Credit Control – Remove those barriers to getting paid

Are you taking your Credit Control seriously?

 

Why are so many companies failing to take credit control seriously? Perhaps it is because so many businesses are too timid towards late-paying customers.

Do you use any of the following reasons:

” They’re well established customers of ours; they do pay, even if it is always late.”

Or:

“They are a good customer of ours – we do a lot of business with them.”

Perhaps, and most alarmingly. you may use the most frequent reason for not enforcing your credit control:

“We don’t want to risk losing future orders by getting heavy with them over payment terms.”

So the real question is, do you honestly believe that allowing your customers to dictate payment terms to you, will ultimately help your business survival?

In reality, businesses trading styles and products differ widely, and therefore, so do staff in customer facing positions. They will want to establish good customer relationships. To many in the business, goods and services being provided shows a constant and reliable customer.

For us who work in credit control, the definition of a good customer is one who pays promptly within the previously agreed credit terms.

We know that you give credit to ensure greater profit for your business, but you need to ask what positive benefit there is for your business in allowing your customers credit terms on either thirty, forty-five, sixty or ninety days?

We believe that effective credit control starts at the customer acquisition and is part of good commercial awareness. It is the responsibility starts at he top, with the Managing Director, the Finance Director and the Sales Director who should all create the right message to cascade downwards to all employees.

To get credit control working properly the following key areas need to be covered:

  • Deciding what credit to give a customer – the risk profile of the company you are doing business with must be understood.
  • Set specific credit limits for a customer and impose them.
  • Chase debt when it is about to become due.
  • When working with large companies, understand their processes and procedures and adapt to ensure you yet paid.

For many companies, credit control is a task which no-one wants to undertake. For us, it is a vital part of ensuring a company survives and flourishes.

If you want to find out more about Credit Control or how Brookstand can help you, either fill in our contact form or call us.

You will find out more about Brookstand’s Credit Control services here.

 

 

 

 

 

Company Registration

A company registration in the UK is necessary for business that is to trade as a limited company. By this, we mean that a company is registering with Companies House which is the United Kingdom Registrar of Companies.  It is an Executive Agency of the Government, under the remit of the Department for Business, Innovation and Skills.

There are over 2.7 million company registrations according to the Companies House website. So why do business owners decide that a company registration is their preferred business structure?

Well here are three main advantages for company registration:
  • A company’s liability is limited and does not extend to the separate assets of its owners. These are known as shareholders. A company can have as many shareholders as it likes or just one shareholder.
  • The shares of a registered company are easily transferred. They can be bought and sold. A price can be agreed between the parties involved.  Shares can also be offered as a reward to employees, acting as an incentive to participate in the future success of the registered company.
  • If a shareholder dies, the existence of a company remains, unlike a partnership which is dissolved when one partner dies.  A company registration allows for the deceased owners of the company to pass on their holding, whilst the value of the viability of the company is allowed to continue.

If you want to know more abut the comparisons  between a company registration in the UK and other different bushiness formats, we discuss it here.

So if you decide that the right business format for your enterprise is to set up a limited company, then the process is made easy by using the services of Brookstand. We will manage your company registration on-line.  Just use the user friendly company registration service we have created to get your company name registration and ensure you are also set up with HMRC. This means you meet both your Companies House and Revenue and Customs requirements.

If you want more information, please leave a comment below and we will get back to you.

However, if you are ready to take the next step,  just follow this link and we will assist in taking you through the company registration process.

 

 

 

What are the options when you set up a company in the UK?

When you set up a company you will have to make a decision more or less straight away: should I set up a limited company?

The simplest business set up allows you to take all the business decisions and take all the risks and rewards yourself.

But when you are setting up a business, this simple structure may not be appropriate.  What about other people owning and managing your business? Do you want to limit your risks and liabilities in the business set up? Do you want to be able to spread the ownership and increase the investors either when set up a company or in the future?

So lets have a look at the main advantages of three of the most popular ways in which people set up a business:

Set  up a Sole Proprietorship
  • Simple and inexpensive to create and operate
  • Profit or loss is reported in the owner’s personal tax return
  • Owner is personally liable for business debts
  • Life of the business is restricted to the life of the owner
  • Limited potential for value creation
Set up a General Partnership
  • Simple and inexpensive to create and operate
  • Partners’ share of the profit or loss reported in personal tax returns
  • Potential for some value creation
  • Partners personally liable for business debts
  • The business is dissolved when a partner dies
  • Only partners can raise outside capital
Set up a Company which is Limited
  • Owners have limited personal liability of business debts
  • Some benefits (such as pensions) can be deducted as a business expense
  • Owners can share out the profit and could end paying less overall
  • Access to full range of outside capital
  • Business can live on after founder’s death
  • Potential for value creation
  • Separate taxable entity
  • More expensive
  • Owners must met legal requirements for stock registration, account filing and paperwork

So if you decide that the right business format for your enterprise is to setting up a limited company, then the process is made easy by using the services of Brookstand. We will manage setting up a company online for you. Just use the user friendly company setup service we have created to get your limited company set up and ensure you are also registered with HMRC. This means you meet both your Companies House and Revenue and Customs requirements.

