Introduction of monetary penalties for data protection breaches

This item is relevant to all data controllers throughout the UK. This includes businesses that process personal information. It takes effect on 6 April 2010.
From 6 April 2010, the Information Commissioner may impose a civil monetary penalty of up to £500,000 for serious contraventions of the data protection principles.

In order for the penalty to apply, the contravention must have been likely to have caused substantial damage or substantial distress.

In addition, the data controller concerned must either:

• Have deliberately carried out the contravention.
• Have known - or ought to have known - that there was a risk of the contravention occurring. In these circumstances, they must also have known – or ought to have known - that the contravention was likely to cause substantial damage or distress, but they had failed to take reasonable steps to prevent it.

Statutory guidance produced by the Information Commissioner provides further details on how he proposes to exercise his functions in relation to imposing a civil monetary penalty and data controllers' procedural rights – see the appropriate link below.

You are reminded that, when you and/or your employees process personal information, you have a duty to comply with the data protection principles. These are to ensure that the personal data you hold is:

• kept secure
• processed fairly and lawfully
• adequate, relevant and not excessive
• processed in line with the rights of individuals
• accurate and, where necessary, kept up to date
• processed for one or more specified and lawful purposes
• kept for no longer than is necessary for the purpose for which it is being used
• not transferred outside the European Economic Area unless adequately protected

Download guidance on monetary penalties for serious data-protection breaches from the Information Commissioner's Office (ICO) website (PDF, 263K) - Opens in a new window

Data protection guidance on the Information Commissioner's website - Opens in a new window

A Weekly Round Up Of Tax Stories From The Press

BUSINESS

Property companies are preparing to turn top earners into self - employed partners to minimise the impact of the government's impending higher tax regime.

Times

Anyone thinking about following this route will need to ensure the status of their employment when they change to self-employed. Getting this wrong could result in substantial PAYE arrears.

The Government has changed its rules on research and development (R&D) tax credits, allowing small businesses to claim the relief even if they do not own all the intellectual property rights arising from their work.

Financial Times

Bring it on - any possible tax saving is greatly welcomed.

A Celebrity-backed campaign for a "Robin Hood" tax on banking transactions has been condemned by the director of the Centre for Business Taxation at Oxford University, Mike Devereux, for promoting a "stealth tax" that would hit unintended targets while leaving the banks unscathed.

The "Robin Hood" tax is effectively the Tobin tax that has support among some politicians, including Gordon Brown, but none from the USA. Therefore it is unlikely to go anywhere. It is difficult to take seriously a celebrity-backed drive when it comes to taxation though!!!

Around 600 independent filling stations could be put out of business by Government tax changes, according to their trade body RMI Petrol.

This is in relation to the rules covering the rateable value of properties, which are being revised to better reflect the current rental value of petrol stations.

GENERAL

Only 4% of taxpayers are likely to be deliberate tax dodgers, according to a study commissioned by HMRC, which also shows that 26% of people fail to meet their tax liabilities because they do not understand the tax system well enough, or are genuinely unaware of their obligations.

Financial Times

This study was published last September with the aim of helping HMRC understand what problems need to be addressed to encourage compliance. Given the complexity of tax legislation and individuals' natural antipathy to dealing with the Revenue, it is no surprise that such a large percentage of individuals are non compliant because of ignorance.

INCOME TAX

Nearly one in three families will loose their tax credits under plans by the Coservative Party to save £400million from the annual credits bill.

Mirror

Under the Tories' plan, families on incomes of more than £50,000 will not receive the credits - Does this mean Jeremy Kyle will be screened in the evenings too??

INVESTIGATIONS

German tax dodgers have been rushing to declare money that they have hidden in Switzerland after the Government warned that it would buy a stolen disc containing details of secret bank accounts.

The Times

UK tax avoiders be aware. Information purchased by the Germans relating to accounts in Liechtenstein was subsequently purchased by our very own. Leading the way as ever!!!

HMRC are investigating a fund called Inside Track, which brought tax benefits to the film industry on suspicion of tax avoidance.

Mail

The rules relating to film taper tax relief have been tightened up over recent years to ensure that it is applied as intended. As this investigation is on going, it is not clear how the scrutiny works yet.

