|
|
| Prime Scene Investigation
'I would say that the market will eventually stabilise, as it always does. It is a much needed spring cleaning for the economy'.
The UK has in the last few years, focused its attention on the US elections, the Iraqi war, and more recently the threat of a reccession.
Unfortunatley, when changes in economic activity occur, small companies are more susceptible as they have less control over their business environment. They, therefore, more than other businesses, risk the survival of their company with one wrong move.
By far, the one global event that will have a serious effect on th UK economy is an unexpected downturn. It is general belief that with the US elections, there might be an increased economic growth , fuelled by a more relaxed fiscal policy, as has been a past trend. With the Iraqi war, it might be harder to speculate its direct cost to us, apart from the estimated financial cost of £5bn announced in 2007.
According to Tom Connor, a strategist from the Department of HRM and Strategy in the University of Bedfordshire Business School, 'we are far from being hit by a recession. In fact, this seems to be a strategy by city analysts and investment journalists trying to sell their major product - advice'. His argument being that the country is not experiencing negative economic growth , as businesses are still investing and companies are definitely growing. With general unemployment at only 5%, relatively low inflation, and satisfactory interest rates, why would any analyst fear a recession?'. 'If we are concerned about a credit crunch', says Tom, 'I would say that the market will eventually stabilise, as it always does. It is a much needed spring cleaning for the economy. This situation is just chastising leaders who have ignored tried and tested rules about risk and return, and have engaged in bad lending practices'.
One person who is less optimistic, is Dr. Sudesh Sangray, from the Division of Accounting and Finance in the University of Bedfordshire Business School. In his opinion, 'the US has so far, improved its economy with interest rate cuts, but they are yet to stave off a downturn. All economies in the past have been dramatically affected by the US eceonomy, but the Americans are having less impact on the world economy than they used to, especially with the Asian economies steadily increasing their export income and domestic growth. We are facing a serious economic threat, but one global event that would affect many economies including the UK is putting an end to the Iraqi war. Apart from the human factor, the UK will likely benefit from reconstruction contracts - if the French do not get there first!'
With several other consumers expressing their concern over the state of the economy, there is the general apprehenesion about the effect on the ordinary person, general purchasing power, and possible lifestyle changes. However, as a recession is an average condition of the total economy with different economic cycles, some businesses/people thrive, and some others go down. If a recession does occur, the only way to ensure that we don't go down is to be prepared!
|
| Income Tax Rate Change -
The Good , The Bad & The Ugly
The income tax rate reduction is in itself a good thing...or is it?
Well, having our basic tax rate reduced from 22% to 20% seemed like really great news, until you looked at some other changes taking place simultaneously. Now, here's the bad and ugly stuff:
Bad News 1. Okay , so you've discovered that the 10% starting rate has been abolished.
Bad News 2. You also probably know about the increased National Insurance threshold.
Bad News 3. For a pensioner, its worse.
According to Mandy Wilson, 'it is quite heartbreaking for people like me, because we will have 2% less tax relief on pension payments, and if no one has really explained that to you, here's the deal'.
Currently, if you make a regular pension payment to a group pension plan arrangement, you get tax relief from HM Revenue and Customs. Now, with this tax change, your tax relief is reduced, so to get the same amount in your pension fund, you have to increase the amount deducted from your salary, otherwise, this will eventually affect the retirement benefits available to you.
To make this simple, if you pay £78 contribution on every £100 plan, you now have to pay £80. Might not seem like much, but if you have budgeted expenses like I do (and you should), it affects your personal planning quite significantly.
|
The Overdraft Facility - A Trojan Horse?
With software, a 'trojan horse' disgusies itself as another program and causes data destruction and exploitation. With businesses as well, something similar tends to happen with overdrafts.
It is true that external finance may offer some relief to cash flow crises and may be necessary to help a business grow, but if businesses can better manage cashflow more efficiently within their organisations, they could avoid or significantly reduce the unnecessary cost and time spent on external financing. The big question is 'Should businesses make use of an external overdraft facility just because it is available'? Much of this is commonsensical and easy to apply, hence small businesses can bring this into their control rather than be at the whim of external financiers and credit committees.
To avoid going to the banks for invoice discounting, factoring, overdraft or any form of debt, here are a few simple internal strategies for your business, if you want to get rid of those high interest rates, bank fees, renegotiations and a sudden demand for repayment in the new year:
Bill early: Send a bill as soon as you have rendered a service or sold your goods. If you have longer term contracts arrange for stage billing or, even better, upfront payments.
Bill when work is done: Companies do not have to wait until the end of the month to charge for services rendered much earlier. If a job is done over a long period, break the job into stages and bill after each stage is completed.
