Dormer Finance Limited - Accountants in Basildon Essex covering Billericay, Laindon, Wickford, Brentwood

The budget – In a nutshell!

admin — Wed, 23 Jun 2010 08:32:45 +0000

So, the eagerly awaited emergency budget has been delivered, and after much media speculation, the Chancellor has surprised many with his package of spending cuts and tax rate changes.

Herewith a brief summary of the main points with a brief comment of the impact on businesses and individuals:

Business Taxation

Corporation Tax

- The main rate of Corporation tax to be reduced from 28% to 24% over a period of four years. Companies with profits in excess of £300k pay this rate.

- The Small Companies Rate (SCR) for companies with annual profits under £300k - will be reduced back to 20% from April 2011.

Comment:

The above is good news for our incorporated clients, who have seen the SCR rise from 19% to 21% in recent years.

The cut in Corporation Tax for small businesses also makes incorporation (trading though a limited company) more attractive for sole traders and partnerships, after the tax differences narrowing in recent years between incorporated and non incorporated businesses.

Capital Allowances

- Writing down allowances reduced from 20% to 18% from 2012

- Annual investment allowance reduced from £100,000.00 to £25,000.00 from 2012.

Comment:

The continuation of the Annual Investment Allowance is good news for our clients, effectively this means that all capital items up to £25k per annum bought by a business will be 100% tax deductable in the year of purchase.

In fact, many commentators predicted that the Annual Investment Allowance would be abolished! So, despite the reduction, it is business as usual for the taxable treatment of Capital Expenditure for small businesses who do not spend in excess of £25,000.00 per annum on capital items.

National Insurance

- Start-up businesses outside London and the South East to be exempt from NI for first 10 employees. Tax breaks worth up to £50,000 for 400,000 businesses, is expected to last three years and will allow businesses to avoid NI for 12 months.

- Rises in both Employers and Employees NI from April 2011

Comment:

Unfortunately, the NI exemption is only for start ups rather than existing businesses, and there are several conditions and anti avoidance rules to consider so please contact us if you would like to discuss further.

Despite the government stating in their election campaign that the NI rises would not be implemented, they will be introduced from April 2011 to 13.8% and 12% respectively.

Employees, who will be given an income tax break with the increased personal allowance, will see this saving reduced by paying additional NI.

Employers will see their employment costs rise as a result of the Employers NI, however to cushion the blow, there will be an above inflation rise in the employer threshold for NIC from April 2011. The entry point for contributions rising by £21 above indexation.

In the current economic climate, the wisdom of increasing a tax (by any other name) on growth, enterprise and jobs is, in our opinion, questionable to say the least.

We will continue to advise our clients on the most tax efficient way to extract funds from their businesses, taking into account all of the above changes in NI.

VAT

- VAT will increase to 20% from 4 January 2011.

Comment:

For businesses offering their services to the public or non VAT registered clients, this will have the obvious impact of increasing the sale price. Such businesses will have to make the choice of passing the rise on, or absorbing it within the sale price.

Many small businesses are on the Flat Rate Scheme for VAT and will, once again, have to factor another new rate into their VAT returns.

The cost to businesses of implantation of a new VAT rate is also considerable, once again systems and processes will have to be changed to factor in a new rate of VAT.

Personal Taxation

Capital Gains Tax

- Higher rate taxpayers will face an increase of 10% from midnight tonight, with the introduction of a new rate of 28%;

- Low and basic rate taxpayers will continue to pay 18% on capital gains;

- Entrepeneurs relief will be extended to the first £5m of lifetime gains.

Comment:

A mixed bag here. Higher rate taxpayers will pay considerably more in capital gains tax than before, and with the nigh on immediate introduction of the new rate, have no time to dispose of their capital items.

This move penalises savers, those who have invested in second homes, shares and other such investments and will prove to be one of the more unpopular measures within this budget. However, by capping the new rate at 28%, higher rate taxpayers can continue to pay considerably less tax than they do through revenue producing activities. Additionally, the new rate is considerably lower than the 40 - 50% rate that many experts predicted to be introduced.

Personal Allowance

- The personal allowance (the annual amount taxpayers can earn each tax year before tax is charged) will increase by £1,000.00 to £7,475.00 from April 2011.