WEBSITE WORTH LOOKING AT!!

Ever wondered how to work from the local councils?

Please take a look here.

HMRC INVESTIGATIONS - What you need to know!!!

Since the introduction of self assessment in 1996, HMRC has been retraining its staff to develop investigatory skills rather than deal mainly with compliance and the preparation of assessments, as was previously the case. This new focus of the Revenue and certain developments over the last year suggest that the number of tax investigations, which may target businesses or individuals, is likely to continue rising over the coming months.

The war on tax evasion

During 2009 governments across the world were engaged in a co-ordinated campaign to limit banking secrecy, sign tax information exchange agreements with known tax havens, gain information on any potential tax dodgers and stamp out tax evasion. With tax information exchange agreements negotiated even with the jurisdictions traditionally committed to banking secrecy such as Switzerland or Liechtenstein, HMRC has access to an increasingly wide pool of information and there are few places to hide for tax evaders.

Those who may have unpaid tax liabilities but choose not to come forward voluntarily, are likely to see investigations launched into their financial affairs, as tax inspectors attempt to recover revenue for the Exchequer. Britain’s public debt stood at £15.7bn at the end of 2009, and it is clear that the government will need to raise its tax take in order to plug that hole.

The information network

Details of offshore account holders handed over by banks under new tax information exchange laws are not the only reason for the start of HMRC enquiries. The tax authorities assess a wide range of information. For example, they look at gross profits of similar businesses up and down the country and if your income is significantly different from the average, that might trigger an investigation.

A large proportion of tax enquiries, perhaps over 50%, are started by informants - former business associates, jilted lovers and others.

What to do

Tax investigations are becoming an increasingly inevitable part of the fiscal landscape but there are some simple rules which will help you limit the trouble and anxiety associated with an enquiry if not avoid it altogether.

Keep good records

Good records are essential to running a business as well as keeping an individual’s financial affairs in order. They will also be a great help during tax investigations. You need to ensure (especially if yours is a cash business) that your books are carefully maintained, with all transactions properly logged and recorded so that should you or your business ever be subject to a tax investigation, you will be able to respond to all queries and provide all information requested. By law, self-employed individuals are required to keep all records pertaining to their tax return for five years from the filing date, and those whose tax is deducted through PAYE must keep records for 12 months from filing date.

Cooperate

Under the Taxes Management Act, HMRC has the right to request information from you or a third party (e.g. your accountant), and you are obliged to cooperate. However, cooperation is not just a matter of legal necessity - it can also significantly help your case. Timely responses to HMRC enquiry letters, providing all the information requested can help resolve an enquiry early on before it turns into a full-scale investigation, saving you a great deal of trouble.

Cooperation can also be rewarding in purely monetary terms as any penalties imposed can vary significantly depending to the extent to which you demonstrated a willingness to come forward with information and cooperate with HMRC investigators.

Seek quality professional advice

Having a good professional adviser representing you will, in many cases, help you avoid becoming the target of an enquiry in the first place. If you are facing a tax investigation, the help of an experienced professional who has a good reputation with HMRC will be invaluable in dealing with any enquiries.

Tax doesn’t have to be taxing ….

I must admit I bloody hate that phrase, it might not have to be taxing but it is! However, what HM Revenue & Customs have done is put together a few videos covering basic taxation, how to register yourself with HM Revenue & Customs, PAYE and they have added videos covering the experiences of others who ‘have gone it alone’.

Although I would always say that you need to take professional advice before ‘going it alone’ these guides are still worth watching. 

PREPARING TO WIN – IMPROVING YOUR MANAGEMENT & LEADERSHIP SKILLS

The management and leadership skill of a small business owner is often one area that is neglected in a small business. Taking the time out for personal and professionally development is equally as important as securing new business.


Improving management and leadership skills is often a task that remains on the ‘to do list’. It is understandable given the nature of a small business. That is many small business owners frequently work long hours or take on several tasks within the business – hence there is little time left to focus on professional development.

Taking time out to engage in additional management and leadership training can lead to improved productivity and employee performance. Motivating employees and sharing your vision with them can go a long way towards improving business productivity. Your business can only develop as much as the owner develops professionally.

