Probably number one in the PITA list of any business owner is the drudgery of the constant admin that’s required. You’ve had a great, but busy, week and you’re looking forward to your day off, maybe a couple of glasses of wine with your partner, a night at the cinema, a day at the park with the kids. Then you remember that you’ve got the weekly accounts to do and you can forget doing anything other than this for the next few hours.
Not if you’re an Acumenica client. With the power of FreeAgent (free to all Acumenica clients) you can be out of there in jig time. Here’s our top five ways to nail the admin and get your day (or night) off back on track.
- Synced up bank transactions
Tracking your bank transactions manually or using a spreadsheet can be a major drain on your time. Fortunately, Freeagent can pull all of your bank transactions into your accounting system automatically.This is easy, time efficient and super-secure
- Smart bank reconciliation
Once your bank transactions are in the system, the potential for tedium continues. Reconciling your bank account – the process of making sure your accounting records match the money in the bank – can take forever.
But FreeAgent can “guess” your transactions. It intelligently categorises or ‘explains’ your bank transactions based on existing information in your FreeAgent account, matching up bank transactions to the appropriate bill or invoice and you have to do is approve the transactions.
- Scan (or email) bills and invoices straight into the system
Instead of manually copying each line of your receipts, bills or invoices into your accounting software, our system analyses and extracts the important information so you don’t have to.
A quick photo or scan is all it takes to get the data from the receipt in your wallet to accurate usable data on FreeAgent. You can even provide your suppliers with a dedicated email address to send invoices straight into the system with no work from you at all.
- One click VAT and payroll filing
Once all your data is in, you can file your VAT and PAYE returns with a single click of your mouse. FreeAgent is MTD ready and HMRC recognised, ensuring filings happen without a hitch.
- Automatic Invoice Reminders
If you haven’t had to chase a customer about an overdue payment, you should count yourself lucky. The Credit Protection Association reports that the average small business in the UK chases five outstanding invoices at any given time, wasting up to an hour and a half every day.
To help solve this problem, we’ve included the ability to set automatic late payment reminders in FreeAgent. You can set these reminders to be sent as soon as a payment becomes overdue. FreeAgent can then re-send the reminder a few days later if your customer still needs an extra nudge. On the bright side, you can set FreeAgent to send automatic thank you emails when you get paid.
Use FreeAgent to stay compliant and manage the books, and Acumenica to provide the insight and expertise.
And that’s not the half of it: on average, Acumenica clients spend just one hour a month on their accounts but they still have all the vital financial information at their fingertips resulting in more profits, lower tax bills, and less headaches.
If you want to reduce your paperwork even further, talk to us about The Big Blue Envelope. Throw all your invoices and statements in an envelope every week or month, and we do the rest.
If your business has been adversely affected by the latest lockdown restrictions, you may be able to apply for help from the Strategic Framework Business Fund.
- Up to £3,000 per month if your business is forced to close
- Up to £2,100 per month if your business has been legally required to modify its operations
- Administered by local authorities
- Based on rateable value – only businesses with premises are eligible
- Business must have active since March 2020
Businesses which have had to close
If you had to close your business due to lockdown rules, then you can apply to your local authority for support via the Business Temporary Closure Fund. Similar to the support provided earlier in the year, this will be based on the rateable value of your premises:
|Rateable value up to £51,000
|Rateable value £51,001 or more
Businesses which have had to modify operations
If there has been a legal requirement placed upon your business, ie, to reduce hours, then an application can be made to the Business Restrictions Fund for support. Again, this us based on the RV of your premises:
|Rateable value up to £51,000
|Rateable value £51,001 or more
- The business must have a dedicated business bank account (you will be required to provide the account details as part of the application process and this is the account your grant will be paid into if successful).
- The business was trading on 02 November 2020 (including businesses who were required to close due to coronavirus (COVID-19) restrictions).
- Your business must have been actively operating before the 17th March 2020, where necessary local authorities may request additional evidence to determine eligibility
- Business premises are registered for Non-Domestic rates (if you pay rates through your landlord rather than directly to a Council, you are still eligible to apply but must provide evidence of this arrangement through a copy of your lease agreement).
- The business has not breached wider coronavirus (COVID-19) regulations/requirements prior to the Strategic Framework restrictions being implemented on 02 November 2020.
- The business is not connected to a tax haven, as set out in the Coronavirus (Scotland) (No. 2) Act 2020.
- Businesses operating from a single location, must be based within the local authority area that they submit an application to.
- Businesses with multiple premises must be headquartered within the local authority that they submit an application to.
