Prompt payment news - from Chris Gibbons (Query Management)
I’m pleased to be able to report progress in the drive to tackle late payment.
- The Enterprise Bill, passed earlier in the summer, gave the green light to the appointment of a Commissioner for Small Business. One of the Commissioner’s key responsibilities will be to help small businesses tackle the late payment culture. The Commissioner will have the power to name and shame companies that regularly pay late.
- Legislation is in place to cascade 30 day terms down the supply chain for all public sector work.
- A new Duty to Report comes into force in April 2017. This means large businesses will have to report on payment practices. We’re still waiting on the details, but anything that exposes bad practice can only be a good thing.
- The Prompt Payment Code is proving its worth, and there have been a number of successful challenges against signatories that have resulted in getting invoices settled quickly and improving contract terms.
- The Minister responsible for small businesses has written a joint letter with Philip King (Chief Executive of the Chartered Institute of Credit Management, which administers the Prompt Payment Code) to PPC signatories, confirming Code signatories should pay within 30 days. Though the requirement for compliance will stay at 60 days unless there are exceptional circumstances, the letter clearly states that 30 days should ‘increasingly be the norm’.
Let’s hope the progress continues, and that an increasing number of firms will start to see late payment as unacceptable business practice.
In the meantime, we’re here to help – if you’re struggling with late payment, just get in touch.
You can ring me direct on 01625 878198 or email us here.
Pensions auto-enrolment: are you up-to-date?
(Kindly supplied by PIB member Nolan James Chartered Accountants).
With effect from 1 June 2015, small businesses employing fewer than 30 staff became bound by the requirements of the new pensions auto-enrolment regime, obliging them to automatically enrol all eligible employees into a qualifying pension scheme and to make a minimum contribution to that scheme.
If you would like to find out more details please click here.
'Hot off the Press'
Nolan James assist businesses with a range of accounting services, from Individual tax returns & advice to Statutory audits & accounts. The Chartered Accountants regularly update their website with hot business/tax topics - a must read for all businesses!
Test yourself in our scary SME cashflow quiz
(Kindly supplied by PIB member Chris Gibbons of Query Management)
Test your knowledge of how SMEs are managing their cash - and find out some scary facts.
1. How many SME decision makers have used a personal credit card or taken out a personal loan to help finance the business?
2. How many SMEs rely on their overdrafts?
3. What levels of cash reserves are typical amongst SMEs?
4. How many SMEs are worried about cash flow over the next twelve months?
5. How many SMES chase late invoices – and how quickly?
The answers - complete with scariness rating.
1. Personal credit cards and loans.
A recent Santander survey of SME decision makers found that more than 10% had used a personal credit card or taken out a personal loan to help fund the business in the past twelve months.Chances are many of these people found themselves with no other option due to unexpected cash flow problems.
Scariness rating: 5/5.
High interest rates hurt the bottom line; family finances are put on the line even if there’s a limited company structure in place.
The Santander survey found that 25% of SMEs had relied on their overdrafts.
Scariness rating: 3/5
Arranged overdraft interest rates and fees will usually be a lot less than personal credit cards or loans. And there are many good reasons for a business to borrow (though an overdraft is unlikely to be the most cost-effective option). But a good percentage of these overdraft borrowings will again be simply to cover cashflow problems – which means money’s going down the drain rather than being spent on the business.
3. Cash reserves
A Simply Business survey found more than half of small businesses have a cash reserve of £10,000 or less and 30% have under £500. 20% have no cash reserve at all.
Scariness rating: ?
Hard to say without knowing the size of the businesses concerned. But with quoted estimated average fixed costs running at £20,000, it looks as if many firms would be out of business within a week or two of any unexpected emergency halting trading. Could better cash collection help give a longer survival time?
4. Cashflow concerns
The Santander survey found 43% of businesses saying they were concerned or very concerned about cashflow.
Scariness rating: 4/5.
It’s no surprise, but it's always worrying so many businesses have serious concerns about cashflow. At least, however, these business owners know enough about their cashflow situation to be concerned (going back to reserves, the Simply Business survey also found that 16% of small businesses didn’t know how much cash they had in reserve to draw on in an emergency). By taking action to tackle late payers earlier rather than later, those with concerns have a good chance to minimise the risks and protect their business.
5. Late payment chasing
Liberis, the small business funder, found that while 53% of small companies chase late invoices immediately or a week or so after the due date, more than 25% only chase if they have time and more than 20% never chase late payments.
Scariness rating: 5/5.
The longer you leave it before you chase, the greater the risk you won’t get paid at all. And, of course, the longer it is before cash hits the bank, the greater the chance you’ll have to borrow just to keep the business going.
STOP THE VAMPIRES
Running a business can be scary; and running out of money is one of the biggest fears. If you could use some help to get the cash in and stop the vampires, give me a call on 01625 878 198 or email Chris Gibbons at email@example.com.
