Business Numbers Archives - Page 5 of 5

How to preserve your cashflow during COVID-19 crisis

Posted on April 14, 2020 | by Jade Donno | Leave a Comment

How to preserve your cashflow during COVID-19

As the saying goes, turnover is vanity, profit is sanity and cash flow is king. And never has that saying been ever truer. Use this tips sheet to help you preserve your cash flow so you are ready and able to trade again as normal when the restrictions lift.

Tip 1: Know when you are going to run out of cash

It is really easy to get caught up in hysteria and believe that your business is going to go bust. When we recently spoke with an insolvency practitioner, they told us that only 5% of the calls they are receiving at the moment are for businesses that are genuinely insolvent. If you haven’t already, it’s time to look at how long your cash will last if the lockdown restrictions remain. (If you need help with this, then let us know) When you know how long your cash will last you then you can take sensible decisions in regards to your business.

Tip 2: Make sure your books are up to date

I know we accountants are always telling you to keep your books up to date. But it now more important than ever to know the true picture of your finances. If you don’t know what you owe and what is owed to you then, you can’t take the right decisions. For those of you still relying on spreadsheets or desktop software for your books, now is the time to go onto the cloud. We, as a firm, can’t easily advise you if we are looking at out of date figures. And the benefit of the cloud is we can see exactly what you can see.

Tip 3: Look to take advantage of all the government financial help which is available right now

The best type of borrowing is the borrowing you don’t have to pay back. And there are grants worth £10k or £25k for most small businesses with premises who pay rates or who get small business rates relief. If you haven’t already claimed your grant from your local authority then give us a call. Once you’ve checked this look at the following to see if your business is eligible:

Deferment of VAT payments
Coronavirus Job Retention Scheme
Paid sick pay
Business rates relief
Accessing a Coronavirus Business Interruption Loan

Tip 4: Analyse your business costs and pare it back to the bare essentials

Now is the time to examine your overheads. What exactly can you eliminate or cut back on and still be, either able to trade, or be able to trade when the restrictions are lifted?

Tip 5: Do you have an opportunity to reduce your wage bill?

Wages are often a business’s biggest costs. Which of your employees can you Furlough or make redundant in order to save costs? If you believe you wouldn’t be able to employ your whole team again after the lockdown restrictions are lifted, you may be better off in making them redundant now.

Tip 6: Prioritise actions which are the quickest ways to generate cash

Normally they are in this order:

Chase late payers
Change your payment terms to get paid quicker with current customers or clients
Give long-term customers/clients the opportunity to pay in advance for work (potentially with a discount added?)
Bill any customer/client with outstanding work which can be invoiced
Focus your sales team on your warm leads
Consider what can be your business equivalent of a ‘toilet roll’, i.e. what can you change about the product/service you deliver or how you deliver it which will make it an ‘in-demand’ item?

With all these cash flow tips, we can help you take balanced and rational decisions about what to do to preserve your cash flow in these very difficult trading conditions.

The small business grant - are you eligible

Claim Your Small Business Grant – TODAY

Posted on April 9, 2020 | by Jade Donno | Leave a Comment

Claim Your Small Business Grant – TODAY

If your business is eligible for small business rate relief OR rural rate relief:

Your local authority will provide you with a one-off grant of £10,000. (So, doesn’t need to be paid back).

If you are a retail, hospitality or leisure business:

The government is giving you a payment holiday for your business rates for the 2020/2021 tax year. This will be administered via your local authority. If your business received the retail discount in 2019/2020 tax year, your local authority will rebill you as soon as possible. A £25,000 grant will be provided to retail, hospitality and leisure businesses operating from smaller premises with a rateable value between £15,000 and £51,000. Your local authority will be able to tell you whether you are eligible and how to claim

Small businesses in Suffolk urged to access £200m pot of COVID-19 aid

Eligible businesses across Suffolk are being urged to access grants of £10,000 or £25,000 to help them through COVID-19 crisis.

The Government has allocated over £213m to support qualifying businesses in Suffolk who are struggling because of restrictions in place to combat the Coronavirus.

There are over 15,000 eligible businesses across the county who can access one of two grants of either £10,000 or £25,000 to help with their ongoing business costs.

To access the schemes, please visit the corresponding Local Authority:

Babergh & Mid Suffolk: www.midsuffolk.gov.uk/business/business-rates/grant-funding-schemes/

East Suffolk Council: www.eastsuffolk.gov.uk/business/covid-19-business-grant-funding/

Ipswich Borough Council: www.ipswich.gov.uk/businessratesgrant

West Suffolk Council: www.westsuffolk.gov.uk/c19business

Business Interruption Loan Update

Posted on April 3, 2020 | by Jade Donno | Leave a Comment

Business Interruption Loan Update

We don’t have full details yet, but we wanted to let you know that the Coronavirus Business Interruption Loan (CBIL) Scheme is going to be revamped after it has come under considerable criticism.