Follow up quickly: Make a phone call within 1 week of raising the invoice to check clients have received it. Call within two weeks of an unpaid bill. Write a letter within 30 days if still unpaid. Escalate the seriousness of letters through to legal action if required after 30 days and before 60 days overdue, including putting goods and services on stop. In this case always keep notes of conversation held and promises made and try to avoid going to court if possible. Also bear in mind you can claim statutory interest at 8% over base plus costs for overdue amounts.
Make it easy for customers to pay: - ensure there are no invoicing errors on your invoices and that payment instructions including your bank account are clearly marked on the face of the invoice. If an invoice is disputed, agree to a payment of the undisputed part and then quickly work to resolve the balance.
Avoid 'no pay' or 'slow' customers: Be upfront with your customers about how long your credit policy and terms are, and understand their own internal payment and authorisation procedures. Avoid doing business with poor or long - paying customers and if need be, stop any ongoing projects and services. Clients delay payments as long as they can to manage their own cash flow but will usually pay up when you have a strict policy. You should only trade with customers with a good credit record.
Initiate a regular payment system: Encourage your clients to pay using a direct debit or standing order if you offer regular services. For those that are not regular, encourage customers to pay electronically by online banking or BACS
Discounting: Offer incentives for prompt payment to both customers. Consider discount payments for customers who make upfront payments and charges for late-payers.
Bartering: As long as you are getting the right value for your products, no cash or credit management is required in this arrangement and settlement of your invoices is immediate.
Now focus on getting this right the first time within your organisation and you can avoid fees and charges that will eat into your profits. Maintain a good financial management discipline by keeping accurate records, tracking key performance indicators and employing appropriately qualified and skilled financial staff. Outsource to specialists if you need to! |
Linda Price Leaves e-FM 
Linda Price, Financial Controller, resigns from e-FM after six years. Linda's decision to leave has been made known to staff and clients, prior to her departure in March 2008, to join a client company. Linda has been a tremendously valuable resource, especially druing the current execution of e-FM's expansion strategy. All of us at e-FM are indeed sorry to see her leave , she will be missed by all. Linda worked closely with some major clients, including Light Blue Optics, Arnold Hose Limited, Toshiba, Go 4 Ventures and Metair Mechanical services Limited.
'I have had a very interesting time at e-FM and have formed many wonderful relationships. I would like to thank everyone at e-FM for making this a great place to work. I am convinced that e-FM is set to achieve greater heights than it already has in this industry. I am really proud to have worked with such a company' says Linda.
Gary Jesson, Managing Director says 'Linda has contributed greatly to the success of e-FM and it is indeed a sad thing to see her go, but fortunately, she is only a phone call away, so if she changes her mind...she only needs to give us a call. We understand her reason for leaving though, and wish her the best in her future endeavours.
| |
|
|
|
 |
Business Seminar :
'Against The Odds in 2008'
BOOK YOUR PLACE AT THIS EVENT FREE!
e- FM (providers of financial management services) in conjunction with Peninsula (the Employment Law and Health & Safety Specialists) is hosting a seminar to demonstrate the problems that businesses face in dealing with their finances, financial reporting and employment law, given the challenging business environment of 2008.
This event is especially designed for Directors, Business Owners and Decision Makers. At this seminar, participants will be provided with information about business management and the recognition of corporate danger signs. With tax changes, a credit crunch and threats of recession, you could risk the survival of your business, with one wrong move. This year, human resource management is as vital as financial resource management. Current fire regulations and Health and Safety legislation are particularly important for companies with 5 or more staff. For such companies, we will highlight best practice and provide you with solutions for total resource management.
This is a seminar you do not want to miss. The first of such events kicks off in the North West region. To apply for a complete programme and booking form for this seminar in Manchester, kindly send an email to maurice@efm.uk.com before the 1st of April, 2008.
For other events in the NorthEast, West and the NH Counties, you can book by sending a mail to clientcare@efm.uk.com.
Be one step ahead of the game!
|
| FREE WORKING CAPITAL MANAGEMENT HEALTHCHECK!
e-Financial Management and Lysander Enhanced Receivables Management have joined forces to offer a unique combination of financial management experience and cash collection services. Our Working Capital Healthcheck draws on our vast knowledge and experience of financial and receivables management. A finance manager will conduct a half day complimentary healthcheck with you and your colleagues resulting in a brief report giving advice in areas including:
-
Managing financial risk
-
Mismatches between assets and liabilities
-
Improving financial controls and processes
-
Introducing effective credit control procedures
-
How we can help to collect outstanding debt
To find out more about Lysander, kindly visit their website:
| |
