers, you will probably find there are a number of ways in which they can help you.

Be Prepared for the New Waste Management Laws

Waste management company, BusinessWaste.co.uk, recently surveyed 1700 small businesses and discovered that around 90% of them were not aware that waste laws for businesses will change at the beginning of 2015. The Customer Services Manager at BusinessWaste.co.uk is Alex Wignall. He said, “It is shocking that 90 percent of the businesses we spoke to had no idea that these changes are set to come into law very soon. The cost of not complying with these new regulations could be catastrophic for businesses – small businesses in particular.”

What you Must Do in 2015

An amendment to the Waste (England and Wales) Regulations 2011, based on the EU Waste Framework Directive, means that you will be legally obliged to separate recyclable materials from your landfill waste. This is so that the waste collection services can collect it separately.

As long as you keep materials like paper, glass, metals and plastics separate from the non-recyclable waste, you don’t have to separate the different types of recyclable material to stay within the law. But different local authorities have different recycling arrangements and some may require this. The way they arrange their domestic collections will give you a clue about it, but if you are not sure about it, your outsourced bookkeepers may know through their contacts. Otherwise, you can check the local authority website or you can contact the waste collection service you currently use for advice.

What you Should do now

If you don’t currently separate your recycling, you need to be organising this now so that you can be ready by the New Year. There should be some advantages to the new regulations. If your business gets rid of waste to landfill sites, the fees and taxes you pay for this will be reduced along with the weight of your landfill waste. This should offset the cost of investing in any new bins or recycling bags you need.

What Could Happen Otherwise

As Alex Wignall pointed out, the penalties for non-compliance are unlimited in the Crown Courts, and they can be very severe. Even magistrates can impose fines of up to £5,000 on a business that is brought before them. So make sure your business doesn’t get a criminal record by sorting out your waste management arrangements now.

Discussing regulation that has the potential to affect your bottom line with your outsourced bookkeepers can often be helpful. All their clients have to meet these challenges, and they see what is working for others. Talking it over with them could be the next best thing to all those time consuming networking events.

Small Businesses and Real Time Information

Have you got your head around Real Time Information (RTI) yet? Many small businesses are saying that they were not able to ready themselves for the deadline for this new tax regime.

Submitting Payroll Data to the Revenue in Real Time

Under RTI, you have to make online submissions of information about employees and their pay to HMRC on or before the day they are actually paid. If you pay monthly, that means once a month, but for anyone paid weekly, the RTI return must be submitted every week. This is instead of sending in the quarterly and annual employer returns and is a major change in the work relating to payroll operation.

For many companies, the changeover date was 6 April 2013, but small businesses were given a less stringent regime with more time to prepare for it. They could submit their returns monthly even if they paid some employees weekly. Of course, they still would have to find the wherewithal to update their systems or invest in new payroll software, as well as to set up new procedures and resource them.

Employee details are critical. It is particularly important that national insurance numbers and dates of birth are accurate, and home addresses must be kept up to date. It’s a tall order for a small operation, but of course, your outsourced bookkeepers will be up to the job.

Period of Grace for Small Businesses Extended

Since many of the smallest businesses have reported their concerns that they have still not managed to prepare themselves properly, HMRC have now extended the full deadline for those with fewer than 50 employees to March 2015.  If you fall into this group, you can continue to submit your returns monthly until this date, so you still have a few months of grace.

With the help of your bookkeepers, even if you aren’t ready yet, you could most likely manage it before then. The sooner you can submit returns on or before wages and salary payment dates, the sooner you can breathe your sigh of relief knowing that you won’t be penalised from March next year.

Remember though, that if your business is doing well enough for your employee numbers to be growing and likely to hit the magic 50, you have no choice but to comply with RTI. Otherwise automatic fines that cannot be avoided will be applied.

Business Growth Beyond our Shores

Recent research carried out by The Small Business Research Centre and Barclays Business indicates that small businesses that export are growing faster than those who simply serve the UK markets. Their report follows a survey of 1000 owner managers across the UK, plus detailed qualitative analysis by the academics.