If you want more information, please leave a comment below and we will get back to you.

However, if you are ready to take the next step, just follow this link and we will assist in taking you through the process to set up a company.

 

 

Business Failure – avoid mistakes and deliver success in business

Let’s face it, business failure is not on our minds when we decide to start our business.  To be fair, there are enough siren voices around telling us that the time isn’t right to go it alone. They argue that we would be safer in a large business. People advise that we should be risk averse.

But we should be prepared to put these voices behind us.  Instead, we need to plan and nurture our ideas.  This will help us realise our dreams.

The Official Receiver lists the main reasons of business failure for SMEs (Small and Medium sized Enterprises) as follows:

  • Insufficient Turnover
  • Poor management and supervision
  • Lack of proper accounting
  • Competition
  • Not enough capital
  • Bad debts
  • Excessive remuneration to the owners

So how do you avoid falling into these traps?

Well having good planning, market research and systems in place will help alleviate these issues. By introducing these aspects you will help be a success in business and protect against business failure.

Getting prepared for business should force you to ask the fundamental question: “Do you have the abilities for starting and running your own bushiness?”

There is a common held belief that for every ten people who want to start their own business only one finally does so.  Business failure can be down to several reasons as we know, and apathy is another strong contender.

We suggest to prevent you falling into the business failure trap you look at your own abilities,  satisfy yourself there is a real need,  and check the viability of the market you are hoping to operate in.

Why not explore this further? Each of these areas can be tackled with guidance and the right support. Contact us to see if we can help.

 

What is the difference between a Project and a Programme?

I am always being asked what the difference is between a Project and a Programme and whilst there may be lots of debates around this the answer is quite simple.
The debates are usually around the kudos of a programme (and the title of Programme Manager) over a project however, many projects can be far more complex than some programmes, and can control budgets far greater than that of programme.
A project is a temporary organisation setup to deliver a benefit to the business whether it be additional profit, compliance or improved efficiencies. Projects deliver benefits of which it needs all its workstreams to deliver for the business to deliver the benefit.
Whereas a programme has two or more projects which can be deliver business benefits independently, however these are intrinsically linked and the desire of the business is for the benefits to be delivered and managed together. Generally there will be functional workstreams such as IT & Business Readiness which run alongside the projects to support the delivery of the projects.

For example the implementation of a new ERP system could involve millions of pounds worth of investment last several years and involve most areas within a business however; the delivery of the ERP system has to be delivered as a whole to deliver the business case.
In another example a company wish to setup a programme to reduce their telephony costs, this could involve two projects, one for landlines and one for mobiles, working with the same or a different provider. This may only save the company ½ million pounds and involve just a few areas within the business however; the delivery of either of the projects will deliver a benefits to the business.

So in answer to the question, what is the difference between a project and a programme, is not necessarily the size or complexity but, it is based around the business case and whether elements of the business case can be delivered in isolation.

Pricing Decisions: What Should My Price Be?

The pricing decision you make is part of your business’s marketing mix.  It can differentiate your product from the competition.  Here are eight major pricing methods and strategies. Which applies to you?

 

  • Cost Plus: This is the simple method of taking your costs and adding a desired profit margin.  It is the crudest  method and  most ignorant of what is happening in your market place.

 

  • Penetration Pricing: A company will use this to grab market share and control a market as the low-cost producer.

 

  • Perceived Value to the Consumer: Here your customers believe that they are getting good value from your products or services.  The pricing of replacement parts is an example where this is applied.

 

  • The Price/Quality Relationship: The perception of quality in a product sometimes dictates it price – for example, the pricing of luxury items such as jewellery or perfume are based on attributes of style and workmanship.

 

  • Skimming: Early in the life cycle of a product, companies can often charge a high price. They then skim high margins from a new and novel product or service. The extra benefits will recover the initial development costs of the product.

 

  • Price Based on the Price Elasticity of the Buyer: Sometimes a pricing policy needs to be aware of the sensitivity to price of consumers. Some products are more price elastic than others. For example, tobacco users often absorb price increases than forgo their habit.

 

  • Meeting Competition: This is a decision to employ a pricing strategy to match or beat the prices of competitors. This is to gain or retain market share in a competitive market.

 

  • Meeting Profit Goals Based on the Size of the Market: In a tight market, a price has to be set to justify the marketing and manufacturing effort. The alternative is to find another marketplace!

