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Internet Levels Playing Field

Sarah Bean - Thursday 26.01.17, 13:10pm

The internet is making it easier for small companies to compete with their larger rivals, according to new research conducted by Yell and the University of Southampton.

Consumers were asked to compare the websites of large and small firms, without knowing the size of the businesses concerned. In many cases, the participants were unable to judge the relative size of the companies. In addition, when asked to choose between two competing businesses, two thirds of people selected the smaller firm.

Commenting on these findings, Richard Hanscott, CEO of Yell UK, said: “Our unique research illustrates how digital marketing has torn down the traditional barriers to promotion, allowing small businesses to compete with larger players like never before.

“No matter what the industry, investing time in an effective digital presence will open your business up to a wider market and help attract new customers.”

The research found that customers are attracted by authenticity, with easy to read descriptions and a simple approach (81%).  43% favour proximity and 71% want to get a sense of the people behind the business before purchasing. Prominently displayed business addresses and phone numbers are a contributory feature (77%). Reviews and recommendations are also important - 64% value positive feedback about a supplier on the web.

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Tags: Small Business

10 Tips to Keep Your Cash Flowing in 2017

Sarah Bean - Tuesday 10.01.17, 16:50pm

1. Make sure your Terms and Conditions are clearly stated and send them out with all confirmations and invoices.  Don’t be afraid to send a reminder as the payment date draws near and start chasing payment as soon as it is overdue.

2. Offer your customers an early payment discount.

3. Credit check new customers and before increasing credit limits. If there are any doubts insist on payment up front. Always take a deposit to cover your costs in the case of bespoke work which couldn’t be sold on to anyone else.

4. Don’t give your customers a reason to delay payment; check invoices before you send them out. Issue invoices as soon as a job is completed, addressed to a named individual if possible. Certain information is required by law; make sure you have provided this.

5. Use invoice finance to make the cash locked-up in your invoices available from Day1. The money freed up in this way can be used for any business purpose.

6. Try to negotiate better payment terms with your suppliers.

7. Avoid tying up cash by holding too much stock, however tempting the discounts; plan ahead and be aware of customers’ buying patterns.

8. Reduce costs where possible; for example, shop around for better deals on mobile phones, investigate ways of reducing energy costs, Skype meetings where possible, rather than travel to them. Encourage staff to suggest efficiencies – and reward them for their input.

9. Keep all your records in order so you can keep track of the cash going in and out of your business. This is more important than ever, with HMRC planning to conduct spot checks on companies.

10. Keep a running cash flow forecast, so you can identify bottlenecks early on and plan what you are going to do before they become major issues.

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Tags: Cash Flow

The Growth of the Enterprise Culture

Sarah Bean - Saturday 10.06.17, 14:15pm

2016 has seen a growing number of people starting new businesses, according to research by Creditsafe. Their figures suggest that 470,000 new companies will have been registered by the end of the year, an 18% increase on 2015 figures.  Even though insolvencies are predicted to rise by 4% over the same period, there will still have been a net gain of 455,000 new limited companies.

These figures do not include sole traders, who represent a large proportion of business start ups each year but who are difficult to quantify.

London (160,000) and the South East (60,715) have seen the greatest number of new businesses but Yorkshire (46,100) and the Humber (28,800) have also seen a significant increase.

“[These figures suggest] that those made redundant in the public sector are starting new ventures in the private sector,” said Creditsafe business development director David Knowles. Additionally, enterprising graduates and school leavers may have decided to go it alone, in the face of an extremely challenging job market.

The Department of Business, Innovation and Skills has recently introduced a new portal called ‘My New Business’, which offers practical tools, videos and advice for those thinking of, or are in the early stages, of starting a new business.

https://online.businesslink.gov.uk/hub/action/render?pageId=mynewbusiness

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Tags: Business Link · Start-ups

Better, Not Simpler, Reporting Needed for Micro Businesses

Sarah Bean - Monday 07.06.17, 17:17pm

The UK Government should abandon proposals to simplify statutory reporting for the smallest businesses and instead encourage accountancy bodies, banks and software companies to collaborate to develop a more cohesive technology framework which helps Britain’s small businesses to prosper, according to online accounting software company Xero.

