Getting Value from your Management Information

As a business owner or manager, you have to make decisions every day. Can you say, hand on heart, that you always know how to make good ones? Are you confident about them? Or do you sometimes feel you are flying by the seat of your pants?

The Information you Need

Most business decisions are based on management information, together with external data about the markets and the competition. While much of the external stuff will be collected randomly, you have much more control over the internal data. You just need to make your most basic decisions about what statistics and details you want, and how and when you should receive them, so that you will have the right information at your fingertips at the right time.

If sales of one product have suddenly taken off, while another is still languishing on the shelves, you need to know about it now, not in a month’s time. If a new customer is not paying your invoices, you have to get in touch with them sooner rather than later, and put a stop to the credit and the supply if appropriate. You have to know what is going on before you can do anything about it.

Structuring Data to be Useful

In theory, today’s technology should give you fantastic, instantaneous access to all the data you need. We’ve long passed the time of handing over scraps of paper to a bookkeeper every few months so we know how much VAT to pay. Knowing about your revenue flows, your profit and your available cash every day should never be a problem now.

But the information you hold will only be useful if it is properly managed and structured according to the needs of your business, and if it is readily accessible. While there are general rules you can follow about maintaining the quality of your data, every business is different, and different entrepreneurs do things in different ways. You may need to make a small investment in data quality software that will pick up inputting errors and maintain consistency, plus a good accounting system, efficient processes and the reports that work for you.

It’s a good idea to keep your experienced outsourced bookkeepers in the loop too, because they will have the objective viewpoint you may find difficult. They can help you interpret up-to-date information about your business performance, so you can make all your key decisions with confidence.

Business Advice from Chartered Accountants

The Institute of Chartered Accountants of England and Wales (ICAEW) recently initiated a Business Advice Service, with many of its member firms agreeing to offer free consultations to potential entrepreneurs looking to set up a business. The network of accountancy offices involved across the country is 3,200 strong, so everyone should be able to find one nearby.

There’s always something to worry about when you are running a business. Nigel Hastilow is director of enterprise at ICAEW. He referred to common worries such as keeping accounts up to date, and wondering whether there will be enough cash in the bank to cover the monthly wages bill, and said: " … We want to help small businesses to succeed and our members all over the country are offering a free, no-obligation consultation which could help deal with some of these hurdles standing in the way of business success…The ICAEW Business Advice Service has been set up to help companies address these and other issues."

Free Business Advice Events

Together with the British Bankers Association, ICAEW has designated week commencing June 25^th 2012 to be Business Advice Week and organised over 30 free events around the country. Their seminars and other networking events will focus on topics dear to every entrepreneur’s heart, such as accessing finance, getting a good start and growing a business.

There are a number of events in London and the South East, including:

·         June 27^th at 7 pm at Twickenham Stadium – topic: finance raising

·         June 28th at 6 pm at the Ivy Hill Hotel in Chelmsford – main topic: presenting a proposal for finance

·         June 28^th at 6 pm at Chartered Accountants’ Hall in London – topics: access to finance, business plans, better business finance and an overview of government initiatives

One will also be held at Croydon on another evening during the week with date and time yet to be confirmed. It will be aimed especially at small businesses wishing to accelerate growth.

Networking Opportunities

You can’t lose by going along to one of these. You may learn something that could benefit your business and you’ll certainly have opportunities to meet other business owners, potentially helpful organisations, bankers and perhaps business angels. You can find out more and make bookings at the ICAEW website.

Don’t forget though, that your outsourced bookkeepers can often help you with any accounting concerns you have. You don’t always need to involve a chartered accountant.

Do you Have the Right Bank Accounts?

If you haven’t reviewed your bank recently, and considered whether you might get a better deal elsewhere, think about doing it now. If more small businesses did this more often, and acted on their findings, we might all start getting some additional value from our banking service.

Your Level of Importance in The Bank’s Customer Portfolio

Are you a high priority for your bank, or are their preferred customers in a different league from your business? Don’t be afraid to ask questions about this, as well as looking at their marketing materials. Have you outgrown the customer profile they are targeting, or are you actually too small to matter? When was the last time your account manager called you or suggested a review of your account structure? Or do you not get calls like that at all?