Traits of an Effective Leader

Being able to create and share your vision

Everyone involved in your business should be aware of your vision. As employees work, the organisation’s vision should be in the forefront of their mind. Understanding of how roles and responsibilities aid the business promotes a feeling of being involved in the business and a set of advocates that will promote and advertise your business freely.

A leader must have passion

Passion is an important ingredient in motivating employees. If you are not passionate about your business and its future then you cannot expect your employees to be. Connecting employees to your vision will help to build an effective team that is capable of producing good results. Employees buying into your vision will create enthusiasm about driving your vision forward and growing your business.

Be a great decision maker

Making the right decision is never easy having too much information can be as bad as not having sufficient information.

•Decisions should be made in a timely fashion not too hasty but not at a snails pace.

•Provide the necessary resources to support your decisions.

•Be committed to your decision but not too rigid.

A leader must be a team builder

A fantastic team can dramatically change your business for the better. Being able to choose the right people and build a great team is a must for any leader. Being able to delegate, recognise and reward good work are essential ingredients of creating an effective team.

In conclusion, it’s important not to forget about personal and professional development when running a small business. The right support and training can improve management and leadership skills and facilitate quality decisions and actions.

Often good leadership is what separates the successful business from a failed one.

DAVID vs. GOLIATH: A NEW WAY TO THINK ABOUT BEING A SMALL BUSINESS

The tale of David and Goliath is a biblical tale with which most people are familiar. The story of David and Goliath centre’s on a shepherd boy confronting a giant named Goliath on a battle field armed with only a slingshot to defend himself. Against all odds and against adversity David manages to slay Goliath with a stone that is carefully targeted towards Goliath’s forehead and then finishes him of with a sword.




On Saturday 6th November 11, 2009 a modern day version of David and Goliath was replayed in a boxing ring. Londoner David Haye triumphed over Russian Nikolai Valuev to win the WBA heavyweight belt. A considerable difference in stature and boxing style set the two contenders apart – even so the significantly smaller Londoner emerged as the winner.



It is not uncommon for many small businesses to find themselves in David’s shoes. That is facing competitors that are more than twice their size. There is a constant battle to find ways to grow and develop against competitors that appear to be in a totally different league. Battling with larger competitors is a familiar everyday scenario for small business owners.



Many of the growth options that are available to larger businesses are neither practical nor appropriate for smaller businesses. Growth tactics and strategies therefore become vitally important for small business owners. Some of the objectives of a small business owner are to:



To increase market share

Increase profitability

Reduce costs

Create repeat business

Attract new business

Maintain quality

What Can Small Businesses Learn From The David & Goliath Story?



The other side of the coin reveals that not everyone ‘roots’ for the underdog. There are consumers who will naturally choose the larger more well known competitor. Many of the reasons are based on perceptions relating to quality, price and after sales service. It is therefore essential for small business owners to give customers a reason to use their services or buy their products.



The more successful your business becomes the more competition that your business will face. Each new contender will bring new challenges and a desire to exploit your weaknesses. Just as in the world of boxing, there will be competitors that analyse your business in order to acquire business intelligence that they may use against you. In other words David has now been transformed into the new Goliath. Maintaining and managing the position of Goliath brings with it its own challenges.



In the world of business David vs. Goliath is not always as dramatic or as well publicised as the recent boxing bout or as the original story. The story does however, offer encouragement and opportunities for small businesses to learn. The story has been retold many times in the business world. There are numerous examples of small businesses that have flourished and achieved considerable growth against all odds.



If you run a small business and are struggling to find a suitable accountant or business advisor to help why not consider calling WS Accountancy today.

EXISTING BUSINESSES NEED PLANNING TOO!!!

Every business needs to plan




There is a common myth that associates planning with start-up businesses. This misconception often leads to existing businesses suffering from inertia, or fire fighting on a regular basis. There are a host of other reasons why existing businesses do not seek help. As a result they miss out on the opportunity to manage themselves better and to produce improved results.



As an owner or manager of a small or medium business, can you afford not to plan? Do you often plan on the back of a beer mat and let your business develop according to external events? Or do you plan for priorities, and manage your growth proactively. Like any other business activity planning takes time and may not be seen as a priority.



A strategic plan, annual plan, operational plan; it does not really matter what term you choose to use. What does matter is the implementation and the management of the plan.