Comment:

This will reduce the amount of income in which tax is paid although the income tax saving will be reduced by the additional NI charged.

Summary

The tax changes introduced today will affect all business owners, without exception. The above details the main points and the implications though is no substitute for detailed guidance and application, tailored to your circumstances.

We would be happy to discuss the implications in further detail for you and your business. Please contact us should we wish to arrange a consultation.

Action points to consider:

Pre January 2011

Ensure that your systems are geared to facilitate the new VAT rate of 20%.

For those on Flat Rate Scheme – Ensure that your new rate is obtained and used correctly in the overlap period of change.

Pre April 2011

For incorporated businesses, ensure salary / dividend levels are optimised for tax purposes taking into account today’s changes which will be introduced in the tax year commencing 6 April 2011.

The Credit Crunch – A valuable lesson?

admin — Wed, 23 Sep 2009 09:34:31 +0000

There has been much written about the credit crunch. There can be no doubting that this has been a very challenging time for small businesses and many have not managed to survive the current economic downturn. Many firms that have continued to trade are only breaking even, or trading at a loss.

Whilst this climate has many negative implications, there have been some positives too. Many owner managed businesses who have not had the resources to allocate to every area of their business (which they have previously overlooked) are being forced to ensure that every area of their business is now being given sufficient attention:

Staff

In the past, many owner managed businesses who have not had previous management experience have not fully utilised their workforce, or have not fully managed their staff. Idle time has been tolerated, staff have not been fully motivated, and insufficient attention has been given to lowest cost allocation of resources. Sub standard performance has previously been accepted by some.

This is no longer the case. Business owners now have no alternative than to ensure that they are getting the most out of their most vital asset – their people.

Suppliers

As with staff, in many cases suppliers have previously been chosen out of habit when such suppliers are no longer competitive on price or service.

Business owners are now increasingly regulary reviewing the value they receive from their suppliers, and switching if it makes good business sense.

Clients

Firms are now increasingly doing what should be second nature – going the extra mile for their clients in order to retain their business and to generate exceptional referral rates.

Marketing

More and more small businesses are investing in lower cost but more effective marketing, rather than the previous popular method of advertising and waiting for the ‘phone to ring.

Costs

Many firms previously used to look at increasing turnover without looking at their costs. The credit crunch has taught business owners that cost review and analysis is every bit as important as increasing sales, if not more so.

Credit Management

Non or late payment of invoices has been the reason that many firms have gone under of late, despite their business being profitable.

Firms are now wising up in this area, and are implementing credit management policies, researching new clients, setting credit limits, and chasing payment much more pro-actively.

Profit retention

The smarter firms have always kept reserve levels, though other firms are learning the hard way that in business, there are bad times as well as good and some funds should always be retained for a rainy day.

Summary

The above shows only a few areas in which business owners have had to review and act on very quickly, sometimes making unpopular decisions that they may have shied away from previously.

For all of the downsides of the recession, it can also be viewed as an invaluable lesson in business, albeit a very expensive one!

Firms that ensure that they continue to put into practice what they have learned in this period could be well placed to prosper when the economy recovers.

The taxman cometh…

admin — Thu, 11 Jun 2009 09:39:02 +0000

HMRC have introduced a complete overhaul of their powers in relation to compliance of the tax system by business owners. These powers came into effect from 1 April 2009.

The new penalty regime relates to Income Tax, Capital Gains Tax, Corporation Tax, VAT, PAYE, National Insurance Contributions and CIS.

Whilst the new regime can drastically increase penalties, it is our view that the ideology behind it is the right one in that it seeks to assist taxpayers who make every effort to comply, whilst coming down hard on those who abuse the system. With the public coffers at such low levels, it will be much more beneficial for HMRC to target the abusers as this will result in substantially higher tax takes.

It will also be a more consistent approach giving taxpayers more certainty than the previous system.

However, it remains to be seen how this will be applied in practice as, for example, it is still a grey area between mistakes that are ‘careless’ and ‘deliberate’ action and as you can see from the table below, this can be a costly distinction:

Unprompted Disclosure - Penalties

Type: Mistake Careless Deliberate Deliberate and concealed

Max 0% 30% 70% 100%

Min 0% 0% 20% 30%

Prompted Disclosure - Penalties

Type: Mistake Careless Deliberate Deliberate and concealed

Max 0% 30% 70% 100%

Min 0% 15% 35% 50%

Penalties are based on the potential lost tax revenue.