A Benchmarking Exercise

When you check out other banks, of course you will compare transaction charges, but there may be a number of other ways they can help you with money saving ideas. Set up meetings with potential account managers and judge how interested they are and how proactive they are likely to be. The questions they ask will give you clues.

If they ask whether you export or do business in foreign currencies, you could be offered holding accounts for monies in those currencies and an information service about exchange rates so that transfers to a sterling account can take place at the time you would get most financial benefit. If you are concerned that a current account operates at close to zero, or to your overdraft limit, they might offer automatic movements between accounts to avoid additional costs. If they ask about the possibility of mergers or acquisitions, they may know of other companies seeking a partner or a buyer. A proactive account manager will network on behalf of his or her customers, making appropriate suggestions and introductions.

Ensuring a Smooth Transition

You’ll also need to be confident about how the transition will be handled. How much will the new bank be involved in this? How much of the organising will they undertake? How will they take over your payroll payments, your standing orders, direct debits and other payments to suppliers. Will it be a gradual process or happen overnight? How will they make sure it all goes smoothly?

Ask your outsourced bookkeepers for their opinion. They will see all levels of banking service during the course of their work for other clients.

E-marketplaces: the Latest HMRC Campaign

Each campaign of HMRC is, as you probably expect, a focus on a particular area where people have been avoiding paying their taxes or are unaware that they should. The campaigns are publicised on its website so you can take a look at the areas they’ve covered in the past and what is coming up, as well as what campaigns are current.

The campaigns give tax payers a window of opportunity to come clean about where they might not have paid enough, and to pay up without incurring serious penalties. Meanwhile they are investigating so they can bring criminal charges against those that don’t own up to additional income received in the last six years.

Are you an E-market Trader?

The current campaign is about people who trade on e-marketplaces, such as eBay. Now don’t freak out: that doesn’t mean everyone who has auctioned or sold anything on-line. It means people who trade on these sites to make regular extra income. So, if you sell your cast-offs or unwanted birthday presents now and then, it doesn’t count. But if you regularly go to car boot sales or trawl the adverts in your local newspaper for items you could buy to make a profit, watch out.

The Campaign Stages

If you want to declare extra income, rather than get found out, you have to go through two stages, each with a deadline. Stage 1 is to notify HMRC that you will be doing so. The deadline for this is very soon. This window of opportunity closes at midnight on June 14^th, so you need to do it as soon as possible.

After that, you have three months to work out your extra income and the tax due, inform HMRC and pay up. So this deadline is September 14^th. If you are unable to pay by then, you may be able to pay by instalments, but this would have to be negotiated.

How to Notify HMRC

The Revenue have an e-markets Disclosure Facility Helpline at 0845 601 2944 which will accept your notification. Or you can do it on-line via a form on the website. If you prefer, you can print out the form and send it in by post.

You don’t have to do it yourself. Your accountant can notify for you, or the agent who deals with your tax affairs. Your outsourced bookkeepers could help with the notification and sorting out the extra income to be declared and the extra tax to be paid.

What the Queen’s Diamond Jubilee Means for Business

Last year it was the royal wedding. This year it is the diamond jubilee. Yet another royal event marked by an extra Bank Holiday.

Nearly three quarters of the respondents to a poll by business services firm, ELAS, felt that the practice of adding a bank holiday to celebrate national events such as these, is wrong because it causes hardship to small businesses. At a time when many of them are struggling to develop, or in some cases to survive, they feel they can’t afford to lose another day of trading.

Personal Benefits

Because the Queen’s Diamond Jubilee immediately follows the Spring Bank Holiday on June 4^th this year, many employees are also applying for another three days leave, giving them the benefit of a full week off. This happened last year as well when the Easter and May Bank Holidays, plus the Royal Wedding Bank Holiday allowed people to be away from their workplace for 11 consecutive days (including two weekends) by taking just 2 days of annual leave.

Benefits to the Wider Economy

Of course the diamond jubilee will bring more national and international visitors to London who will need food and lodging. The travel, hospitality, entertainment and retail sectors should reap benefits from this. Tourists may also take the opportunity to see more of the country so those sectors in other areas might also find it an advantage.

Can you Ignore the Extra Bank Holiday?

Over 60% of those who completed the ELAS poll are planning either to stay open on June 5^th or make staff use a day of their annual leave entitlement to take it off. But not every business is legally entitled to do that. It depends on the wording of their contracts of employment.

