Being Troubled By Late Payments?

Now it is no small secret that SMEs are being crippled by late payments, but what is the actual magnitude of the damage? In a survey carried out by BACS (direct debit & credit), £24bn has been outlined as the overall amount of money owed to SMEs in the UK, with an average individual debt of up to £27,000 and an average 52 day delay. These debts have resulted in millions of working hours spent on the retrieval of payments, which could have been spent on working on the business itself. Others have gone as far as to create a role within their business for the sole purpose of chasing up debts!

You can combat ate payments to your company by implementing a number of new rules which can result in a reduction in the number of late payment to your business. This can include:

• Intensifying the rigidity of payment terms.
• Screening new clients with credit checks; this can be used as a preliminary screen as potential clients with bad credit can be turned away immediately.
• Keeping regular and friendly contact with debtors, this can also ensure communications on payments are clear and you are always updated.  It is also positive as you can gain a better working relationship with each other which results in strong brand loyalty and positive word of mouth.
• Be stern with late payers, such as adding a late payment fee. This will push them towards paying their debts within their allocated time. However you must be careful to find a balance, especially when dealing with a good and valuable client.
• Introduce incentives for quick payments, this can be discounts on products/services or having access to special deals or any other incentives.

For more information on how you can combat late payments, please contact us. Our skilled business advisors can help you today.

Impending Changes To PAYE: How will they affect you?

2013 will bring changes to the PAYE system; a system hat has been pretty much the same since 1944. HMRC will take the role of calculating tax for businesses. The main implications of this will be the increased filing requirements, so the HMRC will have enough information in order for calculations to be done as accurately as possible. The filling will be done via a new system called Real Time Information (RTI), so the HMRC can have the information come in Real Time via the internet.

The new system may lead to administrative time & cost savings to businesses. But may also bring an end to the payslip system; which allows employees to view their gross, net pay as well as their tax deductions and thereby errors (if any) could be resolved.

Currently, HMRC are still in the planning stages and are urging businesses and software developers who are interested, to get involved. Implementation of RTI and other changes will come into effect as of April 2013, with full integration of the changes in by October 2o13.

If you have any questions about PAYE and how these changes will affect your business in particular; please contact us. Be in the know, gain peace of mind!

Is Alternative Finance Your Next Move?

Time and time again we hear that lending is as strained as ever between banks and SMEs. To select customers, banks are still rolling out overdrafts and some loans; but we’re in an era where lending from banks isn’t easy as demand outweighs supply. But there is another choice: crowdsourced funding is the means in which businesses can gain finance from a web-based community (no banks involved!).

Crowdsourced investment websites are increasing on the web. The aim is to pitch your idea to an internet based community, in a Dragon’s Den-esque fashion, and leave it to them whether they would like to invest in your business. There are a small amount of investments given, by a high volume of investors. This type of financing has most of the features you would find in an angel investment group, but with none of the big upfront costs. Perfect for Start-Ups!

To help you on your way, here are a few tips to practise:

• Have a plan
• Set a funding goal
• State the ROI
• Cast your net
• Keep them interested
• Keep building your social network
• Convert them to your way of thinking
• Recognise your supporters
• Report on progress

Now that you know that there are alternative finance mechanisms other than the bank, we can help identify which are best suited to your business. Contact us and find out today!

Can You See Where You Are Going?

Looking at the current state in lending for SMEs, the ever-increasing costs and decreasing consumer spending, it’s no wonder that many of you may be worried for the future of your business.  Are we really out of the recession? Will it be a double-dip? Either way, over the last few months the reserves have probably been eaten up and getting those much-needed injections of funds into businesses is harder than ever. Many SMEs feel as though they won’t make it past the year unless trading conditions improve. While some reliance is upon the economy, SMEs must take it upon themselves to find new ways to increase their business.

Now in order to do this, SMEs have done the usual quick fixes such as: dropping prices, and introducing more discounts and sales. Businesses are also trying to save money on costs; which is being done by cutting down staff hours, benefits and lowering wages, while others may opt to get rid of staff altogether. Outsourcing none core functions can also reduce costs and increase efficiency, which can free up more time so key staff can get back to doing what they’re good at.

So here are some key things you need to do:-

1. Have a strategic plan for the business.
2. Make sure the owners goals are aligned with the business.
3. Ensure you are focused on what you do best; outsource non-essentials.
4. Talk to your customers; identify new needs from them.
5. Review your prices, margins and overheads.
6. Have a vision; where do you want to be in 5 years time?
7. Take good advice and retain your best people.
8. Do projections and cash-flows to plan.
9. Alliances and collaborations – now may be a good time to speak to your competitors as they may face the same challenges as you, or you may be able to work together while staying independent.
10. Research new products and services; meet those new needs!

Our firm has experience in guiding business owners and management through the above processes, which they must undertake. We’re able to ensure that you are on the right track, review your goals and help with outsourcing your non-core departments. Remember, by working together as part of your team, we can achieve much more. For a free no-obligation meeting to discuss your roadmap, contact us. Its time you were en route to your success!