The results showed that the highest proportion of those who did business overseas were London based, an unsurprising trend given the city’s global reputation. Around 66% of all those who exported operated as manufacturers or retailers, many with online trading facilitating their ventures.

Surprise Findings

One aspect that surprises bookkeepers and business people is that some 68% of the survey reported that they had been exporting since day one. This contradicts the perception that most companies start local before moving on to overseas markets.

Another thing that might surprise you is that many exporters did not make strategic plans to move in that direction. They simply followed opportunities and “fell into it”. 59% were initially approached by contacts for overseas trade and 25% acquired the business by referrals. The report points out that they were being “reactive”, rather than “proactive” and were therefore likely to be missing other opportunities.

Barriers and Challenges

Of course, an online presence means that you can be known around the world, and more likely to be approached from overseas. But it appears that the challenges of exporting put many businesses off actually pursuing trade across boundaries. The complexities of regulation cause fear of falling foul of them in other countries. The way the markets operate can be different to what you are accustomed to, and then there are the language and cultural issues to deal with. Finding agents and organising the logistics can also be daunting for potential exporters.

Your outsourced bookkeepers will be in agreement with the report which recommends that small businesses “need to know where to look for immediate assistance and which

sources of advice can be exploited to maximise opportunities quickly. From a policy perspective, agencies responsible for export promotion, public and private, need to market their services clearly to SMEs and be able to provide appropriate SME advice on a responsive basis. This would include information on, for example, country-specific rules and regulations; together with information on currency exchange management from financial service providers; as well as presenting cases on how it has been done by similar SMEs.”

Nevertheless, the report’s initial finding that exporting is proven to be assist growth makes it well worth considering whether there are any overseas opportunities for you.

Choosing Safer Business Risks

If you want to grow and develop your business, you must inevitably take some risks. All the great entrepreneurs will tell you that they have taken major risks throughout their careers, but they have survived mostly by being canny and calculating about which risks to take. So how can you avoid being foolhardy and only proceed along the paths that are the safest? What will make it easier to calculate the risks and choose the ones most likely to be worthwhile?

Know Your Business in Detail

Perhaps the most important thing is to have an intimate knowledge of your financial starting point at the time you need to make your decisions. Unless you are completely familiar with what cash you have available, the liabilities that will deplete it and the expected revenues, your business decisions could do more harm than good. Outsourced bookkeepers can help, and it’s a wise entrepreneur who discusses plans with them before making commitments.

Do you know the number and value of your average sales transactions per week or month? What have you and your staff done to make this happen? Could there be a way to bump up the numbers without it costing you too dear?

What marketing strategies have you been using? What tactics have worked well in the past? What does your market respond to? What has been the response rate and the conversion rate? What might you change to improve things?

Work out your Needs and Their Cost

You also need to be sure about what it will cost to take a particular route, and be able to predict the long term benefits. Do you need to recruit new skills, and how much will that cost you in both acquiring and retaining these personnel? If you don’t know the answers to all these sort of questions, how can you be certain it will be worth it?

If you don’t already have all this information at your fingertips, now is not the time to move ahead with development plans that could end with you falling flat on your face. Postpone your activity and talk to your bookkeepers about how much historical information could be made available, and make sure that they collect and report on all the data you will need from now on.

With the right information, you will be able to develop reachable goals and plan what risks are the safest to take as you strive to achieve them. As you tick them off, you will have the enviable satisfaction of seeing your business thrive and grow.

The Role of Local Enterprise Partnerships

How much help do you get from your Local Enterprise Partnership (LEP)? Are you confident that you can get the advice and the services you need from it? Do you and other small businesses in your area have a voice in local business strategy of your LEP?

What The Federation of Small Businesses (FSB) Thinks

Your bookkeepers are aware of one of one of its recent reports, which says up front that LEPs must engage more with small businesses. Consulting more effectively with them would help them encourage and make the most of local growth opportunities. The recommendations of the report include LEPs having a small business sub-group and a stakeholder relationship manager to make sure that the needs and ideas of local small organisations are brought to the attention of the LEP. A board member with the relevant background and experience should also be appointed to hold specific responsibility for small business issues.