More details about Query Management including their credit control and bookkeeping services on their website.
How safe is your financial data?
(Kindly supplied by PIB member Chris Gibbons of Query Management)
Working regularly with confidential customer information, we’re very conscious of the importance of data security. The Ashley Madison website hack was a one-off stunt that attracted huge media interest – but every day, ordinary businesses are being hacked and information stolen.
You might think that no-one would be interested in your data, but you couldn’t be further from the truth. In fact - according to the BIS 2015 Information Security Breaches Survey - 74% of small businesses suffered a security breach in the year 2014-2015.
The biggest threat is from organised crime. It’s not just your data that’s a target, but also your customer details. Your bank card details are gold dust, and a simple Excel file with thousands of names and addresses might be worth £100,000. Bookkeeping systems containing customer contact details are tempting prizes.
There’s plenty of advice out there about security, but the evidence shows that too many small businesses aren’t taking the matter seriously enough.
What to look out for
As a starting point, here are four things to keep a look out for:
Phone calls apparently from your bank
If you get a call from anyone about anything related to your bank account, tell them nothing. Instead, put the phone down. Make sure the line is dead. Then, ring the bank, explain what the call was about, and ask to be put through to the relevant person.
Fraudsters are getting ever cleverer and more plausible. It’s easy to be drawn in to giving away information they can use to access your money. One of our clients recently had a call from someone claiming to be from Visa and advising there had been some unusual activity on the account. Though the caller didn’t ask for any confidential information, they said the call would be followed by one from the bank itself – and sure enough, a second call came through within minutes.
Suspicious, she refused to talk to the caller and phoned the bank instead. They confirmed there were no problems with the account and that the calls were fraudulent. No doubt the callers would have progressed to more probing questions as the conversation went on.
Emails claiming to be from your bank
If you get an email from your bank telling you to take any action, don’t click on any of the links in it. Hacker emails are getting more and more believable, but you can usually still spot them.
Here’s a list of things to look out for:
- Actual URLs different from the text displayed – hover your mouse over links to check (resist the urge to click)
- Basic spelling and grammar errors
- Requests for personal information
- Calls for urgent action
- Emails not addressed to you by name
Only ever use the bank’s own website for anything related to your account – and always go directly to it by typing the URL into your search bar rather than following a link from elsewhere.
Emails from an unknown source
If you get any email from an unknown source, be suspicious. Don’t open anything if you don’t know what it is. Attachments carry viruses and spyware, as do links.
Just one click could open up your computer network and allow criminals to access everything including email contacts, financial data, customer databases, and intellectual property material. Alternatively, your click could let in spyware that monitors your every key stroke, collecting up passwords as it goes.
Despite constant publicity about the need for secure passwords, it seems that even for business computer networks and bookkeeping systems, plenty of people still stick with what’s easy to remember – and guess. Apparently password1, password2, logmein, United, and Stockport aren’t uncommon.
Remember the advice of the experts: always use passwords that don’t contain any proper words and have a combination of upper and lower case letters, plus numbers and symbols. And don’t share your password with anyone else, even a trusted office colleague. They just might write it down somewhere.
Get expert advice
These tips really are just the start. I’d also recommend you ask your IT support firm for advice on what needs to be in place to make sure your business is protected, and then keep the conversation going. The situation changes all the time, and not every IT firm will be proactive.
Talk to your team
Also, very importantly, talk to your team. Make sure everyone in your business knows the risks and is as vigilant as you are.
Hackers are criminals who harm businesses and individuals and could do huge damage to you. Don’t give them an easy ride.
Contact Query Management for more details on this article.
56A Park Lane, Poynton, Cheshire, SK12 1RE Tel: 01625 878198 | M: 07951 881324 | firstname.lastname@example.org
Grants for small/medium sized businesses
(From Visitor Economy Development Manager Cheshire East Council)
The Rural Payment Agency and Cheshire and Warrington Local Enterprise Partnership are inviting applications for investments that support the growth of micro and small businesses in rural areas of Cheshire and Warrington.
Grants are available for new and existing rural businesses seeking capital investment to help them grow and create new jobs.
It is anticipated that funding from this call will be awarded for up to 3 years.
For more information please visit the following websites OR download the PDF for much more information.
Call for Applications to support investments to create and develop micro and small rural businesses in Cheshire and Warrington (03RD15BS0001)
View or download the PDF version here (273KB).
Call for Applications to support investments in micro, small and medium-sized businesses specifically in the food and drink sector (03RD15BS0002)
View or download the PDF version here (268KB).
Value: Grants will be available for this call from £35,000 up to €200,000 (approximately £140,000) depending on state aid already received.
Deadlines: Outline application deadline: 27 November 2015.