As can be seen from the table, there is no charge where a person makes a mistake but takes reasonable care.

Penalties may be reduced by:

- Telling HMRC voluntarily of any errors or omissions;
- Helping HMRC; and
- Allowing access to records and other information

Any reduction is calculated as a percentage reduction between the maximum and minimum penalty.

From the basic summary of the new regime, it is apparent that business owners need to protect themselves and ensure that they take all reasonable steps to ensure that their tax affairs are up to date, correct and complete.

For those who operate their business through a limited company, Companies House have also introduced an increase in penalties for late filing of company accounts which is summarised below:

Penalty

Late but within one month £ 150.00
Between 1 – 3 months late £ 375.00
Between 3 – 6 months late £ 750.00
More than 6 months late £ 1,500.00

From 1 February 2009

In addition, these penalties are doubled if there was a late filing penalty the previous year (where the previous year started on or after 6 April 2009).

This could mean late filing penalties of up to £3,000.00 for persistent late offenders.

It is therefore of utmost importance that business owners ensure that their taxation affairs are up to date, correct and complete, and that statutory duties are complied with. Failure to do so can be a costly and stressful experience.

If you would like to find out more about how Dormer Finance Ltd can help you with business compliance, whilst seeking to minimise your tax payments, please contact us to arrange a free consultation.

Darling puts us in the Brown stuff

admin — Mon, 01 Dec 2008 10:31:30 +0000

So, the eagerly awaited Pre-Budget Report has now been delivered and it’s content begins to be analysed.

Once again, henchmen Brown & Darling act as a modern day Ronnie & Reggie. Giving the illusion of lending money, you can be sure they will be demanding it back, with menaces, before you can say ‘protection racket’.

The headline grabber was the TEMPORARY reduction of VAT from 17.5% to 15% for a thirteen month period.

VAT is an indirect tax, a purchase or ‘luxury’ tax levied on voluntary spending so this measure does nothing to put money into consumers pockets. You cannot spend what you do not have.

Any potential benefit with regard to petrol prices is negated by raised duties on fuel.

Furthermore, retailers are already offering massive incentives to get sales, with huge discounts available to tempt consumers to buy. A paltry 2.5% reduction on the VAT element is hardly likely to have any additional bearing on buyers decision making. Has it given you the urge to buy anything that you wouldn’t have done before the rate cut?

In exchange for the VAT ‘holiday’, Ronnie and Reggie have announced future substantial and PERMANENT tax hikes. The most notable being:

- The increase in National Insurance contributions on employers AND employees.

- Higher rate of income tax for those earning £150,000.00 or more per annum

The Krays would have been proud!

Raising NI contributions further will put an additional burden on payroll costs for businesses and does not tie in with economic growth. Raising NI for employees is simply an income tax rise by another name.

The introduction of higher rate tax for high earners is laughable for two reasons:

Firstly, high earners are the backbone and foundation of the economy. It is through their creativity, dedication, drive and risk taking that jobs are created and the economy thrives. There is no place for envy – anyone who earns (by legitimate means) in excess of £150,000.00 per annum deserves to. To tax nearly half of their income over the threshold will incentivise many entrepeneurs to relocate to more tax friendly countries who would welcome them with open arms.

Secondly, most people earning over £150,000.00 per annum would rather arrange their affairs through effective planning to avoid the higher rate, whilst previously just about willing to pay at 40%. Share schemes may come back into fashion (where high earners get paid in employers stock) to reduce their tax liabilities to less than 20%. Whilst the government were ‘getting away with it’ at 40%, the move to 45% could be one step too far and they could find themselves collecting a lot less in revenue from high earners than they are already.

Now for some good news!

The proposed rise of Corporation tax for small companies from 21% to 22% is postponed for a year (but let’s face it, small companies pay too much tax anyway and have already had two corporation tax rises in as many years, AND lost the first £10k of profit at 0%)

Income shifting is also delayed by another year – and with the next PBR falling just before the general election this would be a very poor time for the government to bring in such an unpopular piece of legislation. This is very good news, especially for contractors – many of whom are struggling over fewer contracts at present (try telling those out of work that they are ‘disguised employees’). Furthermore, the double whammy of income shifting legislation AND higher rate of tax for high earners could not be lost even on this government.