The report follows a survey of LEPs, Local Authorities and small business representatives. Of the 39 LEPs currently operating, 36 responded, as well as 131 local authorities and business people. The FSB conclusions are that LEPs are hampered by a lack of government clarity about their role and mission, as well as by inadequate funding and staffing. Its report therefore also makes recommendations to government.

A fascinating graph covers types of LEP activities to support small business competitiveness that are currently available, and the considerable amount that that falls short of what a) local authorities and b) the FSB think they should be offering.

Why the Small Business Sector is Important

It points out that ‘small and medium sized businesses have been responsible for four in five (84%) jobs created in the private sector between 2010 and 2013, and represent almost half (48%) of private sector turnover. Yet the report finds that large businesses are perceived to have most influence within LEPs.

According to FSB National Chairman, John Allan, "LEPs are crucial to delivering local economic growth across England. While some have done a good job of reaching out to the small business community, others need to up their game. Small firms will ultimately be the ones creating most of the jobs and prosperity in the private sector, so it is absolutely essential that they are at the heart of all LEPs thinking and plans.”

So how much do you and your outsourced bookkeepers know about your local LEP? Is it time to find out more and become proactive in lobbying for the changes that are needed?

Starting the Working Day in Bed

Freelancers who work from home have long luxuriated in the fact that they can start work when they want, and can stay in their dressing gowns while getting on with the job and even while talking to clients on the phone. Video calls may have put paid to the latter, but by making good use of new technology, they don’t even have to get out of bed before checking their emails, posting social media updates, performing research, working on drafts of proposals and reports and so on. Similarly, those entrepreneurs, directors, managers and employees who roll into the work place after 10am, could easily have been hard at it from before dawn.

Recent Statistics

Digital market research company, Toluna, recently revealed that around 70% of UK participants in a survey check their smart phones as soon as they wake up in the morning. Are you one of them? If so, you are probably starting your working day in bed.

Price comparison website, Give as you Live – which raises money for charity from transactions through the site – has also been doing research. It found that nearly half of its UK shoppers were in bed when they made purchases.

What This Means for Businesses

Outsourced bookkeepers and their clients recognise that these trends have implications for business. The shop is never closed when it operates on the web. Whether they are using mobiles, tablets or laptops, users can access the internet in their homes, gardens and bedrooms, and out and about wherever WiFi is available.

Paul Twite is the Managing Director of Toluna in the UK. He advised that, “As consumers use multiple devices to access the internet, it is becoming more important to understand how habits are changing.”

“With UK consumers active on the internet at all times of the day, and in all locations, it is important for marketers to be able to provide engaging content outside of traditional time frames. It is also vital to react quickly to trending themes and stories in order to meet the high expectations of an audience that is always switched on.”

If your business sells goods or services on the internet, you may need help to ensure you are making the most of its opportunities. Your bookkeepers know your finances and where your risks lie. If you make sure they know what you are trying to achieve, they will be happy to discuss it with you and may be able to introduce you to people who can help you get there within your budget constraints.

Minimum Wage Rise October 2014

If you have employees, you need to be aware that the next increase in the minimum wage comes into force on October 1^st. For anyone over 21, the hourly rate rises by 19p to £6.50. For 18 to 20 year old employees the rise is 10p to reach £5.13 an hour. For those in work at the age of 16 or 17, it is 7p, making their minimum wage per hour £3.79, although youngsters only become eligible for this on the last Friday in June of the year in which they become 16.

Now that some form of education is compulsory until the age of 18, 16 and 17 year olds can only be employed if they are also undergoing some part time education or training as well. You might have one or more young people on apprenticeships with you, in which case their minimum hourly wage rises by 5p to £2.73. As your outsourced bookkeepers will know, after apprentices’ first year, the rate remains at this level for those under 19, while those over 19 must receive the same rate as other employees in their age group.

