20 ways to improve cash flow
Cash is vital to you and your business, lack of cash kills businesses.
So how can you improve cash flow:
- Prepare a detailed cash flow forecast, schedule your direct debits and standing orders, knowing how much cash you need and when will help you focus on where the cash will come from
- Invoice your clients as soon as you can, often small businesses invoice late and this just lengthens the time it will take to collect payment
- Get stage payments on large contracts
- Negotiate payment terms with your suppliers, try to at least match the client payment terms with the supplier terms
- If you are able to spread payments do it, for example, most insurance companies will offer you that chance to spread the payments over 10 months
- Adopt ‘just in time’ for stock items, don’t carry more stock than you need to
- Pay sales commissions only after the client has paid
- Change weekly payrolls to monthly where possible
- Sell assets you don’t need
- Sell obsolete and slow moving stock
- Consider paying mileage allowances rather than owning company cars
- Chase your debts
- Get a good credit rating as it will help you negotiate better supplier terms
- File your accounts and tax returns on time to avoid penalties
- Credit check your clients and agree terms based on their credit history and rating
- Diversify to smooth out seasonal trends
- Control your costs and reduce them where possible
- Make cash collection a KPI for your business
- Finance your fixed asset purchases
- Use Invoice Finance if your clients demand long terms
steve@bicknells.net
3 ways to comply with Employer Auto Enrolment Obligations
Auto Enrolment has arrived and there is a lot to do……
The Pension Regulator website will help you create a stage by stage plan working back from the date when you need to start (staging date), it is a useful planning tool http://www.thepensionsregulator.gov.uk/employers/planning-for-automatic-enrolment.aspx
Most schemes will be set up with one of the following providers:
NEST – National Employment Savings Trust – NEST was originally created by the government – limited help for employers
The Peoples Pension – B&CE – B&CE is well known in the Construction world, they have online tools to help you
Now: Pensions – ATP (Denmark) – 45 year experience in pensions and many awards
You could use another provider and you should take independent expert advise, never give pension or investment advice unless you are qualified to do so.
If you are asked for advice remember to say ‘I know nothing’
But as an employer you do need to select a pension scheme for Auto Enrolment.
Then you need to consider how you will comply with your responsibilities and keep records for:
- Contributions
- Opting Out
- Opting In
- Earnings
- Employee Records
- Communication with Employees
Take a look at this video for middleware to get an understanding of how you could manage your compliance requirements
So here are your 3 basic ways to comply:
- Small Employers – you may decide to do it yourself using information on the Pension Regulators website and provider of your choice
- Pension Provider Portals – schemes like the Peoples Pension will have portals and tools to help you manage your auto enrolment pensions but it won’t cater for other benefits and other schemes
- Middleware – like the video above, this gives lots of functionality and will allow you incorporate other schemes and benefits but its not free
You might also find this blog worth reading ‘10 things you need to know about Pension Auto Enrolment’
steve@bicknells.net
The price is right!
The new year is looming and now is the perfect time to review your pricing.
Many business owners struggle with putting their prices up, particularly during times of economic downturns, even though their costs are increasing. They leave their prices the same for several years and then have to put their prices up significantly in one go to stay profitable.
However, reviewing prices on a regular basis (say, once a year) is a much better way. Customers are much happier to accept rising prices if increases are regular but small, than they are with irregular, large price increases.
So, make sure you review your prices regularly.
The key to doing this successfully is to make sure that your customers know that you have a particular time when you review prices – the new year is perfect for this. Preparing your customers properly for price increases means that the change does not come out of the blue, and they are more likely to accept it.
Remember, pricing is all about asking for a fair value for the product or service you provide. So, it is important that you are clear on what the fair value is.
Make sure you know what your competitors charge, but more importantly, talk to your customers regularly so you know what they particularly value about what you provide.This will make it easier for you to assess what price is appropriate.
If you are in the service sector the new year is also an ideal time to review the service you are giving your clients, to check if there is any additional work they need.
So, if it has been a while since you reviewed your prices bite the bullet and start planning for one now.
Fiona 🙂
10 expenses that will trip up PAYE workers
- Mobile telephone – if the contract is in your personal name you can only claim business related call costs.
- The £8,500 trap – if an employee earns below this amount but receives benefits in kind taking them over the limit, A P9D has to be submitted.
- A director has to submit a P11D no matter what they earn and complete a self-assessment.
- Pensions – pension contributions are limited to a maximum of £50,000. This will reduce to £40,000 next year subject to an employee’s pay exceeding this amount.Watch out for the 3 year rule.
- Pension pots – the fund will be reduced by £250,000 to £1,250,000 from the 6th April 2014
- All expenses claims must be wholly and exclusively incurred in the performance of their duties, otherwise not allowable.
- Working lunches – are only allowable if all the company get fed.
- Watch out for the Christmas party – an employer is only allowed to claim £150 per annum for entertaining staff and their families.
- Tax free mileage allowances – most people know the limits and allowances. Don’t forget to keep records of journeys made.