So the verdict? Whilst we at Dormer Finance Ltd should rejoice that we will never be short of tax work with this current government at the helm, the lack of transparency and the underhand methods of the treasury leaves a nasty taste in the mouth. Yet again, we as consumers and businesses are left to pick up the tab for the mismanagement of the economy during the good times.

PLEASE CONTACT US IF YOU WOULD LIKE SPECIFIC ADVICE ON HOW THE CHANGES CONTAINED WITHIN THE PRE-BUDGET REPORT WILL AFFECT YOU OR YOUR BUSINESS.

Jason interviews Baiju Solanki on business start up issues

admin — Wed, 08 Oct 2008 12:12:08 +0000

Baiju Solanki is a Performance Coach and is Managing Director of Performance Coaching and Training Limited. The company was formed with the objective of helping local businesses and individuals to fulfil their potential through understating what they CAN do to be able to perform at the best more often. Performance Coaching and Training act for numerous businesses in the Essex area including Southend Council – Teachers, BRS Associate, Southend Hospital, Liberty Hygiene and South East Essex College

Here, Baiju talks to Jason Dormer about challenges in business.

Tell me why you started Performance Coaching and Training Ltd?

My passion has always been in educating, motivating and inspiring. In my formative years I used to teach Psychology and the satisfaction I got when I knew I could make a difference to people was immense. Having trained as a Performance Coach the last number of years, while working full-time, it was a natural progression for me to start my own company where I could assist individuals and business is be the best they can.

What were the obstacles that you faced and how did you overcome them?

Before starting up my main obstacle was leaving a secured well paid full time job as a Sales Director and start of on my own with no security of income. I have had this ambition since 2001, but only really decided that I was going to start up on my own in 2006. Once I decided to leave it was easy, both from the point of view of how I started to think and the opportunities that come up for me, that enabled me to leave my job and pursuer my ambition of being a full-time Performance Coach and Trainer.

What would you do differently if you could start again?

Talk to more people about starting out on your own; you can never get too much advice. In hindsight maybe start to actually pitch for the kind of business I was looking for. Because of the nature of what I do, I completely understood the right mindset needed. I actually decided to leave my job and start on my own 18months before I actually quit. This meant I could get my mindset and circumstances in a state such that It was the most natural thing for me to do. When you actually make a decision with conviction its amazing how your mind and thinking leads you towards opportunities and events that will assist you when starting on your own.

What do you see as the biggest challenges for your business and how do you plan to overcome them?

The obvious is to generate enough cash flow and profit to keep going. However the biggest challenge is to ensure you never give up. One thing I know that is certain is that I WILL have bad days and I WILL have good days. When there are good days it’s great, you go with the flow, you can only think positive things and see the light. When you have bad days, this is the time when your conviction passion desire etc needs to kick in. Its very easy, when you are having the bad days to think, well I’ll just get a job, regular income, its not worth the hassle, I’ll probably won’t succeed anyway, and guess what you’ll be right. Whatever you believe you’re right.

The biggest challenge is how you react to those bad days, will you allow yourself to stay with the bad thoughts and feeling or do you do something about it. What you can do, and the one saving grace you have when you start your own business, is to associate yourself with like minded people. NETWORK. There are more people than you may think, in exactly the same position, and networking is the way business is done in today’s world. Networking is also a great way to talk and exchange ideas about what is working and what isn’t. I probably go to about 2-3 networking events per week. Over 80% of the business I have generated is a result of the networking events I have attended. However it does take time.

Where will your business be in five years time?

The No. 1 Performance Coaching Consultancy in Essex.

What do you love about your business?

My aim is to give business and individuals a way to understand how they can perform at the best more often. The reason we don’t perform at our best is because ‘stuff’ happens in our life. I love the fact I have the opportunity coach people to be the best they can. As a former lecturer in Psychology, I loved it when a student understood and developed as a result of my teachings. Being able to coach and train for a living gives me that same satisfaction.