And this is very positive news for small businesses. As a firm we were personally very disappointed with how the CBIL was being offered and administered by the banks. We believe the following changes will now be implemented (but will confirm in due course)

The loans are available to businesses who have not been refused a commercial loan
The interest rate of the loan after the 1st 12 months interest free are likely to come down from some of the eye-watering rates we had seen quoted. (30%!!!!) But there is still no cap on interest rates from the banks for these loans.
For loans up to £250,000, business owners will not have to supply personal guarantees against their own savings or property.

If you are thinking of accessing the CBIL scheme or a commercial loan scheme or any other type of borrowing, please get in touch as we can help you through the process.

As with any kind of formal borrowing, you will need:

Your books fully up-to-date
Up-to-date management accounts
Projections and forecasts for the business

When more details are available next week, we will be in touch.

What help is there for the Self-Employed?

Posted on March 23, 2020 | by Jade Donno | Leave a Comment

What help is there for the self employed?

It seems that every day the realities of the situation the economy is in just gets worse. I am sure you are like us you are pleased that the government is pumping money into small businesses. But what happens if you are self-employed or trade as a sole trader rather than limited business?

So, included in this blog is a summary of what help is available for you if you are self-employed or worried about your personal financial affairs. We are monitoring this closely and will be in touch once we know more.

Universal Credit

Universal Credit is a monthly payment to help with your living costs. It is available for anyone, even if you are self-employed. But as always you need to meet fairly specific criteria; namely you are on a low income or out of work. If you’re expected to look for and be available for work, then it needs to be identified whether you’re ‘gainfully self- employed’.

Gainful self-employment means that:

your main employment is self-employment
you have self-employed earnings
your work is organised, developed, regular and in expectation of profit

As you would expect, you must provide evidence about your business and what you are earning through your business.

If you’re gainfully self-employed, your Universal Credit payment may be calculated using an assumed level of earnings, called a Minimum Income Floor. It’s based on what an employed person on minimum wage would expect to earn in similar circumstances. If you earn more than this, then your Universal Credit amount is based on your actual earnings. If you earn less, the Minimum Income Floor is used to work out how much you can get. You may need to look for additional work to top up your income.

To check if you are eligible for Universal credit go to: https://www.gov.uk/self-employment-and-universal-credit

Mortgage Repayment

From 17th March you can ask for up to a three-month repayment deferment on your mortgage to give you some breathing space. This deferment applies to homeowners and buy-to-let landlords, to allow them to pass on the payment reduction or deferment to their tenants. It will not affect your credit score. However, you must agree your repayment deferment with your bank, otherwise you may skip a payment and it will show a default on your credit score. Please speak to your bank if you want to organise a deferment on your mortgage.

Talk with your network and get creative

Now is not the time to lie low. Now is the time to get talking to your network. Firstly pick up the phone, otherwise email or message via social media. They may be aware of some opportunities for you to generate some work. Now, is also the time to be creative with your skill set. For example, if you run a hospitality business and can’t work from home, how about offering skype one-to-one cooking classes?

Event cancellations

If you lost money due to an event being cancelled the outline is:

Contact the organiser first
Organisers that postpone events don’t have to refund until they announce the new date
Ask your ticketing platform about refunds
If you are struggling to get a refund then your credit card provider could help with a refund

You might not get all of your money back – but it’s worth fighting for.

Time to Pay Arrangement

Lastly, a dedicated Helpline has been set up to help businesses & self-employed in financial distress and with outstanding tax liabilities. Call this helpline to be able to agree a bespoke Time to Pay arrangement with HMRC. This is where you agree with HMRC a bespoke payment plan for your outstanding tax liabilities. If you are concerned about being able to pay your tax due to COVID-19, talk to us first as we can help you plan your call to HMRC’s dedicated helpline on 0800 0159 559.

July 2020 payment on account

As announced on Friday you could defer this payment but as it is 22 March, I would keep this option on the back burner as you may still have to pay it in January 2021, it is effectively a loan.

VAT Deferment

We do not know enough about this, but again it is a deferred loan that may help you now. If you are going to take advantage of this “loan” I would take it, put it in the bank and pay it back once business is back as usual, treat it like a quick safety net but it is a loan.

Our Advice

As your accountants we can help you as part of our service (no extra charge at all!) we can help you to plan initially for the next four months by looking at your business online and helping you to forecast. We can also negotiate with HMRC or the banks for you and anyone else that you want us to, we are here to help.

I would also suggest that you list all of your household bills including leisure time (restaurants, shopping etc) and make decisions about what you are paying for, again we can help.

Once we have done that the next step is to Plan Plan Plan and Plan even more. We will all get through this together and once we are back to business in full with the right planning and staying on top of your business you will without doubt be stronger and in a great position to thrive.

The Ultimate Guide to the Different Types of Business Financing

Posted on November 19, 2019 | by Jade Donno | Leave a Comment

The Ultimate Guide to the Different Types of Business Financing

Small business loans are being approved at an unusually high rate, making this the perfect time to increase your company’s cash flow via business financing. There are different kinds of business loans available, and it’s important to know the differences between them in order to make a fully informed decision.

This article will cover some of the most common types of small business loans, such as term loans, and help you understand the benefits and disadvantages of each. From there, you’ll be able to find the perfect financing option for your company’s short and long-term goals.