Is Factoring/Invoice Discounting For You?

These days it can be difficult to get your money back from debtors in time. This increases the risk of bad debt and the need to borrow funds, which can cause you financial problems. If this is causing some real worries, then look no further!

Factoring is a service in which your business sells its invoices to a third party, and in return you can receive a quick boost in your cash flow with up to 85% of your money back in approved invoices. Invoice Discounting is a confidential version of this.

While real suitability comes down to a number of factors such as the amount of your annual turnover, and having a wide range of customers; the advantages and disadvantages are the real decider. The main advantage itself is fast money from your debtors, and the amount of time it can free up for you to run your business rather than chasing up customers for your money. A service such as this does cost and there are at least 2 elements to this; the admin and facility fee, and the borrowing cost itself.

While these are just some of the good and bad points of the service, it depends entirely on your circumstances and the quality of your debtor book. If your debtors are the principal assets and cash flow is tight then this can be the life preserve you’ve been praying for. But the charges can be an issue if you do no manage the process and ensure that you are working with a finance house that understands your business and customer base. As the money is being collected for you, this time saving must be used productively to get that extra business in order for you to cover the cost of the service. Factoring is very useful for providing working capital to fast growing businesses. If your debtors are an asset and you have a good client base (not too much reliance on a few customers) , then this facility must be considered if you are not a well capitalised business  as it allows you to raise some much needed working capital.

This is a major financial decision and you need impartial advice from experts comparing the various providers in this sophisticated financial banking sector. If you need help with your current financial situation regarding your business, give us a call or drop us an email and we will be happy to help!

The Enterprise Finance (not so) Guarantee

2009 saw the arrival of the Enterprise Finance Guarantee Scheme (EFG), an initiative in which the government would assist lenders in providing loans to SMEs with risky business plans. The scheme itself will continue through to 2015, providing up to £600m in additional lending to around 6000 SMEs in 2011 and 2012, with an added prospect, if needed, of a total of £2 billion over the next 4 years.

While this may be the key to solving a lot of problems for you budding entrepreneurs out there, I wouldn’t celebrate just yet. Research recently carried out by the specialist lender Aldermore, has shown an 11% decrease in the value of loans through the initiative from £103m (Q4, 2010) to £92m, all in the space of just 3 months. Furthermore, the bank has gone on to say that overall lending under the EFG has dropped by a troubling 36% since its launch in 2009.

While this may cause worry, it may not be as bad as you think. So long as the scheme is still active, SMEs will continue to benefit from a higher success rate of funding from banks; but if the figures continue to decline, SMEs will face a steady increase in difficulty.

For those of you who are finalising your business plans, try to go that extra mile and make it as airtight as possible (we’d also be happy to help), so you’ll be able to walk out of the bank with a smile on your face (fingers crossed!).

India V Pakistan – World Cup Semi-Finals 30-03-2011 – Dua & Co Event.

Indian Property Market ~ Rakesh Dua

Negative effects of cutting costs

Many business owners think that cutting costs is the only way to improve their profit in the long run. This does not surprise considering the fact that after typing in “cutting costs” in google, the results come up with phrases like “Cut costs and increase cash flow” or “How cutting costs can save your business”. In many business advisers you can read about the fact how cutting costs are crucial for a business to become competitive.

But is that really all? Who talks about the risks that can occur?

We do!

It is to say that cutting costs can also become dangerous, if too much reliance is placed on them. There is a risk of cutting into productive capacity and even inadvertently increasing costs. Also it could damage morale and create an atmosphere of pessimism.

As cutting costs does not require a lot of rethinking, it can cause a tunnel vision which leads to missing out on more creative and often much more effective strategies for improving profitability. But often the most successful strategies develop from the most unlikely places of a business which is why increasing revenue is more important than cutting costs.

Last but not least it remains to say that not only costs should be considered but also the profitability of particular processes. But sometimes we lose sight for the obvious: to increase profit successfully the most important question to ask is: How profitable is it?

Design your success

When talking about business success, one thing that does not pop into most peoples’ mind in the first place is product design. But let’s take a look at some best practice examples: everyone knows the Coca Cola bottle that merges with the brand just like its taste. The round edges of the i-phone and its big touch screen have become famous worldwide too. And the smart cars did not without reason play a main role in the movie Italian Job.

A good design matches its product like a second skin and helps creating an image since it can be recognized quite easily. But also it is the key to the processes of innovation and continuous improvement and thus helps you to maximize your profitability. To reach this goal, you have to keep in mind two important principles that smart designs have in common: It is crucial to meet the needs of the marketplace first and the production process second. Despite that designers usually work in isolation, the needs of the end users should be at first identified carefully. The aim is to create products people want, instead of trying to persuade people to want products you have created. That means the design process should be market driven, with the designer focused on creating products that marketing identified as the customers wants. Design and production teams should thus be brought together as early as possible.

In conclusion the design process has to be planned ahead and thoroughly coordinated with other departments such as the marketing. It should not be seen as a separate task but as a part of the business process!