And what do you not enjoy in your business?

The stuff for me, is all the admin bits, accounts, and the waiting for decisions. You find that although my business is about Coaching and Training, the majority of my time is spent generating business. i.e. marketing, networking, sales etc that can challenge you if you don’t have the right mindset.

What do you think are the main reasons that many ‘would be’ entrepreneurs stay in jobs they don’t like instead of creating their business dream?

For exactly the reasons I have mentioned before. They haven’t got the right mindset or at least are not prepared to understand what that mindset needs to be. Fear of Failure, Fear of Success and Fear of the Unknown are common drivers for people to stay in their jobs. The job gives you a secure income, but guess what job stands for Just Over Broke! In order to start your own business you have to come out of your comfort zones, and this can be painful. Many would be entrepreneurs stay in their jobs because the pain of leaving their jobs, to follow their dream, is just that, too painful. The pain to stay in their job is less painful than the pain of leaving and creating their business. Until the pain of staying in their job becomes greater that the pain of starting their business they will never leave.

How could you help people overcome these fears?

It goes back to the pain. When there is enough pain they will do something about it. The way to overcome fears is to truly understand your WHY? This means having reasons for the change. Fear stands for False Evidence Appearing Real. When looking at the fears people have about change, most of the concerns are based on assumptions they have made about starting out. By tackling some of these assumptions and challenging their limiting beliefs you realise some fears are unfounded. Having said this there will still be some concerns about starting a business, this goes back to what mindset is needed to give you the best chance to succeed. What I can give you are tools and techniques that enable you to overcome these fears when they occur. A series of coaching sessions will give you a different perspective on how you look at things and an understanding on how to better deal with your fears.

What advice would you give to anyone thinking of starting a business?

Talk to people. There is a presumption that people want you to fail. This couldn’t be further from the truth. What you will find is that the people who having already running their own business will be more than happy to talk about what works and what doesn’t and the people who are still in a job will be, on the most par, very supportive and quite impressed that you made the jump. Some will even be quite envious that you had the courage to take the plunge and they are still at the beck and call of their employers.

Can anyone do it?

Yes. With the right mindset they can do it. It is very important that you have clear goals and objectives for your business, you are doing it for the right reasons and that you research your market.

What advice would you give to those already in business who are not reaching their potential?

Why not? What are you doing that means you are not reaching your potential. When we are in business it is very easy to ensure that procedures are in place and you know your market etc. However how much time have you invested in ensuring that you are at your best more often? You probably still have the motivation and desire, however are you working in your business or on your business? What would be the payoff if you were able to perform to your potential more often? Investing in yourself stays with you forever it is priceless. Even by answering these questions you may still be wondering what you can do to reach at your potential. A coach will challenge you about how you are performing and see if you are operating within your comfort zones. As your coach I will be the person who holds you accountable to ensure you are at your best and you are getting the results you are looking for.

How do you keep motivated when you are not answerable to anyone?

Exactly, how do you? We all have a honeymoon period when we start our own business, the excitement of going alone, being your own boss, work when you want, its great. Then reality kicks in and you doing everything, from banking, sales, marketing, admin, meetings, delivery. To ensure you are kept motivated and more importantly kept on the right path to meet your goals and objectives you would benefit from using a coach. The coach’s role is to ensure you keep on the right path and help you deal with the ‘stuff’ that prevents you from being at your best and produce the results you want

How do you relax?

I have a beautiful family, my wife Sangita and three lovely children Sapna(12), Milan (10), Suraj (5), take up a lot of my time. I play cricket for Southend-on-Sea Cricket club and am the Secretary of the club. In addition to this I am involved with Essex CCC organising the Southend Cricket Festival. Relaxation for me is doing something that makes me feel good, family, cricket and socialising with like mined people.

Name three famous people who you are most influenced by and give your reasons.

Richard Branson – his single minded determination to have an idea and follow it through with appropriate action and to never settle for second best.

Gandhi – For his passion to do the right thing without compromise

Sachin Tendulkar – For his courage and ability to handle the pressure to perform with 1 billion people wanting him to succeed.

Tell us something interesting about you

I ran the London Marathon in 2005, ran all the way didn’t stop, not even for a pee and finished in 4 hours 49 mins 31 secs. My aim was to run sub 5 hours which I achieved.