- If your employer buys clothing for work it must display the company logo, even if it’s an Armani suit
12 really quick and easy tax tips for PAYE workers
- Child care vouchers – if you have children attending a nursery or looked after by a professional childminder, your employer can join a Childcare voucher scheme. This allows for £55 of the weekly cost to be deducted free of tax and NI if you are a basic tax rate payer, or £28 if you are a higher rate tax payer.
- Pensions – if you pay into a work pension scheme, 20% tax is automatically deducted. For high rate tax payers, you can claim additional relief either by declaring it on your Self-Assessment or calling the taxman.
- Company cars – are a pain and the tax is huge BUT if you have a company van, the benefit in kind is capped at £3,000 so for a basic rate tax payer the cost of driving is only £600 or £1,200 for a higher rate payer.
- Professional membership fees – your membership to a recognised trade or professional body it is a deductible expense, but not for your hobbies.
- Share incentive schemes – there are loads of schemes that allow either NI or Capital Gains Tax to be saved, you don’t have work for a listed company either.
- Giving your work colleagues a lift to work – if your employer encourages car pooling you can claim 5p a mile for the passenger without incurring any additional tax charge.
- Cycle to work – get your employer to provides a bike both for travel to work and play, it’s not considered as a benefit in kind.
- Then after a time you can buy it off them at market value.
- Season ticket loans – your company can advance the cost of an annual season ticket up to £5,000, much cheaper than buying a ticket weekly.
- From April 2014 this increases to £10,000 (not really sure if that’s a blessing?)
- Electric Cars – from April 2015 there’s no benefit in kind.
- Working from home – it is becoming increasingly more common for staff to work from home. You can claim £4 a week allowance without having to produce receipts.
Any questions contact the author at niall@odfinancialservices.co.uk
Will I be taxed on Christmas gifts recieved at work?
It’s Christmas and even though times are tough, you could still get a gift from your employer or client or supplier, will it come with a tax bill attached?
The answer depends on the value.
HMRC Helpsheet 207 – Non-taxable payments or benefits for employees
The Helpsheet says, certain gifts from third parties are non-taxable if all these conditions are satisfied:
• the gift consists of goods or a voucher or token only capable of being used to obtain goods, and
• the person making the gift is not your employer or a person connected with your employer, and
• the gift is not made either in recognition of the performance of particular services in the course of your employment or in anticipation of particular services which are to be performed, and
• the gift has not been directly or indirectly procured by your employer or by a person connected with your employer, and
• the gift cost the donor £250 or less, and
• the total cost of all gifts made by the same donor to you, or to members of your family or household, during the tax year is £250 or less.
http://www.hmrc.gov.uk/helpsheets/hs207.pdf
An employer may provide employees with a seasonal gift, such as a turkey, an ordinary bottle of wine or a box of chocolates at Christmas. All of these gifts can be treated as trivial benefits. . For an employer with a large number of employees the total cost of providing a gift to each employee may be considerable, but where the gift to each employee is a trivial benefit, this principle applies regardless of the total cost to the employer and the number of employees concerned. If a benefit is trivial it should not be included in a PSA (EIM21861).
http://www.hmrc.gov.uk/manuals/eimanual/EIM21863.htm
Will the employer or supplier or client have to account for VAT?
You do not have to account for VAT on business gifts made to the same person so long as the total cost of all the gifts does not exceed £50, excluding VAT, in any 12-month period. To check this it is acceptable for you to adopt any 12-month period that includes the day on which the gift is made.
But where the following apply:
- the total cost of business gifts given to the same person in any 12-month period exceeds £50
- you were entitled to claim the VAT on the purchase as input tax
you must normally account for output tax on the total cost value of all the gifts. How to work out the cost is explained in Notice 700, ‘The VAT Guide’.
steve@bicknells.net
Will the Christmas Party be tax free?
The answer is probably! maybe?
HMRC have an Exemption (not an allowance) of £150.
If the employer provides two or more annual parties or functions, no charge arises in respect of the party, or parties, for which cost(s) per head do not exceed £150 in aggregate. Where there is more than one annual function potentially within the exemption, we do not expect employers to keep a cumulative record, employee by employee, of functions attended. But for each function the cost per head should be calculated. The cost per head of subsequent functions should be added. If the total cost per head goes over £150 then whichever functions best utilise the £150 are exempt, the others taxable (see examples at EIM21691).
The figure of £150 is not an allowance. For functions that are outside the scope of the exemption (see example at EIM21691) directors and employees, except those in an excluded employment, are chargeable on the full cost per head, not just the excess over £150, in respect of:
- themselves and
- any members of their family and household who attend as guests.