- If your business is headquartered outwith Scotland you can select which Local Authority you can submit your application to. Please note you can only apply to one Local Authority.
If your business operates multiple premises you can apply for grants for each premise. All premises can be included in one application to the Local Authority area in which your business is headquartered.
Please note you can only apply to one Local Authority for all your businesses premises.
- Business Temporary Closure Fund – An upper limit of £15,000 in total will apply to any eligible business operating multiple premises.
- Business Restrictions Fund – An upper limit of £10,500 in total will apply to any eligible business operating multiple premises.
In all cases, you need to ensure that your business qualifies for relief. This will depend on the protection level your business is operating in. You can check here.
If you’ve any questions at all, or would like us to check out your calculations, please contact us straight away. We’re here to help you, even if you aren’t yet an Acumenica client.
If you can’t pay your VAT on time or in full, you should contact HMRC’s Payment Support Service on 0300 200 3835 immediately to make them aware of the situation.
By contacting HMRC, you may be able to avoid late payment penalties, which will only make your financial situation worse, and be able to arrange a payment plan that gives you:
- More time to pay
- Allows you to pay your bill in instalments by direct debit.
What is a Time to Pay Agreement?
If your company can’t pay VAT, you should contact HMRC to ask for a ‘Time to Pay Arrangement’ (TTP).
HMRC provides a ‘Business Payment Support Service’ that businesses can use if they are struggling to make a payment.
SMEs that are experiencing cash flow problems but which have a good compliance record should be able to make a Time to Pay arrangement with HMRC to pay their VAT bill over a longer term and in instalments.
Why is the Business Unable to pay VAT?
Being unable or late to pay your VAT is a serious issue and HMRC will understandably want to know why this problem has occurred. One of the of the most important things HMRC will want to know is whether the business is genuinely unable to pay its VAT bill or if the company directors are simply unwilling to make the payment.
It is not uncommon for directors to have invested their working capital in growing the business rather than paying their tax liabilities, and in this case, it will be difficult to reach a Time to Pay arrangement.
What are the Criteria for an HMRC Time to Pay Arrangement for VAT?
When discussing your circumstances with HMRC, the Business Payments Unit will want to know:
- Why the company is unable to pay its VAT in full and on time
- Whether you filed your VAT return on time
- What you have done to try and raise the money to pay the debt
- How much you can pay immediately
- How long you think you will need to pay the rest
Depending on the reasons why the company can’t pay, what your payment history has been and how long you need to pay the bill, HMRC will assess your ability to make the future payments and decide whether to agree to a VAT payment plan.
Deciding how much you can Afford to pay in Instalments
It’s essential you are realistic about how much of your VAT bill you will be able to repay each month. If you are unable to keep to the arrangement then the payment plan could be cancelled and penalties could apply. It will also be much more difficult to arrange another VAT payment plan if you have already defaulted on one. However, you also need to offer to repay an amount HMRC considers to be reasonable enough or it may refuse your proposal.
Got questions? Email firstname.lastname@example.org or call 03330 166559. Our experts are waiting to help you out.
I’m a small business owner as well as an accountant. So I’ve seen the inside of many an SME. Here’s the single most important thing I’ve learned: As a leader of a business, especially a small business, your main role, almost your only role, is to ensure the positive cash flow of the business.
Now, more than ever, it is important to amass cash in your business. The businesses that will come out of lockdown and survive are the businesses that have built resilience into their model. A key part of being resilient is retaining a positive cash flow.
Remember that your clients and customers and supplier are in the same boat and will probably have their own eye on their own cash flow so you’ll likely encounter resistance in a lot of areas, but keep applying the principles and you’ll be fine.
You must retain positive cash flow. Everything else is incidental: Keep the staff happy and motivated? Try motivating your team after the end of the month when the payroll is due and the bank account is empty. You’ll motivate them right out of the door.
Everything flows from cash flow. And as a business leader, whatever you do in your business has to be done with one eye on the bank. From concept to cash.
Even when you aren’t focussed on it, the job in hand is predicated on getting money in the bank. The whole process is a bit like the “There Was An Old Lady…” song we all learned at school. Except for businesses its more like “We created a website, to build up an interest, to create a buzz, to generate clients, to get them to buy, to send them an invoice, to get them to pay”. So, now we’ve established how important the free flowing of funds IN to the business, and the retention of those same funds, here’s our top ten tips (in no particular order) for managing cash flow. There’s really no point in getting everything else right if you just go and cock up the cash flow.