Baiju offers free initial consultation and can be contacted on:

Tel: 07968 533918
Email address: baiju@pctconsultancy.com
Website: www.performancecoachingandtraining.co.uk

Recession? No thanks, not interested! Jason Dormer 26/08/08

admin — Wed, 27 Aug 2008 10:36:00 +0000

With the news that consumer spending fell by a massive 3.9% in June, the biggest fall for 22 years, many experts are predicting dark times ahead for the UK economy.

As is often the case, if the UK press predicts a recession then it may become a self fulfilling prophecy as consumers and businesses react accordingly.

Should we be worried though? Recent figures produced by the ONS (Office of National Statistics) show that although growth has been relatively poor, the UK economy grew by 0.3% in the first quarter of 2008, and the ONS predict growth of 1.75 to 2.25% for the whole of 2008. These are hardly the signs of a country on the verge of recession.

It should also be borne in mind that June’s downturn in consumer spending was on the back of a 3.6% rise in May.

So what to do?

For what it’s worth, I believe that we should exercise caution and no more. As mentioned above, it is easy to talk ourselves into a recession which is something we need to avoid. However, it would be prudent to take some precautions nonetheless:

1. Cost control.

Many firms focus on increased sales but do not look at the other end. Cost control will become increasingly important and now would be a good time to take a detailed look at your business expenditure. Significant savings can be made by analysing your costs (including business taxes) and taking corrective action if and where necessary.

2. Marketing.

Your marketing plans will also help you - in troubled times many firms cut their marketing spend but, contrary to the advice above, increasing your marketing spend can pay dividends (literally). I am not talking about lazy advertising – putting an advert up and waiting for the customers to come to you – I am referring to strategic marketing, going directly to your target market using innovation and creativity mixed with common sense.

3. Cashflow

Many profitable firms go under due to lack of cash. We already have a credit crunch, and if there is to be a recession then sufficient cashflow will be vital to the continuing operation of any business. Make sure that you have plenty of it, and also enough in reserve. Draw up a cashflow statement for the next 12 months and if required take action now whilst time is on your side.

Firms that take action in the above areas will be more likely to weather any storm that may or may not be coming our way. If there is to be a recession, we at Dormer Finance Limited refuse to take part in it. Don’t let your business do so.

Life without Timesheets? – Jason Dormer 28/08/08

admin — Wed, 20 Aug 2008 10:06:05 +0000

On a trip last week to an accountants seminar in Cornwall I met the accountant and author Hugh Williams FCA, of the award winning firm HM Williams, an accountancy firm recognised for it’s customer focused approach.

After discussing our views on fixed fees, value pricing and time based billing, it became apparent that Hugh was a man after my own heart. Hugh kindly gave me a copy of his book ‘Life without Timesheets’ in exchange for my promise to review it on a leading accountancy website.

Within his book (better than I could hope to), Hugh eloquently states the disadvantages of the traditional time based billing approach which many accountants still use, namely:

- Clients get charged by the hour regardless of any time consuming interruptions during that time (loo break, answering telephone etc)
- Timesheets are a chore and contain estimates
- Time recording software is an expense which gets passed on to the client
- There is no incentive for accountants to improve efficiency – in fact the opposite is true; the longer a job takes the accountant the higher the bill!
- An accountant who makes mistakes and takes time correcting them gets paid extra!
- Clients are afraid to contact their accountant knowing full well the clock starts ticking when the telephone is answered

Hugh argues, and I completely agree, that this is an unacceptable approach to any firm which is committed to exceptional customer service and continual improvement. In fact the opposite is true - timesheet based billing encourages inefficiency for the reasons outlined above.

Hugh goes on to state the advantages of fixed fees:

- Clarity – providing clients with a choice to accept the fee, request a reduction in exchange for a reduced level of service, or take his or her business elsewhere
- No surprise bills for the client
- Anxiety free access to support without fear of the clock ticking
- Sense of control for the clients that timesheets cannot give
- Budgetary control for clients
- Spreads the cost when implementing the fixed fee throughout the year
- Incentivises accountants to increase efficiency
- Timesheet administration is eliminated from accountancy practices, freeing up time and money

In my mind, the above is all commonsense – I know from dealing with lawyers (who bill me by the timesheet) that I have no desire to engage in anything but very short conversations with them. Should fixed fees become commonplace in the legal industry (and the smarter firms are already offering them) then I would be more than happy to discuss the weekends football results with my lawyer. Until then, I want those conversations short, sharp and on the subject matter only! Worse, I sometimes do not ask questions of my lawyers that maybe I should, as I know that a 20 minute conversation on the subject will result in an additional, hefty fee.