UK employees have no automatic statutory right to time off for public holidays, or to extra pay if they work them. However, if their job contracts specify a number of days annual leave, PLUS bank holidays, employers have no option but to allow the extra day off or treat it as they would any other bank holiday as per their terms and conditions.

If this applies to your business and you normally pay extra for time worked on bank holidays, if some of your staff are required to work on the jubilee day, it will have implications for your payroll. You need to be sure that your outsourced bookkeepers are aware of it.

Remember to License your Olympics Viewing

Some business owners think that installing a viewing screen in public areas during the Olympics might bring them more business. Many pubs, hotels and restaurants already have facilities for their customers to view sporting events while they eat or drink. Now others have decided to jump on this bandwagon.

Also, to keep staff on their premises during the Olympics this summer, some entrepreneurs are making arrangements for them to be able to watch the events at work. This means either allowing them to watch online, or setting aside an area for viewing on a TV or large screen. No doubt some of the employers will be joining them.

The TV Licence Laws

Whatever your reason for accessing live coverage, and however you choose to do it, you must have a licence to view. You may think that watching streamed coverage on the internet via a computer or a mobile phone lets you off that hook, but that is not the case. Only none-live broadcasts can be seen without a licence. All live viewing on any media has to be licensed.

A licence costs £145.50, but if you are prosecuted for not having one, it could result in a fine of up to £1000.00. TV Licensing promises that their Enquiry Officers will be checking out premises that don’t have licences all through the summer.

Don’t Let your Business Suffer

Once you have your viewing media and your licence, you will need to schedule the viewing so that your business doesn’t suffer from work inactivity. Even staff who are not really interested in the sporting events may be tempted to take as much viewing time as everyone else. That’s only fair. So you need to ensure you proper and fair arrangements for all eventualities.

The best way to do this is probably to introduce flexible working arrangements, in which you specify a minimum amount of time must be spent on work each day or each week. That way you can ensure that essential tasks will be covered, although it may be necessary to extend the time your premises are manned each day so that personnel can start earlier and/or leave later.

Allowing staff to watch some of the Olympic and Paralympic events while at work may motivate them not to take sickies but to make their best efforts to get there even through possible traffic congestion. Just make sure that you have a TV licence that will cover all the live viewing that takes place on your premises.

Is Late Payment Affecting Your Business?

Research on Payment Culture is the April 2012 report on a survey conducted by Graydon, a prominent credit management firm, and the Forum of Private Businesses. The research drew on a number of sources, including a recent e-survey of small businesses, which received 498 usable responses.

A Significant Problem for Many Small Businesses

The report deduces that, out of the 1.2 million SMEs in the UK, around 266,000 find that late payment is a major problem: 124,100 nearly went bust; 209,000 have watched their profits plummet; and many have not been able to recruit more staff and make investments in growth.

Late payments by customers lead to late payments to suppliers and the spiral continues. A massive number of 244,000 businesses have been unable to pay their creditors on time because they haven’t been paid on time by their own customers.

The Worst Offenders

Subcontractors reported that later payments from contractors frequently coincided with the dates when VAT and PAYE payments were due, so while these were given priority by the contractors, it became more and more difficult for those down the pecking line to meet their own tax obligations. Construction seems to be the hardest hit sector, but no one is exempt. Those in most difficulty seem to be companies with between 10 and 49 employees.

Many of the late payers are the major companies for which cashflow is not such an extreme problem as it often is for their small business suppliers. While most offenders are from the private sector, some of them are public sector organisations.

Ongoing Issue for the Government

The findings have been passed to government with various recommendations, one of which is that contractors for government contracts should be obliged to sign up to the Prompt Payment Code of the Institute of Credit Management. This difficult issue is not new to Parliament, as a debate on the subject was instituted by MP, Debbie Abrahams, in September 2011, when she realised how many of the small businesses in her constituency were suffering or actually going to the wall.

In response to the publication of Research on Payment Culture, Business Minister Mark Prisk said, “We need practical, business-focused solutions to help SMEs in particular and make sure they are paid promptly. Legislation alone cannot do enough to enforce prompt payment of suppliers…” 

Are you Affected?

If your cashflow is suffering from late payments, there may be actions you can take to get people to pay more quickly and avoid the problem cropping up so much in the future. Talk to your outsourced bookkeepers to see what they recommend.