 

Help your Cashflow by getting payments more efficiently

Payments are vital for the smooth running of your business. We strive to attract customers for our goods and services by dynamic sales and marketing activities. We pride ourselves on producing attractive offerings at prices that are affordable to our target market. We aim to deliver high quality goods and services to our customers which give them satisfaction, enhance our reputation and hopefully attract them back and/or refer us to their contacts.

So why do so many of us fail at ensuring we receive payments on time when we get around to invoicing for these goods and services? This can be so damaging for our cashflow – often a vital area for most small businesses.
Here are eight tips to help you receive the money you deserve when you expect it:

1. Before you supply goods, make sure the customer has agreed to your terms in writing.

This will mean there are no crossed wires. We won’t have the situation that the sales rep thinks they have agreed to payments within 30 days, but the customer thinks it is due 30 days from the end of the month following delivery!
Make sure you spell out the terms when you confirm the deal and not after the goods have been delivered.

2. If You Supply Goods Make Sure You Get A Signed Delivery Note.

By getting a signature from your customer it gives you confidence that they have accepted the product and if they also sign that it was delivered in a satisfactory condition they cannot use the excuse of faulty goods to delay payments.
Also make sure the signature is dated.

3. Raise The Invoice And Send It As Soon As You Can After Delivery Of The Goods Or Services. Ideally, Ship Them Both at the Same Time.

Remember until an invoice is raised, your customer can’t do anything with it!
The payments process will only start once your invoice has been raised and received by your customer.
Ask yourself could you get your suppliers to pay in advance?
Never fall into the trap if raising invoices monthly.
4. Seven Days After the Invoice Has Been Dispatched, Ring Your Customer to Make Certain That There Are No Problems and That the Invoice Has Been Passed To Accounts for Payment

By calling to ask how things are, it gives you the opportunity to quickly sort out any problems that have arisen and still be paid on time.
This will also have the added benefit of establishing if there are issues with other areas of your organisation such as despatch or sales where customer expectations are not being met.
The results will be happier customers who will buy more from you; greater sales which will result in more cash flowing through the business and potentially your profits will also increase.

5. Always Send Out Statements to All Outstanding Accounts

Many companies only make payments on statements – usually the ones where their purchase ledger is a mess!
If so play by their rules and keep building your the relationship with them to get payment quicker.

6. Seven days after the due date, phone the debtor and explain that legal action will be taken if payments are not made

Make this call!
Remind your customer of your terms of trading to which they agreed and warn them if payment doesn’t come within seven days, you won’t be able to stop the commencement of legal action.

7. Seven Days After That, Fill Out a Writ on a Money Claims Form and Fax It Over, With a Note Saying That If Payments Are Not Received With 14 Days, This Form Will Be Filed With the Small Claims Court

Now your customer will more than likely react straight away and remember all you are doing is nothing more than sticking to your agreed terms of trade and showing you intend to get paid for your invoices.
You don’t have to use a solicitor or go to court to do this.

8. If no payment is made, file the writ

You must file the writ if there is no payment
You can do this on line
If there are still no payments – take it out of your cash flow – write it off! You don’t want to pay tax on income you have not received!

Eight Steps to Good Financial Management of Your Business

Are you really on top of your business’s financial management?

Surely one of the major jobs as a business owner is to ensure that your business keeps on course and out of trouble to achieve your financial objectives. With strong financial management in place, a company can confidently build its business and weather the storms when they arise.  Without it, businesses become vulnerable to attacks on it from general business conditions, the wrong decisions and unscrupulous employees or business partners.

So here are eight objectives you must set yourself to ensure that the finances of your business are in order:

  1. Money for starting your business

You need to make sure you have the right amount of money to start your business; you need to have the cash to get the right assets in place to get your business off the ground.  A great idea needs to be realised and the monetary requirements understood.  Get this clear at the start and you can build the business with confidence. Your business plan needs to be clear how much and when you require this starting capital.

  1. Making a profit

Sounds ideal – but the best companies make adequate profits on a consistent and predictable basis. With this, businesses are in control and can plan for the future.  You need to be confident that you have strong business cases for your ventures and that you know when and how much profit you will make.  A strong business case and a good budget and forecasting system will allow you to measure your performance.

  1. Controlling the cash

We believe that good business manage their cash from profits in such a way that they can keep all their options open.  Remember a sale is not a sale until you have a satisfied fully paid up customer willing to buy more and/ or recommend you!  You need to keep a constant eye on your debtors and their ability to pay you.  Have a good invoice and credit control system in place and remember to control how you pay your creditors!