Non-compliance can be Expensive

Failure to comply with these regulations can evoke some hefty penalties, and these become even more severe on October 1^st. Where currently the maximum fine that could be imposed is £5,000 per employee, it is set to go up to £20,000, which will add up to a significant total if several workers are involved.

HMRC have powers to investigate employers at any time if they have received a complaint or have reasons to suspect non-compliance. They can request pay records for up to the previous three years.

Make Sure you Comply

You are advised to get your bookkeepers to check the payroll and ensure that all your employee records are up to date, especially those for young people whose rates could have changed on their birthdays. Rules for what can be excluded when calculating the minimum wage can be complicated and many employers have fallen foul of the regulations because they were not known or understood. Outsourced bookkeepers keep up to date on all these aspects, so make sure you discuss the changes with them before the end of the month.

If you discover that anyone has been underpaid, pay the arrears straight away to demonstrate that it was just a mistake and you have acted in good faith. That way, you may be able to avoid the heavy financial penalties that can be imposed where employers deliberately flout the rules.

Local Authorities and Small Businesses

The Centre for Entrepreneurs, and the Spend Network, have been analysing the breakdown of spending for the 158 local authorities across the country. Their survey covered over 44 million transactions between April 2011 and March 2014. It found that, at a time when central government claims to be trying to do more business with small firms, most local authorities don’t seem to be following that trend.

The Survey Analysis

We have looked at Spend Small, the report on the work. It states that, in total, during the three years the local authorities spent £89 billion with companies. Only £11.1 billion of this went to small firms, while £9.9 billion went to just 20 of their largest suppliers. While none of the 78,128 small businesses concerned received more than £50,000 in a 12 month period, the average receipts per year of the top 20 suppliers to local government was £165 million.

Some councils have even lowered the amount they have been spending with small local firms, while a few have been increasing it. If you are based in the London boroughs of Wandsworth, Greenwich, Croydon or Newham, you might have more chance of persuading them to do business with you, as these are among those that have increased their spending with local small businesses the most.

Why Local Authorities Spend as They do

The analysis considered various environmental factors, such as financial size, location and political control, and it made like with like comparisons. It found no apparent links between these factors and whether the institutions used small local firms. Their work indicated that what makes the difference is a commitment to spending more with them. To quote the report, “Where an authority’s leadership commits to boosting small firm spend, they are able to do so – indicating that the key factor is having a Spend Small Policy and implementing it.”

How Change Might be Achieved

If you and other local entrepreneurs believe you have much to offer your local authority, we believe this is what you need to be lobbying for. That supporting small local businesses makes real economic sense could be good ammunition for this. Research has shown that, as they develop, small businesses are a key source of job creation and economic growth in local areas.

If you don’t have a local pressure group to run a campaign, you could use your networking contacts to set one up. Your bookkeepers can probably help and might be able to introduce you to other like-minded small companies.

Too Busy for a Holiday? Take the Work with you!

It’s always hard for an entrepreneur to decide to take time off, and many small business owners forgo holidays altogether. That, however, is decidedly not good for you and not really good for the business either. When you don’t take breaks, you get tired and stale, and that affects your performance. Your business can no longer benefit from your vision and verve.

Getting Away Does Help

Take a tip from your bookkeepers and book yourself a holiday. If you really can’t afford to leave your work for a week or two, find ways to take it with you. A change is as good as a rest, the old saying goes, and this could work for you too.

When you are away from home and your work place, other responsibilities are left behind. You can make time in the day or evening for exploring the new environment or go for a refreshing swim in the sea or the hotel pool before or after you put in a few hours of work. You’ll wake in the mornings with things to look forward to once you close your laptop. You’ll be eager to get the work out of the way so you can join companions on the beach or the golf course.

A Little Planning Could Make it Work

If you have a favourite holiday destination, it could be worth buying a holiday home there and going away regularly. Whether it’s a place in the sun or a country retreat, you’ll be bound to come back with batteries charged and ready to move forward at top speed. If you like exploring different places, you need to spend a little extra time on planning to make sure you book somewhere you’ll have internet access. Everything else you can take with you.