*PDF - you may need Adobe Reader to view these. It's free to download on the Adobe website.
Could a commissioner for small business solve the late payment problem?
(Kindly supplied by PIB Member Chris Gibbons - Query Management).
The government is currently analysing feedback on proposals to establish a Small Business Commissioner. Sorting out disputes about late payment could be a key part of such a role.
This sounds like good news.
Though the latest BACS research shows that the overall late payment debt appears to have peaked and started to decline, the figures are still alarming. BACS estimate that SMEs are owed over £26bn in late payments, as against £32 billion in July last year.
80% of all companies which experience late payments say they are being kept waiting a month or more beyond their agreed terms, and, worryingly, 24% admit late payments are forcing them to rely on bank overdrafts.
That means firms are not only having to manage without the cash they have earned, but are also having to cover interest costs. On top of that banks won't provide overdrafts to small firms for large amounts of outstanding payments beyond two months.
A further consequence is that 26% say late payments are forcing them to pay their own suppliers late.
Business minister Anna Soubry is saying she wants the commissioner to bring about a "long-lasting culture change", helping to settle disputes quickly and cheaply. Disputes could include complaints over unfair business practices and supply chain bullying as well as late payment.
Evidence the role could work comes from Victoria in Australia, where a similar commissioner is having a real impact. With more than half of complaints being resolved within a week, the success rate there has been encouraging. Though it’s no panacea – 20% of cases are taking three months or more.
With the government reluctant to legislate to force firms to pay their bills on time, a Commissioner could just start to make dent in the power of large companies to hold small businesses to ransom.
I’ll report back again once the government’s response to the consultation is published.
P.S. Can’t afford to wait? Give us a call on 01625 878198 or email us here, and we’ll start taming your late paying customers right away.
8 Early Warning Signs That Can Help You Avoid Bad Debt
(Kindly supplied by PIB Member Chris Gibbons - Query Management).
The earlier you spot a potential problem with a customer’s ability to pay, the better your chance of protecting your business. Learn to spot the warning signs early, and you can make better-informed decisions about awarding credit and so reduce your exposure to bad debt.
No single sign is evidence of anything – but each one is a little piece of intelligence that can help you put together a fuller picture of a customer’s situation and allow you to take action sooner.
1. You can never get through to the right person, when once you could.
There’s a good chance you’re being deliberately avoided. When a contact starts to become elusive, it’s time to wonder why they don’t want to talk to you.
2. Changes to the board
Changes to board membership are perfectly normal. But it’s always worth bearing in mind what might have prompted a director to leave – and what effect their departure will have on the company’s success or otherwise.
3. A new address
Again, businesses relocate for a wide variety of reasons. But if you notice a new address, take a look. Are the new premises smaller than the old ones? Downsizing might be a sign of increased efficiency or outsourcing, but it could also be a sign of a company struggling.
4. A county court judgement
Never an encouraging sign.
5. An increase in orders
Can an increase in orders really be cause for concern? Yes, if it's because the customer has exhausted their credit elsewhere.
6. A returning customer
You might want to celebrate when a customer returns after a gap. But could it be that the supplier they moved to is no longer keen to supply them?
7. A change of name
An apparently innocent name change could mask the closing down of one company and the opening of another. Worth investigating.
8. A change of bank account
Bank account changes can be prompted when a company fails to get finance. That doesn’t necessarily mean the firm concerned is in trouble. But it just could be a sign of a problem.
If you start to feel suspicious, then do some digging – and find a reason to visit. You might be surprised what a face-to-face on-site meeting can reveal!
Query Management Can Help You
If you could use some extra intelligence to help you assess trading risk accurately as well as help to get cash in sooner, just give us a call on 01625 878198 or 01625 878198.
Customer monitoring is a key part of the service we offer to our credit control clients.
Reduce the cost of your Life Assurance by 49% with a ‘Relevant Life’ Policy
(Kindly supplied by PIB Member Peter Evans - Peak Financial).
Do you pay for life assurance via your ‘net income’ from employment ? A number of life companies now offer the chance to insure yourself via your business. Because the premiums are payable through the business they will attract corporation tax at your marginal rate (usually 20% for small businesses) if you own a limited company, so there is a good chance your monthly premiums could reduce and make a saving.
Who benefits from a relevant life policy?
Self employed individuals who run their own limited company business.
High-earning employees who have substantial pension funds and don’t want their death-in-service benefits to form part of their lifetime allowance.
Small businesses that don’t have enough eligible employees to warrant a group life scheme.
What are the advantages?
- The benefits won’t form part of your lifetime pension allowance.
- The premiums paid won’t form part of your annual pension allowance.
- The payments employers make aren’t subject to income tax because they’re not normally assessable as a benefit in kind.
- These payments can be treated as an allowable expense in calculating your tax liability. They therefore attract at least 20% tax relief to the employer.