Benefits



Guide your growth: the growth of your business will depend a lot of variable factors, including overall economic trends, location, market trends and other elements. Prior planning acts as satellite navigation system for your business. That is its purpose, is to guide and influence business growth, so that businesses can move proactively towards defined objectives rather than just reacting to external events.

Manage priorities: Strategy is focus. Following a strategy will enable resources to be allocated to where they will provide the most leverage. It will also enable you to work towards your strengths and away from your weaknesses. Developing your company by doing the most important things, according to your long-term objectives will certainly lead to a sustainable business.

Assign responsibilities: Finding the right staff will very much depend on organisational priorities and the long term vision for the business.

Track progress: Alternatively you could think of a plan as a business positioning device. With a plan, you can track your progress towards goals, measure results, and manage the business. Without a plan, how do you know whether or not you are moving in the right direction? What do you measure against?

Plan for cash: Profits are not cash, and cash is not intuitive. You spend cash, you don’t spend profits. Many businesses do not plan well for cash, hence the difficulties encountered with cash flow. Whatever else, you do you will have to plan for cash.

Food for thought



Specific responsibilities, activities, deadlines, and budgets: Can be thought of as milestones. They are the bricks and mortar of a business. Your business will only grow if you are able to cement all the bricks together to build an identifiable structure.

Financial plan: One of the most important gains from an annual plan is the financial plan, which of course focuses on cash flow. A business needs to organise its priorities to ensure that they attain the right level of income in order to remain in business. Growth costs cash.

Data Protection Act

The Data Protection Act requires all organisations which handle personal information to comply with a number of important principles regarding privacy and disclosure.




The Act states that anyone who processes personal information must comply with these eight principles:



It states that anyone who processes personal information must comply with eight principles, which make sure that personal information is:



Fairly and lawfully processed

Processed for limited purposes

Adequate, relevant and not excessive

Accurate and up to date

Not kept for longer than is necessary

Processed in line with your rights

Secure

Not transferred to other countries without adequate protection

The Act also allows people to find out what personal information is held about them by making a subject access request. This covers information held electronically and in some paper records, and includes credit reference details.



If members of the public think they're being prevented from seeing information they're entitled to, they can ask us the Information Commissioner's Office to help. The Information Commissioner's Office are responsible for looking after people's rights and making sure personal information isn't misused. Complaints are usually dealt with informally, but if this isn't possible, enforcement action can be taken.



All organisations must make sure that they comply with the Data Protection Act. They provide the following kinds of guidance to find out how to comply:



Good practice notes

Codes of practice

Technical guidance notes

The guidance on Determining what is personal data and Determining what information is ‘data’ for the purposes of the DPA explains and illustrates their view of what is data and what is personal data for the purposes of the Act. It is particularly designed to help data protection practitioners decide whether the information they hold is data and whether such data falls within the definition of personal data in circumstances where this is not obvious.



You can also find out more details about your legal obligations under the Act.



Sharing personal information



They have produced the document 'Sharing Personal Information - Our approach' to explain their general approach to information sharing.



This covers issues including choice, consent, transparency, security and public law. It should help public bodies, in particular, to understand the data protection standards that we expect those involved in information sharing to meet.

Do you know when will your business make a profit?

Managing business performance is always a balancing act. That is an act in which certain cost formulas must be balanced in order to achieve optimum output and maximise the profitability of the business.




A review of your company’s financial statements is not always the best way to acquire an accurate picture of how a business is performing. There are a number of useful analysis techniques that can be used to arrive at a more comprehensive understanding and picture of a company’s financial health. Finding a companies break-even point is one method that can be used to assess your company’s financial health.



To properly asses a company’s financial health, analysis techniques such as reviewing fixed costs, variable costs, the break-even point and the contribution margin can be used. These analytical tools are able to present a far more in depth picture of the financial health of your business. For example a break-even analysis is based on fixed costs, variable costs per unit of sales and revenue per unit of sales.



Fixed and Variable Costs



Fixed costs are those costs that are always present, regardless of how much or how little is sold. Some examples of fixed costs include rent, insurance and salaries. Variable costs are the costs that increase or decrease in proportion to sales. Some examples of variable costs are raw materials, delivery expenses and sales commissions.