The cost of the function includes VAT and the cost of transport and/or overnight accommodation if these are provided to enable employees to attend. Divide the total cost of each function by the total number of people (including non-employees) who attend in order to arrive at the cost per head.
http://www.hmrc.gov.uk/manuals/eimanual/eim21690.htm
Things to watch out for:
1. The function must be open to all staff, if its just directors, its taxable
2. The cost must not exceed £150 per head, otherwise it will all be taxable http://www.companychristmas.co.uk/news/tax_free_christmas_parties
3. If you have several events during the year you may have to choose which ones qualify if the total exceeds £150
steve@bicknells.net
The Perfect Corporate Video
Depending on which research you believe, including video within your campaign can increase click through rates by 300%. If you want to correspond with a company’s senior executives, you had better include a video link as 60% of them prefer receiving video to text. Yet click through only generates traffic. In order to be successful you really need to convert this into sales. That means generating compelling content. Whilst I could write a book on the subject, let’s break it down into three steps.
To find out more on video statistics, watch this:
Step 1: Know your audience
This is your starting point; it steers the whole production in a single, clear direction informing not only how the video looks and sounds, but also how it’s filmed, edited and presented.
In broadcast media it’s standard practice to have a profile of a typical viewer or listener. We give them a name, we know how old they are, where they live, how many kids they have, what car they drive, the newspaper they read and what other programmes they are watching.
You may think being too specific could lose you business; it won’t. The more specific you are the greater the clarity of your production.
Step 2: Know what outcome you want
It doesn’t take long in business to realise that nearly every marketing message your company puts out must have a clearly defined objective. If the aim is to make a sale then everything you do should point the viewer in that direction. If it’s to raise awareness you’ll need a mechanism for measuring that too.
Step 3: Know how you are going to get a response from your video
Now we have to determine how we’re going to achieve the final step – the all-important conversion. This is where a significant number of people are lost. Imagine promoting a holiday destination with an enticing video of the hotel. The pool looks inviting and there are lots of happy people saying what a great time they’ve had. The video ends on a call to action to visit the website to book. That’s another hoop, more typing and more effort. To increase conversions include directions in the video to a simple tracking link included in the email. Autoresponders such as Aweber and GetResponse allow you to manage your campaign.
Even with a compelling video, the maxims of email marketing still hold true – a captivating subject header, personalisation, call to action and tracking.
Alan Coote’s career spans 35 Years in Creative and Digital Media including the BBC, BAE Systems and numerous Independent broadcasters. He is the MD of 5 Digital and broadcasts weekly on the national business radio programme Let’s Talk Business. Follow him on Twitter @TheAlanCoote
Save Tax with a Relevant Life Plan
No one enjoys paying out on insurance premiums but why not take advantage of a great “tax break” when it comes to providing life assurance for your family?
It’s called a Relevant Life Plan and it works as follows;
Most directors pay for family life assurance out of their “taxed” net income and therefore for example a £100 per month premium has really cost approximately £145 when you add back in the tax and N.I.
If you were to pay for this via a Relevant life Plan then your company can make the payments for you and its classed as a business expense therefore saving on Corporation Tax. In this instance the £100 per month would now have a real cost of £80 per month. More good news is that it’s NOT a P11d benefit and the policy is written into a special trust which means on death the proceed go straight into the trust (for the benefit of your family) and not back to the company.
I found details of this policy at www.direct-fs.co.uk
steve@bicknells.net
Tax Break for Racehorses
There are around 8,215 racehorse owners in the UK, ranging from gentry to plumbers united in their love of the sport.
But this is not an investment for the faint-hearted. You are unlikely to make a fortune and could end up losing a huge amount of money. The Racehorse Owners Association says that for every £100 of annual outlay (not including the purchase cost of the horse), a racehorse owner is likely to see a return of just £21.
As reported in the Telegraph (12th February 2013)
Some times it can pay off….
Rugby star Mike Tindall was branded an “idiot” by his wife Zara Phillips when he splashed out £12,000 on a racehorse.
But Mr Tindall is now looking far from stupid as his impulse purchase won last month’s Welsh National. Monbeg Dude, which Mr Tindall owns with four others, is now said to be worth more than £200,000.
VAT Tax Break for Racehorses
Following an agreement with the Thoroughbred Horseracing and Breeding Industry a scheme known as the VAT registration scheme for racehorse owners was introduced on 16 March 1993. If you meet the conditions of the scheme HMRC will accept that racehorse ownership is a business activity. You can therefore register for VAT and recover some of the VAT you are charged on your expenses as input tax.
Owners may include:
- breeders;
- dealers;
- trainers; and
- racing clubs.
You can apply for VAT registration under the scheme if you are registered as an owner at Weatherbys and you:
(a) own a horse or horses covered by a sponsorship agreement registered at Weatherbys; or
(b) own a horse or horses covered by a trainer’s sponsorship agreement registered at Weatherbys; or
(c) can show you have received, and will continue to receive, business income for example from appearance money or sponsored number cloths (SNC’s) from your horseracing activities.
You can recover as input tax the VAT you are charged on the purchase, training and upkeep of a racehorse and any overhead expenses used for the purpose of your business.
steve@bicknells.net
Business Accountant 