Xero and the accountancy firms it has consulted believe that there are other ways to address any reporting concerns that the UK’s smallest businesses – 60% of UK businesses registered at Companies House - may have, without requiring yet more legislation.

This follows the discussion paper ‘Simpler reporting for the Smallest Businesses’, which is now being considered by UK Government. Published by the Department for Business, Innovation and Skills and the Financial Reporting Council, the document aims to stimulate discussion around whether the burden and complexity of existing reporting requirements on micro and small businesses is too onerous and therefore needs to be changed.

Xero’s UK Managing Director, Gary Turner, comments: “While it’s commendable that the government recognises the role that small businesses can play in reviving the economy, we don’t believe the proposed changes highlighted in the paper would deliver more than superficial benefit and instead, could even be detrimental. For instance, by changing the basis on which micro businesses prepare their accounts could result in misleading information being supplied to customers and trading partners.

“Also, the proposals would make it even more difficult for banks to use annual reports to assess lending risk. What businesses and their stakeholders need is better reporting, not a further simplification. In the current economic climate accurate and real-time information is even more important for managing cash flow and returning to growth.”

“Rather than papering over the cracks, we think it’s time for the Government to push accountancy bodies, banks and software companies to work together to provide a new generation of better integrated services that help the millions of small business owners in the UK to manage and run their businesses better. Many UK small businesses fly blind because their systems and processes are disconnected, antiquated and cumbersome.  By all means, look at how small businesses can be better supported, but some of the suggestions are like taking a sledgehammer to crack the wrong nut.”

Mr Turner’s views are echoed by Laurence Moore, Director of Prime Chartered Accountants: “The outline suggestions set out in the document are an over-simplification. For instance, the suggestion of a ‘statement of position’ would not have the information required to reconcile with either a profit & loss account or trading statement, & therefore are of limited use to HMRC, for trading partners and banks to assess risk, or to micro businesses themselves.”

Maria Clark, Partner, Kingston Smith LLP, adds: “The Balance Sheet has always been paramount to a micro-business to gain an understanding of performance, and to put the trading of the business into context. Micro-businesses should, and will, continue to record their transactions in the normal way, but under the proposed regime they would have to convert their underlying records from a traditional accruals basis to a cash basis, which seems an unnecessary, and costly, task.

The cost of transition should also be taken into consideration for a growing business. They will begin as a micro-business but over time will mature and then have to change their accounting basis – they will have no useable historic information from their time reporting under the proposed simplified method to provide to new trading partners.”

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Tags: Reporting

New Businesses Reminded Not to Miss Out on NIC Holiday

Sarah Bean - Monday 24.16.17, 07:59am

HMRC have issued a reminder that start-ups outside London, the south east and the east of England are exempt from paying employers’ National Insurance Contributions (NICs) for the first ten recruits they hire.

The Regional Employer NICs Holiday for New Businesses, which was announced in the emergency Budget last year,  is aimed at encouraging enterprise growth in the parts of the UK which were worst hit by the public sector spending cuts.

Under the three-year scheme, new businesses in all parts of the UK ― except London, the south east and the east of England ― are exempt from NICs for the first ten recruits they hire in their first year of trading, up to a maximum of £5,000 per employee. More than 6,000 businesses have applied to the scheme to date, HMRC said.

HMRC director general Stephen Banyard commented:  “This is a real opportunity for new businesses, so don’t miss out.  If you’re thinking of starting a new business, or have recently set one up, read the HMRC guidance carefully to find out if you’re eligible. If you are, apply now.”