The contribution margin is calculated as the total revenue from a product or service less the total variable cost. The key point in understanding contribution margin is to understand that as revenues increase from selling more products or services, variable expenses will increase at a proportionate rate. The contribution margin will also increase at a proportionate rate.



Using the contribution margin as an analysis tool will help gauge the impact of cost and sales volume changes on operating income. Understanding the contribution margin as well as fixed costs, variable costs and the break-even point, are important points as they lend much insight into income, costs and profits.



Being able to track fixed costs and variable costs is a necessary component of running a business. These are extremely important costs to track as they affect a company’s bottom line. There is not a singular ratio or analysis technique that will offer all the financial information relating to the running of a business.



In essence a successful business requires more than just basic bookkeeping formulas. Running a business often involves a far more complex financial knowledge than what the average lay person possesses. Ultimately the choice is yours as to how your business is run and the level of management information that you think is necessary. The recent ‘credit crunch’ has proven that getting the financial side of business right is more difficult than some people think. The continued growth of a business depends on the profits that are made.

Planning Strategically for Business Growth1:33pm - Oct 17, 2009

There are 100s of business books, articles, seminars and a large number of business gurus that all claim to have the secret of creating a multi million pound business. If only it were that easy – we would all be millionaires by now! At WS Accountancy we take a more hands on approach to helping a business to grow. We have noticed our most successful businesses have certain characteristics in common.




One of these characteristics being that they all have a strategic plan that they are working to. I hear you say ‘but we have a business plan’. Whilst a strategic and a business plan should complement each other they remain very different in essence.



A strategic plan determines the direction in which you would like your business to evolve and grow. In other words it is the big vision that your business is aspiring to. Conversely a business plan focuses on the day-to-day operations of the business.



Some of the items that a strategic plan should take into consideration are:



Exit strategy for the owner – It is doubtful that anyone would want to continue working beyond a certain age. It is therefore important to consider carefully the need to have an exit strategy plan in place.

Geographical location of the business – whilst it is great to work from home, or near to home it may not always be the best profitability strategy. Being accessible to an increased number of customers or accessible to future employees will go a long way towards increased sales.

Ownership structure – the right business structure not only facilitates growth but also brings additional tax advantage. One of the easiest ways to grow a business is through giving a percentage share of the business in return for a financial investment. It is unlikely that investors would be interested in investing a business that is run by a sole proprietor.

Do I need a strategic plan to grow my business?



Whilst a small business can generate a good turnover, it is unlikely to be able generate the same income as a larger business. Employing more staff or having a larger site necessitates a move away from hands on management to strategic management. This in turn has implications for quality and risk management to name a few areas.



As your business becomes larger and more complex, so strategy formulation will need to become more sophisticated, both to sustain growth and to help you muster the leadership and resources you need to keep your business developing.



To do this, you will also need to start collecting and analysing a wider range of business intelligence about your business and the external world in which it operates. Whilst it is good to have a plan, it is far more important to implement it – not just file it away.

Business Rates - Make Sure Your Paying The Right Amount

This October , all business will receive their new business rates valuation, together with a breakdown of how it has been calculated.




It's important that you look through this and inform the Valuations Office Agency if there are any errors as it will form the basis of your business rates bill for the next five years!!!!!!



You will need to inform the VOA by the 30th November 2009 if you find any inaccuracies, please call us for more details or go to www.voa.gov.uk/2010

Business Networking Online

The British Chambers of Commerce has launched Business Network Online – a networking and trading portal that operates via local chambers of commerce.




Businesses can receive tendering alerts, advertise online and meet new suppliers.



Although chamber members have free access, non-members can have a three-month trial of the network.



If you are a small business looking for extra opportunities register today for a £FREE three month trial and see what new business this portal can bring.

Planning the Future of Your Business Strategically

At WS Accountancy we place a great deal of emphasis on planning the growth and development of your businesses. That is because we understand and know that it can be tempting to steam ahead in business without any real idea of what your next steps will be. ‘Playing it by ear’ is not a good business strategy if you are trying to run a successful business. In such circumstances it is not unusual to apply quick fix remedies at the expense of a long term growth and stability.