Business Term Loans

Business term loans are one of the most common varieties, giving borrowers a fixed sum of money to be paid back over a given term. You’ll need to meet certain requirements to receive a business loan depending on your location and lender.

Business term loans don’t require any collateral, and they can be used for any business-related purpose. Your interest rate will be based on a variety of factors related to your company, including financial health, monthly or yearly revenue, and your business credit score.

Small Business Administration Loans

SBA loans are backed in part by the government, allowing lenders to charge lower interest rates and have assurance that they’ll receive payment. Depending on the size of your loan, the maximum interest rate for an SBA loan ranges from 7.75% to 10.25%.

Like business term loans, Small Business Administration loans work for essentially any business purpose. it’s important to note that you’ll need a strong credit history to qualify for and receive an SBA loan.

Business Line of Credit

Unlike a conventional loan, a business line of credit works more like a personal credit card. You’ll be able to use your new line of credit at any time up to your credit limit, and you can continue to withdraw again once you’re caught up with your existing payments.

It’s generally easier to qualify for a business line of credit than for a more traditional form of business financing, but there are some other factors to consider. Missed payments carry a heavy penalty, for example, and lenders may ask for collateral.

Invoice Factoring

Invoice factoring is a quick way to free up cash flow for your business, and it’s especially effective for companies dealing with late payments. It involves selling off unpaid invoices to a factoring company who then takes on the responsibility for collecting the cash.

Depending on the terms you arrange for your own invoice factoring, you may receive an advance of anywhere from 60 to 100 percent of the total value. It’s important to note that unlike the other items on this list, the amount you can gain from invoice factoring is limited by your current pending invoices.

Equipment Financing

You can use any kind of business loan to finance more equipment, but equipment financing makes this process much cheaper by using the equipment itself as the loan’s collateral. You’ll get a significantly lower interest rate with equipment financing, even if your business has a poor credit score.

In general, you can use equipment financing to take out a loan of any amount up to the cost of the equipment you’re receiving. This equipment is yours to use as soon as you sign onto the loan, making it an immediate solution for companies with growing equipment needs.

The main downside of equipment financing is its attachment to the equipment itself. If you use this method to acquire a piece of equipment which becomes obsolete quickly, you’ll still be on the hook for the loan without a way to get that money back. Only use equipment financing if you’re confident in the equipment’s viability and longevity.

Merchant Cash Advance

Merchant cash advances are another great option for companies who don’t have the credit score necessary to receive other kinds of financing. A merchant cash advance gives you cash up front which is repaid as a percentage of what you spend on your credit card.

This method of repayment gives merchant cash advances a flexible time period for repayment, so you won’t have to worry about making payments on time each month. That said, interest rates are typically higher than those available with other kinds of financing.

Depending on the specific lender, you should be able to find merchant cash advance opportunities with borrowing limits as high as $250,000. Expect to pay the loan off in roughly six to eighteen months.

Business financing is a crucial aspect of achieving short-term growth and long-term stability for any small business, and there are several options available to immediately increase your cash flow. With more than a few choices, this is a great place to start if you’re looking for a way to help your company expand.

1 Accounts – You are not a bank

Posted on February 25, 2019 | by Jade Donno

You Are Not A Bank

As a small business, credit control can be a nightmare. Paul will tell you that when he first started running his traditional accountancy practice (Paul Donno & Co) he was pulling his hair out when he would do work, invoice the client and then not get paid. Unlike buying a product, paying for a service seems to have less urgency when it comes to paying. It used to take Paul on average just over 90 days for collection on 10 day accounts.

There is a group we belong to called the 2020 Group. One of the founders, a guy called Gordon Gilcrest spent some time with Paul to help his overcome this problem, he sat him down and said to him:

“Paul, you are not a bank. If people want a loan, they can go to the bank and they can pay interest on it. You are not a bank; you have credit terms, stick to the credit terms. If you give 14 days’ credit that gives them the right to pay within 14 days, not over days and pay you 50-60 days later”

This advice has stuck with Paul, and he re-evaluated his approach as a result. He spoke to the clients who were taking a long time to pay and advised them that they needed to change their ways. He also parted ways with a couple of companies.

When starting 1 Accounts Paul did not want these problems again. We set up Go cardless and have automatic direct debits taken every month. The direct debit is automatically set up when the proposal is signed. This saves time, money and chasing.

Here is our advice to you if you are struggling with credit control:

Look at your trading terms and ask yourself why you are offering credit, and if you do offer credit, want are your terms? Work out on average how quickly your customers are paying.
If you are lending money long term, that is for banks to do and not you!
Look at all types of money collection and do not put barriers in the way. Take credit cards, offer direct debit, provide alternative funding to customers
Remember ‘Turnover for vanity, profit for sanity but cash is reality’
It is no good tying up your money in stock that takes ages to turn over, measure stock turnover and don’t lock up your cash.
Don’t give extended credit, and if you do chase it hard, you have already paid for the goods sold or staff to provide services.
Without cash, you cannot make rational business decisions to move forwards.

Category: Business Numbers