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Tags: NIC

Government Proposes Reduced Financial Reporting Requirements for SMEs

Sarah Bean - Friday 07.16.17, 20:38pm

More than 100,000 UK businesses could save a total of over £600 million in accountancy and administration costs every year, under proposals to reduce financial reporting requirements, published by the Department for Business, Innovation and Skills.

The consultation on Audit Exemptions and Change of Accounting Framework sets out plans to allow more small companies and subsidiaries to decide whether or not to have an audit.

Current EU rules mean that to classify as ‘small’ for accounting purposes, a company must comply with two out of three criteria relating to their turnover, balance sheet total and number of employees. However, to obtain an audit exemption in the UK, small companies must fulfil both the balance sheet and turnover criteria. Under the new proposals, UK SMEs would be eligible for audit exemption by meeting any two of the three criteria, saving them an estimated £206m per year.

The Government is also proposing to introduce legislation in 2017 to exempt most subsidiary companies from mandatory audit, provided their parent is prepared to guarantee their debts. Savings are estimated at £406m per year.

In total, removing this EU gold plating could save UK businesses £612m per year. These moves are part of the Government’s wider focus on cutting red tape and reducing unnecessary burdens on business, in particular addressing the impact of European legislation.

Additionally, following the consultation by the UK Accounting Standards Board on changes to UK Generally Accepted Accounting Principles (UK GAAP), the Government is seeking views on whether to allow companies which currently prepare accounts under International Financial Reporting Standards (IFRS) more flexibility to change their accounting framework to UK GAAP.

The Minister responsible for Corporate Governance, Edward Davey, said:

“Over time, both the volume and costs of reporting requirements for UK companies have increased, and businesses have stressed to us the need for more flexible and targeted rules. Tackling these problems now will save UK SMEs millions every year and give them more opportunities to expand and grow their business.

“Audit is very valuable for many companies. But the proposals we’ve published today are aimed at removing EU gold plating and freeing up enterprise, which ultimately benefits the whole UK economy and will help put us on the path to long-term, sustainable growth. So I encourage businesses to read the consultation document and share their views with us.”

In March 2016 the Chancellor and Business Secretary published The Plan for Growth. One of the Plan’s ambitions is to ensure the UK ranks among the best places in Europe to start and grow a business. In order to achieve this, the Government is committed to removing regulatory burdens and improving corporate governance.

The consultation covers the whole of the UK and will close on 29 December 2016.

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Tags: Small Business

71% of SMEs Fail to Credit Check Their Customers

Sarah Bean - Wednesday 21.09.17, 16:19pm

Over 70% of SMEs are exposing themselves to increased risk of late or non-payment by failing to credit check their customers, according to new research by Experian. The survey of nearly 700 UK small businesses found that 71 % did not check their customers’ credit status, 39 % didn’t know what a credit score was, while 61 % have never checked their own score.  Businesses that do not check their scores are unlikely to be aware of any issues until they lose out on a contract with a potential new customer, are refused materials from a new supplier or are turned down for finance.

Credit scores provide an assessment of a business’s financial health, with a low score implying that a business is more likely to fail.  According to Experian, for small businesses many low scores can stem from a lack of detailed data about the business or a failure to file complete or accurate information, rather than underlying financial insecurity.

A low credit score can affect a business’s ability to access finance or attract new customers, while it could also force suppliers to impose more stringent trading agreements.  Small businesses tend to rely on a small pool of suppliers and customers, and a single customer loss or change in terms can have a large impact on the financial health of the business.

Maria Streat, Managing Director of Experian’s UK SME business, commented: “Failure to address credit problems may put small and medium sized businesses at a big disadvantage, as many organisations will be put off engaging with a company that has a low score. It is important for businesses to monitor their credit score on a regular basis to ensure it reflects their situation accurately and to be able to take action to resolve any issues that are highlighted. Simply taking the steps to check the credit score of firms before doing business with them is straightforward and affordable, and it could make all the difference.”