- So for the individual the premiums can effectively be reduced by a whopping 49% for a higher rate tax payer and up to 40% for a basic rate taxpayer !
- In most cases the benefits are paid free of inheritance tax – provided they’re payable through a discretionary trust.
So it might be worth digging out your life assurance policy details and having them reviewed to see if you can save.
Compulsory Pension Legislation For Employers
(Kindly supplied by PIB Member Peter Evans - Peak Financial).
AUTO-ENROLMENT Don’t leave it too late – getting left behind could prove to be a costly mistake as the recent article from ‘Money Marketing’ below suggests.
The government’s new Auto Enrolment regime commenced in late 2012 with the largest employers. Each employer has a ‘staging date’ at which point they must start paying in to the scheme of their choice on behalf of their employees. For example, if you employed 40 or more members of staff on 1st April 2012 your staging date is 1st August 2015. If you had 30 or more members of staff on 1st April 2012 your staging date will be 1st October 2015 and the dates for smaller employers then spreads over the following year or so down to those employing just a couple of staff. Every employer is required to comply with the legislation !
Given that the industry is urging smaller employers to plan at least twelve months in advance of their staging date, it is important that employers will need to be taking decisive action in the next few months.
The message is do not leave it until the last minute, as you may be unable to find a suitable provider and costs of setting the scheme up increase dramatically because options are severely reduced. The Pensions Regulator will issue large fines to those who miss their staging dates.
Providers turn away auto-enrolment business as capacity crunch bites.
From: ‘Money Marketing’ – May 2014
Scottish Life is turning away automatic enrolment business from firms that are less than six months from their staging date due to concerns they will be unable to deal with the administrative workload.
Experts have previously warned of an auto-enrolment “capacity crunch”, with insurers struggling to meet the demands of employers as the reforms are rolled out to small and medium sized businesses.
“We will consider a shorter lead time than six months only if we have agreement that the Scottish Life ‘run system’ will be used, that standard member communications will be used, and on the contribution design for the whole work force.
“This approach is required so that we can understand if the time available until the staging date is adequate to implement the scheme to our usual quality. We will not provide terms on these schemes until this has been established.”
Legal & General will not confirm whether it has a specific cut-off period, although it is understood the provider will not deal with employers that are within three months of their staging date.
An L&G spokesman says: “An employer should ideally be thinking about auto-enrolment at a minimum of six months ahead of their staging dates, preferably longer.
“We are helping all of our customers to meet their auto-enrolment obligations and have encouraged them to engage early in the process.
“To date we have not turned an employer away but we are unable to provide a solution to an employer that has not embarked on their planning for auto-enrolment in good time.”
Other providers recognise the challenge posed by employers that do not begin preparations for auto-enrolment early but did not provide details of when they will consider turning business away.
An Aviva spokesman says: “Our first priority is to support our existing customers through auto-enrolment, and that is where we are applying our efforts.
“However, with any potential new business we will look at each customer’s individual needs and assess whether we are able to assist them, and we may make other recommendations, for example, refer them to NEST if that is more appropriate.
Scottish Widows head of corporate pensions Pete Glancy says: “Given how much time and effort is required to deliver auto-enrolment schemes, we are not surprised some providers would express concerns about being able to deliver with less than six months notice.”
Business Development Unit at Macclesfield College offers support and training.
The Business Development Unit at Macc College offers a whole range of training and business support for local business.
Check out the website at: http://www.macclesfield.ac.uk/business-training/default.aspx to see if there is anything of interest.
Some courses can be fully funded.
Connecting Cheshire announces a host of new, FREE, events for businesses
If you have any interest in marketing your business using new technologies or feel that you should have, there are a load of free seminars, meetings and workshops available through Connecting Cheshire.
Check out their website for more info: http://www.ccbusiness.co.uk/events
Government support for small business and proof it has benefitted a PIB member!
Richard Holland, Poynton Town Council Operations and Events Manager, has provided the following selection of Government information sources, grant details and available finance for smaller businesses. There could be some valuable information for businesses in Poynton and if you haven’t checked out the Great Business website before, some of the case studies are excellent.
The Great Business Website
This is a single website that brings together all Government services to business in one place - http://www.greatbusiness.gov.uk/
My Business Support
A new tool on the GREAT Business Website called My Business Support, helps SMES find the right support for their businesses - http://mybusinesssupport.greatbusiness.gov.uk/
Support for home-based businesses
The government has also announced a new package of support aimed at improving the business environment for people wanting to set up a business from home.
- Changing the law, so landlords needn’t fear agreeing to home business use undermining their residential tenancy agreement.
- Clarifying that most home businesses shouldn’t have to pay business rates.
- Launch of a new Government Home Business Checklist.
- New concise guidance that answers key questions when starting a business from home.
More details: www.enterprisenation.com/homebusiness
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