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.