Further, I do not feel in control of my finances when engaging in transactions that I cannot be given a reasonable estimate of cost.

To me, this is not an acceptable way to do business.

Professional advisers need to have more empathy with what clients want – which is clear, fair, value driven pricing and the comfort of knowing that they will only be charged a pre-agreed price.

I am sure that Hugh would not object to me describing him as a ‘mature’ accountant having set up his practice 35 years ago, and I think that it is testament to his commitment to meeting clients needs that he has made the shift from the ‘traditional’ accountants pricing method to the ‘new school’ method. I salute him and thank him for reiterating to me the importance of life without timesheets.

If you would like to purchase a copy of ‘Life without Timesheets’ (£20) then please get in touch.

Should you incorporate? – Jason Dormer 05/08/08

admin — Wed, 06 Aug 2008 12:37:08 +0000

With the current advice from the pub ‘experts’ to sole traders and partnerships to incorporate a limited company, caution should be exercised before making this important decision.

My recent article on UK Business Forums http://www.ukbusinessforums.co.uk/forums/showthread.php?t=60813
provoked a good response and generated much interest on this subject.

Have a read through and take note not only of the original post but also some of the replies, which make very valid points. I particularly agree with ‘TaxSorted’ who advises “don’t let the tax tail wag the dog”. If only more advisers were this honest and put the individuality of each clients needs first before urging incorporation – it should always be borne in mind that accountants fees for a limited company always exceed that of a sole trader or partnership!

The credit crunch – Are your clients borrowing from you? - Jason Dormer 01/08/08

admin — Tue, 05 Aug 2008 15:41:19 +0000

Welcome to the first of our regular blogs which we hope that you will find useful and informative.

I am going to kick off on a subject that is topical for many. There has been plenty of client feedback in recent weeks suggesting that the credit crunch is beginning to affect local business. Fewer sales, higher costs and decreased orders have all been mentioned along with the number one complaint: unpaid invoices. I am in no doubt that there will be challenging times ahead and that firms need to take action on this subject now whilst time is on their side.

A good start would be to review your credit policy – or if you haven’t got one then to create one!

Here are a few tips with regard to the content of a credit policy. There cannot be a ‘one size fits all’ content, but I would generally recommend that you:

- Establish the true identity of each client;
- Consider personal guarantees from directors of limited companies;
- Do a credit check on both new and existing clients;
- Set (and revise) credit limits;
- Have an alert system in place for clients approaching set limits;
- ‘Down tools’ if credit limit is reached;
- Have a reminder system in place for unpaid debts;
- Ensure that the client is aware of your payment terms;
- Use third party involvement for debt collection;
- Eliminate common reasons for disputed invoices;
- Don’t give clients ‘surprise’ invoices;
- Be ready for, and overcome, common excuses for non-payment;
- Try to get all clients on a standing order / direct debit scheme
(mutual benefit);
- Get to personally know the person responsible for paying your invoices;
- Charge interest on overdue invoices;
- Offer incentives for prompt payment;
- Investigate the causes – are your clients satisfied?
- Look at the worst offenders and arrange a meeting to discuss; and
- Do not be afraid to commence court proceedings to recover debts
(as a last resort)

Clients who are slow to pay are using up more of YOUR resources including your time and your money. Do not allow your clients to effectively use your money for unsecured and interest free borrowing. Put a policy and a system in place to ensure that your invoices are paid in time - this will result in increased cashflow, better relationships with your clients, reduced bad debt resulting in increased profit, and frees up lost time from credit control work. If a good policy makes the difference between being overdrawn and in credit you will also benefit from interest received rather than bank charges paid.

Remember – A sale is not a sale until the money is in the bank.

If you would like to discuss the above further then give me a call.