There are always challenges to face in business. Just when you think you have found the right remedy one part of your business equation will change. Having a strategic plan will help to keep your business on track. Naturally as an accountancy practice that incorporates business advisers we would advocate the inclusion of strategic planning into your business. There is no substitute for long term strategic planning. Attempting to run a business without strategic plans is similar to driving in a car that has blacked out windows and trusting in faith that you will end up at the right destination.



Given that the economy is currently in a transitional and unpredictable phase it would be wise not to rely on a singular plan. Instead it may be more expedient to have several scenarios to one situation. It is more than likely that you will have some good ideas about how to achieve your strategic goals. Having an alternative options can save time and could possibly prevent a crisis. Thinking of several scenarios will definitely add strength to your preferred plan as it gives you to an opportunity to think in terms of contingency planning.



Things to keep in mind when formulating a strategic plan are:



What key business relationships are vital to the success of your business?



Are the assumptions and plans that you made about your business last month still sound and applicable to your business?



Can you anticipate new opportunities arising in your business sector in the future?



Are you able to exploit newly emerging business opportunities?



Is your business reliant on a few major clients; are you aware how their business is doing?



Do you take the time to obtain regular credit reports on your clients or references from other traders?



Do you take the time to consider opportunities that may arise out of a global market?



Does your long term planning quip you to trade in European markets?



What would you need to compete in European or global market?



There may be financial assistance available from the government especially if you are exploring the possibility of trading in overseas markets. Knowing how best to access this funding is an area where you may need professional assistance. Seeking professional assistance from a professional firm such as WS Accountancy to support your business can help your business to achieve growth and profitability. Spending too much time focussing on where you are now and how turbulent the current market is can be detrimental for your business. Strategic planning is an essential ingredient for every business. There is a wealth of support available to you, and as such there is no need to go it alone.

NEW PENALTY REGIME FROM HMRC

Not long ago (April 2009) HMRC introduced a whole new penalty regime for tax payers. It is very important that tax payers understand these penalties and how it affects them and whether they should consider using the services of a professionally qualified and competent individual for those who currently have no representation.




HMRC have provided a useful e-learning series on this. I would recommend everyone, whether represented or not, go have a look.

4 Reasons Your Business Should Use a Bookkeeper

Should I or shouldn’t I use a bookkeeper? From the perspective of us it really looks like a no brainer. Even so we speak to a number of businesses who do not see why it is important for businesses to have a bookkeeper or the importance of sound financial record keeping systems.




First and foremost the reason to implement a bookkeeping process into your business is to help you to manage your business tasks more effectively. It is difficult to have an accurate financial picture of your business without bookkeeping records. In essence financial records answer questions such as: Is my business making money? Are my sales increasing? How does business expenditure compare to sales?



REASON 1: MAKING DECSIONS



Evaluating the financial consequences of all your business decisions should always be part of your decision making process. Without the aid of accurate records and financial information forecasting the results of any given course of action will be difficult. Presumably you are in business to make money. Hence forecasting the profitability of sales will give you an indication of whether or not you will need to hire or fire staff; sell more of one product or to stop selling another.



REASON 2: APPLYING FOR FINANCE



Making the decision to apply for finance for your business is fairly straight forward. However it is not so simple to prepare the supporting documentation if you do not already have it. Both banks and financial institutions will want to see proof of income, balance sheets, tax statements and projected returns before they make a decision about whether or not to loan you money. Preparing such information when it is required is never a good idea. Ideally this information should all be at your finger tips.



REASON 3: SEEKING INVESTORS



Once your business has developed to a stage where you would like to attract investors or a partner you will require financial information to demonstrate that you business is still a ‘going concern’. The source of this information usually emanates from day-to-day bookkeeping. It is possible that suppliers and creditors may want to see this information before permitting your business to have credit.



REASON 4: PREPARING A BUDGET



All businesses should use budgets for planning purposes. Budgets enable businesses to remain on track by forecasting cash needs and controlling expenditures. When reviewing what your business does and what it will be doing in the future it is always good practice to have a budget to prevent overspending and to control costs.



In short bookkeeping is an integral part of every healthy business.