Factors such as incomplete accounts, a location change, the move from non-limited to limited status, or mergers and acquisitions, can all influence credit scores.  By engaging proactively with credit reference agencies, firms will be better equipped to take action to boost their score and improve the external perception of their business.

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Tags: credit control

Financial Advisers Challenged To Be More Flexible

Sarah Bean - Friday 02.09.17, 22:22pm

Research by RSM Tenon has found that only just over half of UK entrepreneurs would consult an accountant or professional adviser when they are in need of financial guidance.

The RSM Tenon Business Barometer, a quarterly survey of senior management in SMEs, found that of those surveyed 13% would turn to their peers for advice, 5% to a bank or building society, whilst 4% in Scotland would talk to their family and friends.  Astonishingly, only 5% of UK entrepreneurs said they would use the internet and seek financial advice online (10% in Scotland).  Nearly 10% were unclear where they would go for financial advice.

John White, head of financial management at RSM Tenon, commented: “The financial downturn has undoubtedly placed increased pressures on companies over the last three years, and the need for business owners to seek good, sound financial advice has never been greater. Worryingly, these results clearly show advice is being sought from non-professional sources, which may mean that businesses are not getting the credible advice they need.

“I think that the wider issue here is that people don’t necessarily want to seek financial advice through the traditional methods such as having a meeting with an adviser. The financial services industry needs to address this, and look to be more flexible in the way that it offers advice. There is a good opportunity here for the industry to start to look to a variety of different ways of communicating advice, and making this process easier may encourage more business owners to seek professional advice from the outset.”

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Tags: Financial Advice

Invoice Finance Jargon Buster

Sarah Bean - Friday 19.08.17, 09:24am

The invoice finance industry is a jargon jungle. But don’t let that put you off. Let SME Invoice Finance be your guide. Take a closer look at the SME Invoice Finance Jargon Buster – a glossary of most frequently used terms to help you understand more about the world of invoice finance. For example:

Advance rate. The agreed percentage of eligible debts, which will be made available for you to draw down.

Cash Flow. The measurement of cash that your company gains or loses during an accounting period; perhaps one of your most important management tools.

Confidential Invoice Discounting. An invoice finance facility where funds are advanced to a business by a lender (discounter) secured against the value of the business sales ledger and where the funding relationship is confidential (i.e. not disclosed to your customers) with complete responsibility and control of the sales ledger management, credit control and collection functions remaining within the business.

Factoring. A method of providing accelerated cash flow to a business using the sales ledger (receivables) as security to borrow money and where the lender also provides a full sales ledger management, credit control and collections service.

Working Capital. Current assets less current liabilities, representing the investment required to finance stock, debtors, and work in progress.

To see more, go to http://consumeraffairs.org.uk/ /invoice-finance-jargon-buster.html

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Tags: invoice finance

Don’t Fall Victim to a Cash Crisis

Sarah Bean - Tuesday 09.08.17, 16:36pm

When times are hard, Cash is King.  Follow our Top 10 Tips to keep your cash flow healthy.

1. Credit check your customers before extending credit, or when increasing their credit limit.  If in doubt insist on payment up front or by credit card.

2. Charge a deposit at the time of order. This is particularly important if you will incur significance expense, or if the goods or services are bespoke.

3. Issue invoices to arrive as soon as work is completed, or time them to arrive at the same time as despatched goods.

4. Offer incentives, such as discounts, for prompt settlement.

5. Start to chase payments the day they become overdue.

6. Use invoice finance to release the value of your invoices from Day 1.

7. Check your bank account regularly and keep a rolling cash flow forecast.

8. Give yourself time. Act to secure funding as soon as you have identified a need.

9. Analyse your stock requirements and avoid tying up any more cash than you have to.

10. Explore ways to cut back on outgoings without impacting negatively on your business. For example, Skype meetings rather than travel to them, switch to a cheaper utility provider or reduce your ‘phone tariff. Encourage your staff to suggest money saving ideas.

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Tags: Cash Flow