To get the most from your break, you should set some rules where you can. These could be set times during the day to check and respond to emails and other messages. Your out-of-office email message could ask for text messages to your mobile for anything urgent.

The holiday destination could give you the respite you need to write an important proposal or bid for funding. But if you expect to be really busy on something like this, plan longer periods for working with set times to stop and do something else.

It’s true that having to work on a break is not ideal, but it’s certainly better than not taking one at all. With all the technology that’s available now to make it possible to access your files and stay in contact with staff and customers, there really is no excuse for putting off taking that well-deserved and much-needed holiday.

To be sure that everything will be properly looked after whilst you are away, have a chat with your outsourced bookkeepers about their general office services. You might be surprised at what can be taken off your shoulders for as long as you want.

More Help for Small Firms Seeking Funds

Although we are supposedly well into economic recovery, small businesses are still finding it hard to access the revenue they need to develop. Sometimes they need funds just to get them over a slump and survive, and this seems to be even more difficult.

There are many new options from which investment can be sourced, yet outsourced bookkeepers agree with the Business Secretary, Vince Cable, who recently said that “…small businesses often give up if they are turned down for finance by their bank.”

Banks to Be Forced to Give More Help

In his March 2014 budget, Chancellor George Osborne mentioned plans to make banks do more for these small firms. They would be obliged to give them the option of being referred to an online platform giving access to alternative lenders. These will include crowd funding and peer-to-peer lending websites, invoice finance companies and some of the new challenger banks.

An announcement from the government on August 6 included proposed legislation on this as part of a new strategy to encourage more innovation in finance. It is one of the first steps in a campaign to make the UK a global centre of financial innovation. A full strategy document will be published shortly.

Boosting the Alternative Funding Sector

The alternative funding market grew significantly in 2013 to be worth almost £1 billion, and its value is expected to reach around £1.6 billion in 2014. This is a trend that the government wishes to promote and exploit.

To encourage the evolution of the financial technology (FinTech) sector, the Chancellor launched a new body, Innovate Finance, which already had 53 members, and which CEO Claire Crockerton believes will soon reach a membership of 200 companies in the sector. Innovate Finance and the Business Bank will be sponsoring new prizes and awards for those who manage to provide solutions to meet a challenge or problem in granting small businesses access to alternative funding.

The announcement also referred to a further £1 million for the British Business Bank’s investment programme, designed to help small businesses generally, plus the FinTech sector specifically. Ministers will also be looking at the potential advantages of using virtual and digital currencies such as Bitcoin, as well as the risks involved and how to regulate them.

Until the proposals to make the banks more responsive to their customers’ needs for finance come into force, your outsourced bookkeepers will advise you not to give up if your bank won’t help you. The many other ways to access funding are growing day by day. You just need to keep trying.

Managing Without Borrowing

Can you run a successful business without borrowing? Some do, and if the circumstances are right, with some good cash flow management, you could too.

Managing the Circumstances

The circumstances will be right when the business income is reasonably predictable; you are not planning excessively expensive changes; you have ample stocks; and you have the staff you need and the cash to pay them. These are aspects that can also be managed, but you need to take them into account when considering the cash flow situation.

The circumstances may not be right if you suffer from fraud, theft or a serious cyber-attack. While you can take steps to protect your business from such wrong-doing, this is not manageable in the same way. Crises like these, or natural disasters such as flooding, may need more cash than you have available to be able to recover. But these are rare circumstances, and while it is good to have contingency cash, your outsourced bookkeepers would recommend that, like most successful entrepreneurs, you do what you can for protection and then stop worrying about them.

Managing the Cash Flow

Cash flow, on the other hand, must be kept in mind all the time. The most important factor in good cash flow management is keeping accurate and up to date records. This is what will allow you to know the state of your finances at all times and have no nasty surprises.