  1. Minimise threats of fraud and other losses

Watch out for the bad guys! – they could be poor payers, fraudsters, either internal or external – not everyone is as honest as you, and you need to have systems and controls in place to highlight issues and act fast when you see them. Control of your business assets means that you do not generate waste and there is leakage of the profit you business should be earning.

  1. Be tax efficient

You need to do this for the business, its owners and it employees – this is not about evasion but efficiency and there is nothing wrong with this objective.

  1. Understanding the cash needs of your business

You may have great plans ahead, but if you don’t have the cash in place to realise them they are merely dreams. Understand what cash you need for your ventures and how that fits in with your business patterns. A strong understanding of the cash low of your business will prevent you getting into difficulty by overspending at the wrong time, and ensuring that you know when is the best time to move your business forward.

  1. Keep in good shape and out of trouble

We mean your financial condition here – good cash position, good customers and reliable suppliers and protect your business assets! Always question have I got the right customers and the right products and services to maximise profits and can I improve contracts and services I receive from my suppliers?

  1. Know what you are worth!

So how do you know what price you are worth if someone wanted to buy your business! What value is your business at the present

Well, do you have the basic skills and knowledge for the financial management of your business?

 

Why Set Up a Limited Company? The advantages of Company formation

 

UK businesses consist of sole traders, partnerships and companies – we give some thoughts as to whether Company Formation is the option for you.  There are also limited liability partnerships, companies limited by guarantee and other unusual beasts – but this blog looks only at the Limited Company.

 

We will look at the advantages and disadvantages that you will find to help you decide if it is right for you.

1.     Incorporating for Tax advantages?

 

Dividends and Salary – As the company’s shareholder/director you wear two caps – you get rewards for your hard work as an employee and also you get reward for your entrepreneurship as a shareholder.  This means you are able to split your income into salary and dividends which could generate large income tax and national insurance savings.

 

National Insurance – As the owner of a company you have more scope than many to undertake effective national insurance planning.

 

Corporation Tax – The Corporation Tax regime is lighter than income tax with most small owner managed companies paying corporation tax at a rate of 20%.

This compares with a 50% higher rate of income tax which is paid by sole traders and those people who belong to partnerships.

 

2.     Non tax reasons to Incorporate

 

Limited Liability Protection – Basically this means that a company’s shareholders cannot be sued by outsiders for the debts of the company as they are separate. Although cautious lenders and creditors may require personal guarantees, this could provide invaluable security in certain circumstances.

 

Borrowing Money – It is potentially easier as a company to raise additional finance for example by raising a floating charge of the company’s assets or by raising equity finance.

 

Enhanced Status – Trading as a company is often perceived to have more prestige than by trading in your own name.  People often have more faith when they see Limited in the company’s name even if in practice there is virtually no difference.

 

Flexibility of Ownership – New people can be easily brought into the ownership of a Limited company.  It also gives you the ability to separate ownership and management if that is attractive to you especially if you want to keep your stake in the business but not be involved in the day to day management.

 

Continuity – A Limited Company structure allows for a smooth exit from the business – the company can continue even if a company member retires, dies or simply wants to move on.

 

3.    And the drawbacks

 

Costs – There are set up and monthly costs for the company secretarial and accounting aspects but in most cases the tax savings should easily cover these extra fees.

 

Company Law – As a company director you will be subject toUK company law.

 

Reporting Requirements – You will need to file your annual accounts and returns with Companies House revealing certain of your trading results.

 

PAYE - this will be applicable to any employees of the company, so you will have to run a payroll and ensure the PAYE is paid over monthly to tax man.

 

 

 

But don’t let these issues cloud your judgement – the benefits of being a Limited Company can be quite considerable and Brookstand Ltd is perfectly placed to help you with these administrative burdens so carry on with your business!

 

Contact us for more help at mail@Brookstand.co.uk

What is interim management?

Interim Management – Bringing flexibility

An interim executive, with relevant experience and a good track record, can be the answer to a company’s prayers. Interim management is a relatively new industry with great potential for making the most of today’s fast-moving business climate. The concept was created by the Dutch in the 1970s as a way of injecting much needed flexibility into the market place. At the time, companies faced long notice periods for employees, so changing their most expensive people – the management – was difficult without incurring large costs. The model was adopted enthusiastically in the UK during the late 1980s.

Interim Management - Bringing expertise

Today, we operate perhaps the most sophisticated interim management services in the world, with executives and managers covering a wide variety of roles at different levels of expertise and within various technical areas. These include:

  • adding new skills on a part time basis
  • plugging a gap created by a sudden departure;
  • managing acquisitions;
  • project management;
  • effecting culture change;
  • setting up new businesses and closing down old ones;
  • mentoring and team development;
  • crisis management;
  • turning round an ailing business.

The best exponents of interim management are already proving that, used effectively, they can be worth their weight in gold.