Tip 1: Make it easy for customers to pay
Offer as many payment methods as possible: cash, cheque, bank transfer, credit cards. Oftentimes, you don’t even need to set up a merchant services account. Apps such as Stripe (stripe.com) and iZettle (izettle.com) can have you accepting card payments online in a matter of minutes. And there’s obviously PayPal as well.
Tip 2: Accelerate invoicing
The quicker you can get an invoice to Accounts Payable of the customer, the better. Many online accounting systems like Xero allow you to generate invoices on the fly and email them by PDF. The quicker the invoice reaches the client, the quicker you’ll get paid.
Tip 3: Invoice accurately
If there’s one thing that’s certain, if you make a mistake on an invoice, it will not be paid. Remember that your customer is also more than likely working within serious cash flow constraints and will be look for reasons to not to pay until they absolutely have to. If you make a mistake on your invoice you can guarantee that this will give them an excuse not to pay. Don’t give them that excuse: make sure your invoices are correct.
Tip 4: Offer early settlement discounts
If you have the margins, and if you can afford it, offer discounts for early settlement. But you need to make it worthwhile. 10% is about the minimum that’s likely to make any odds.
Tip 5: Take up credit references
While not exactly foolproof (see Northern Rock, RBS etc) credit checking can help avoid bad debts. There’s no point in adding to this month’s bottom line with a sales invoice that’s going to come straight off next month’s. Experian and Equifax are a good start but also look at Creditsafe. You can also DIY by asking potential customers to provide references from other suppliers and their banks.
Tip 6: Ask for partial (or total) up front payment
There’s no shame in asking for upfront payment. If you’re embarrassed to ask, then you need to reconsider your career. Remember, big business were once small, established businesses were once start-ups. They all appreciate the pain of early stage cash flow and might be quite happy to help you out a little. But be prepared for a little quid-pro-quo. Upfront payment might merit a discount or an improved delivery schedule.
One of our salon owning clients has maintained a positive cash flow during the lockdown by putting the after-lockdown appointment book online and asking her customers to pay a deposit of around 20% to secure a spot. The client did this after reading my article Get Ready For (Re)Opening Day and in the first week of using the system, collected over £2,000 in deposits. Note: If you’re going to do this, remember that this income is not Revenue, it’s a liability – a promise to provide services in the future so make sure you book this to the balance sheet rather than the profit and loss account.
Tip 7: Minimise fixed cost expenses
So far we’ve focussed on getting cash IN. But, nothing drains cash flow like fixed costs when there’s nowt coming in. Start ups should avoid costly rents and staff costs until there is a level guaranteed income. Need a place to work? hot desk. Need a meeting space? try hotel lobbies – it’s free and surprisingly professional. Use a virtual PA or call answering service like yourreceptiondesk.co.uk or virtualpa.co.uk until you can afford a real person to answer your ‘phone and make you coffee.
One of your largest fixed costs is likely to be Salaries. or Wages. You might have some or all of your team on furlough at the moment, but when the JRS well runs dry you might be forced to lay off some staff. This could well be the difference between surviving and business failure. If you are going to make redundancies, cut once and cut deep: it’s better to make the redundancies than have the threat hanging over your existing team members: a jittery workforce, in fear of their jobs, are not effective in the fight for business survival.
Reducing expenses also applies to the business owner personally as well as the business itself: if you can reduce your spending it will (a) reduce the amount of cash you need to flow from the business to your personal account, and (b) foster a “we’re all in it together” culture within the team. See the bonus tip below to see why this is so important.
Tip 8: Only pay bills when you have to
I’m not suggesting you take the mickey out of suppliers but if you’ve negotiated terms, use them. If you’re given thirty days, pay on the thirtieth day. But not a day later. When you have a surplus of cash it may be an idea to pay early as well. This will normally give you some goodwill with your customers and might allow you a little flexibility when the time comes when there is a bill due and there’s no cash available for it.
During the current crisis, many landlords and suppliers are being extremely lenient with their tenants and customers. You should try to take advantage of this by arranging rent holidays, payment deferrals or extended terms. Remember that the businesses you work with are also worried about their survival and great deals are to be had. You can leverage but also remember that these businesses are in the same boar as you. So, be fair.
Tip 9: Set up pay monthly / subscription arrangements
If the service you provide is seasonal and therefore likely to cause your cash flow to experience significant peaks and troughs, try to even these out by offering your customers the ability to spread their payments monthly. This will probably be as attractive to them as it is to you.