Regular cash flow forecasts will also allow you to project that knowledge forward, so that you will know when monies are due in and can allocate them for spending. This means you can plan activities for when you can make financial resources available, and will be able to develop your business in this way.

Enlist the Help of Your Bookkeepers

Your outsourced bookkeepers will be invaluable to you in helping with this. They can also assist with controlling your debtors and paying creditors at the right time. Paying within terms but not too early means you will keep your cash as long as you can, and maintain a good credit rating.

Use your bookkeepers wisely and they will ensure that invoices go out promptly with advantageous terms. They will also flag up any potential problems with cash flow that you might otherwise miss. Noting them in good time means they can probably be avoided. Talk to them about whether late payment penalties or invoice factoring would be a good idea if you have any customers who take their time to pay.

All of this could help you manage without having to take out a bank loan or search for alternative funding.

Can you Cope with a Rise in Interest Rates?

Next year, the Bank of England is expected to begin to lift the base rate of interest from its all-time low of 0.5%. It’s going to have quite an impact on the finances of the nation. While savers will welcome it, borrowers will be hit with a rise in repayments. Businesses will mostly sit in the latter camp.

According to a survey carried out for the financial risk management firm, Company Watch, over a quarter of the UK businesses in its 500 strong sample have not even thought about planning for it. Your outsourced bookkeepers will have noted what the others are expecting and what they plan to do about it.

What the First Rise Might Be

It seems that some people believe the rise could be as much as 0.75% and are adjusting their financial business panning accordingly. Others are preparing for a 0.5% rise while an equal number think they only have to plan for a 0.25% rise.

How Can the Extra Costs Be Accommodated

How they will address the added pressures on their finances also varies. While some said they would try to get a better deal with a different lender if their bank debt payments start to spiral, a much larger percentage say they are already discussing terms to lock-in their current debt arrangements. Half of those trying to plan for these eventualities intend to increase sales and generate more revenue that way. A third will be looking at how to cut other costs, but only 3% said they would pass on the extra costs to their customers.

The Knock-on Effects

Emma Caister is Strategy & Business Development Director at Company Watch. She said, “Clearly with many companies in the Company Watch survey still feeling the effects of the long recession, even a small increase in debt costs might end up having a big impact on the strength of their businesses. We believe it’s sensible for companies to understand not only what higher interest rates might do to their own businesses, but also to examine what the impact might be on the financial health of their main suppliers and customers.”

Even if you don’t have bank debt that will be affected, people you do business with might, and there are plenty of angles connected with the probably interest rate rise that need to be considered. Your outsourced bookkeepers could be the best source of advice, support and inspiration for how to keep your business on an even keel when the Bank of England raises the base rate.

Could Cloud Computing Benefit your Business?

If you are already a fan of cloud computing, you’ll know all about the benefits for businesses that have embraced it. Many business owners though are still cautious about using it because of the problems that have been associated with it in the past, and because of some of the cyber-crime stories that are still around.

What they may not realise is that providers of cloud computing services are technical experts who employ all the state of the art techniques to keep their private servers and their customers’ data ultra-secure. In fact they claim, with some justification in the opinion of many bookkeepers, that your data is more secure in the cloud than when it is just kept on a PC or mobile device that is connected to the internet without these up to the minute security barriers.

The Easiest Back up and Disaster Recovery Facility

There are a number of ways to use the cloud. You might just want to have a secure backup facility that means everything is automatically backed up at regular intervals and is readily accessible to you if you need it. It’s so much easier than having to use some kind of external hard drive, making your back up yet another task for each day.

If everything is saved in the cloud, you’ll never have to worry about your data being lost in a fire or other catastrophe. Everyone hopes and expects that this will never happen, but if it did, you could concentrate on the myriad other things to be dealt with, confident that at least your data is safe.

The Hosted Desktop

Some entrepreneurs go the whole hog and commission a hosted desktop service, in which they operate in the cloud pretty much all the time. Their systems are hosted on secure servers at a data centre and can be accessed on any PC or mobile device that is authorised. They don’t have to upgrade their hardware to accommodate new versions of software or make more space available. Their software is upgraded for them as and when new versions become available. All the technical support needed is supplied by the service provider for a monthly fee which covers the software licences and upgrades.