Managing Risks

There are a variety of risks associated to running a business. Some are out of our control such as acts of God. Others are closer to home and come in the guise of new customers placing large orders. On one hand a new order may well bring the prospect of much needed cash injection. On the other hand a new customer also brings associated financial risks of none payment. It is a catch 22 situation that many medium to small enterprises face.




Should you ask new customers for references, should you conduct a credit check, should you look at their accounts at Companies House or should you check out individual directors – the answer is most definitely yes to all of them. No – you are not being suspicious; you are simply taking steps to protect your business from bad debt,



On a positive note the recession has made business owners aware of the risks associated to receiving large orders from firms which then go out of business for one reason or another. Being left with a bespoke order that cannot be sold or has little use to anyone else is very much a real risk that faces small to medium size enterprises. Additionally unwittingly being part of a chain of bad debt is another risk that many businesses face.



So What Can Be Done?



First and foremost all new customers should be credit checked.

Intermittently the financial status of existing customers should be checked (they too could be having difficulty collecting payments).

Ask for at least three references.

Set an upper credit limit for all customers.

Strategies to reduce trading risks



Do not be shy about asking for cash on delivery or an advance payment. The benefits of having a strategy in place far outweighs the option of leaving payment to chance. Having sound terms and conditions that are legally enforceable will offer your business a variety of choices in the event of a business closing down. Do not forget to include a clause pertaining to the retention of goods in the event of a business going bust.



Preventing Financial Mishaps



The only way to prevent financial mishaps is to have accurate financial information. Computerised accounts and online banking services have made it much easier to keep track a firm’s financial position in real time rather than months in arrears. It is good practice to keep track of the detail relating to individual products, projects or customers. In so doing you will be able to measure the return from a specific job or customer and be able to track whether or not a particular transaction is making a net profit or a loss. In times of scarcity there is a danger of reducing costs just to retain business. As such the business coming in does not yield sufficient profits to sustain the business.



It is fundamental to have a good risk management strategy in place. Taking the time to think about all the risks that face your business and then ways to mitigate them will place your business on a stronger footing.



As previously observed, the most serious threats to a business may be closer than you think

How to Improve Your Cashflow

The old adage that ‘cash is king’ certainly does ring true in the world of business. Maintaining the cash flow of your business is always an ongoing priority. To put it simply it enables you to remain in business. The absence of cash may lead to your business being in debt. Being in debt is only worrying if those debts cannot be serviced because of poor cash flow.




The following are ideas which can help to improve your business cash flow. On an individual basis they may have a minimal impact. However, cumulatively they can add significantly to your cash flow.



Increase your credit lines. Taking a little longer to settle with your suppliers, will ensure that money remains in your business longer. Reviewing your creditors and the payment schedule that they are on will give you a better idea of how your payments can be spread out. Extending your credit terms with suppliers by two weeks will make a significant difference to your cash flow.

Request a payment confirmation date. Knowing when your customers will be paying you will enable you to accelerate and predict future payments. Customers are more likely to pay promptly if they have a payment date in mind. Equally less time will have to be spent chasing outstanding sales invoices.

Use a credit card. Most credit cards will not incur interest payments providing that the balance is cleared at the end of each month. Using a credit card for purchases can effectively give your business a month’s credit to ease your cash flow.

Do a stock inventory. More than likely there are many stationery items, office equipment or raw materials hiding in cupboards that have been forgotten about. Using these items can potentially reduce the cost of reordering and the duplication of stock. Ordering when required has now become a standard policy in many businesses to avoid wastage.

Set 5-10% cost-saving targets. This methodology can be applied to any aspect of purchases you make within your business. Simply set a target to reduce a particular aspect of your expenditure by 5-10% and then look for ways to achieve that saving. For example, you may be able to save on the cost of your purchases by being more prescriptive about the items that staff are allowed to order. Save money on your telephone costs by discouraging calls to mobile phones where possible. It is also possible to save money by reducing the number of business related journeys that are made.

Shop around for utilities. Seeking alternative suppliers of utilities will save money on your ongoing costs. There are many companies that offer discounts depending on the number of services you receive from one provider.

If you institute just a few cost saving ideas, you will make considerable savings on your outgoings. Saving money improves cash flow and increases the profit margins of your business. Implementing cost saving methods will ensure that your business operates at maximum efficiency.