Budgeting and financial planning becomes much simpler. That’s why accountants and bookkeepers usually find the concept interesting. If you are wondering whether you could benefit from turning to the cloud, why not discuss the pros and cons with your outsourced bookkeepers and see what they think.

New Flexible Working Rules Explained

On Monday 30 June 2014, new regulations came into force regarding flexible working hours. Now all employees who have been with you for at least 26 weeks can request flexibility in the hours they work. Previously only parents or other carers could expect this to be considered and granted. Now this category of employee no longer has to be given priority as every request must be considered on its merits.

You Don’t Have to Agree

Clearly, allowing this will be more difficult for entrepreneurs with small businesses and therefore fewer staff and resources. But you must give all such requests reasonable consideration, and you can only deny them for valid business reasons. These might be that there won’t be enough work to do through the proposed new hours of work, while you won’t be able to meet customer demand outside those hours. You can’t get the work covered by your current staff, and you can’t recruit more staff because you can’t afford it. Work performance and overall business performance will suffer.

If you really can’t allow flexible working, you are less likely to attract the best people, so it will be worth making what efforts you can to accommodate requests. Perhaps your outsourced bookkeepers can help if you discuss your needs with them.

Jo Swinson, the business minister, has said, "Firms that embrace flexible working are more likely to attract and retain the best talent and reap the benefits of a more motivated workforce. Employees will benefit from being able to balance work with other commitments in their lives. It also helps drive a cultural shift where flexible working becomes the norm."

Flexible Working Versus Flexitime

Flexitime has been operating, mostly in large companies, for a number of years. This is where everyone has to work in set core hours and can make up their specified work time at their convenience. It is different to the current concept of flexible working, which can mean working at home or in places other than the business premises, as well as being able to work outside the standard hours or on certain days of the week.

Employees will appreciate not having to travel to work every day of the week, or being able to start earlier or later than normal. Directors and managers will have to find ways to make it work wherever possible. Outsourcing some further aspects of back office work could be the answer for some, and outsourced bookkeepers may be happy to undertake this.

The Importance of Numbers in Business

If you want to be successful and ensure your business reaches its full potential, there is a multitude of numbers that you have to keep tabs on. Unless you are aware of your sales, profit and cash flow numbers, as well as a number of other performance indicators, you can’t make accurate forecasts and estimates that will help you to plan for growth.

Other Important Numbers

Most people are aware of the importance of the figures mentioned above, but your outsourced bookkeepers will tell you of many more. ROI is an important one. For example, when you start a new marketing campaign, it will probably cost you in cash and in time. You need to know how much it costs you and what return you get from your investment (ROI). If it brings more customers and more revenue you may decide to repeat the exercise, if not you may need to consolidate for a while before you investigate what didn’t work and decide to try something else.

If you are getting leads on potential customers, how much investment are you making in bringing them on board? If you keep tabs on your conversion rate, you will know how many leads you need to acquire and follow up, and how much you need to spend on it.

What is the average value of each sale or service product? How much do you need to multiply this by per week or month to break even or make a profit? Could you make improvements so that you can charge more and put up the revenue your sales generate? What would it cost you to do this, and would it be worthwhile?

At any given moment, can you state what your liabilities are, and when you must find the money for them? Can you put a figure on your receivables right now, or can you find it out quickly? How long before these payments will come in? Are the debtors all reliable so that you can expect payments on time? If not, when you plan your spending, you will need to disregard amounts you are not sure about. You really need to be measuring, averaging and estimating all the time.

Get the Help you Need

Staying on top of all these numbers can be daunting. But your bookkeepers can help you. If you are not confident about any of these areas, or any others that would be helpful to know about, talk to them about your concerns. They can produce the figures you need in reports from your accounting system, or help you to work them out from the data available. And they’ll always be happy to talk through what they mean to the business.