Tip 10: Make sure you monitor cash flow
I’ve saved the most important until last: Get yourself a good accounting system that will allow you to monitor and control your cash flow. The old adage “what you can measure you can manage” has never been truer than when it comes to cash flow. A good system will allow you to chase and collect overdue payments, schedule payments of your own bills and to predict your projected cash flow and assess what impact certain events – ie, the non- or late-payment of a customer invoice will have. When you have this information to hand, you take appropriate action.
Bonus Tip: Get everyone on the same page
Be open with your team. Cultivate an attitude of “we’re going to weather this downturn together.” Go ahead and show them the books (or at least an overview) so they can see that ugly chart of dwindling (or heaven forbid, negative) cashflow. Don’t be afraid to say “we all need to be 10% more efficient and 10% more productive (ie., make 10% more while spending 10% less), or else none of us will have a job in 6 months.” Just including them in the problem solving process is often enough to motivate them to give that extra effort during tough times.
So that’s it. Take these tips into your business, apply them appropriately and you can guarantee your cash flow will be as good as it can possibly be.
HMRC PORTAL OPENS 20 APRIL 2020
We now have some much needed guidance on the Job Retention Scheme which will allow employers to recoup 80% of furloughed employees’ wages or salaries, up to £2,500 per month.
The portal for making the claim is currently in beta testing and HMRC say it will be up and running by 20th April 2020 so now would be a good time to run through the process for claiming:
Before you claim
Although we don’t know exactly what the claim process will be, we’ve dealt with HMRC for decades, we can have a stab at what information will be required. So now might be a good time to get this information pulled together:
- your ePAYE reference number
- the number of employees being furloughed
- the claim period (start and end date)
- your UTR if you operate a sole trader or partnership, or your Corporation Tax reference if you run a limited company
- the name and NI number for each employee being furloughed
- amount claimed (per the minimum length of furloughing of 3 consecutive weeks)
- your bank account number and sort code
- your contact name
- your phone number
How to Claim
When the portal is open, you will need to log in, and provide the above information. Note that this claim will not be linked to your payroll software so you will need to calculate the amount that you are claiming yourself. If your employees earn a fixed amount per pay period, this will be a fairly straightforward calculation. However, if your employees have variable wages then you can claim the higher of either the:
- 80% of the same month’s earning from the previous year (up to £2,500)
- 80% of average monthly earnings for the 2019-2020 tax year (up to £2,500)
This will be particularly relevant to seasonal workers who have higher than average earnings in the spring and summer months.
Once you’ve submitted your claim, HMRC will check you are eligible, and aim to pay the grant into your bank account within a target of four to six days.
Is this scheme open to abuse?
Acumenica are among the many professionals in the field who have expressed concerns that the system is open to abuse. The system relies very much on the employers being honest. It’s easy to see where an unscrupulous employer might be tempted to claim for workers who are NOT furloughed and drastically reduce their wage bill. To combat this, HMRC have retained the right to retrospectively audit all aspects of any claim made. They are also in the process of setting up a hotline where suspected breaches can be made – presumably this will be where employees can blow the whistle on fraudulent claims. Employers are reminded that deliberately defrauding HMRC through the scheme would potentially leave them open to criminal proceedings against them. This is clearly to be avoided at all costs.
How can Acumenica Group help?
Acumenica are committed to helping their clients and the wider business community navigate their way through these difficult and unprecedented times. If you need help calculating or submitting your claim, please contact email@example.com who will be able to assist you. Contractors and PSCs should find the process extremely straightforward and we encourage you to self-submit any claim you make but if you need our help, we will of course be happy to assist. We ask that you remember that we expect to be extremely busy with this, so priority will be given to businesses who have been worse affected by the outbreak such as businesses operating in the hospitality, tourism and leisure industries.
Less than a week after the chancellor confirmed he was pressing ahead with the reforms, the Treasury last night announced that the Off-Payroll reforms – due to come into force on 5th April 2021 – will now be delayed until April 2021.
This means that contractors retain the right to determine their own status and that the liability will not transfer to the end client.
Alan Broome, MD at Acumenica said this morning “This is undoubtedly a big win for contractors but it is only a deferral. Make no mistake, the rules will come into force next year. We, the contractor community, have been given a year’s reprieve and it’s most important that we spend it wisely. Contractors need to engage immediately with their clients and get their working practices in order. All the measures we’ve been recommending for months, which were really essential good business practice anyway, now need to be put in place. We’ve seen from many of the big FS companies’ knee jerk blanket bans over the past few months that they’re not going to help much. Contractors, this time, need to look after themselves. This is what we mean when we say that the time should be spent wisely.”
It may be too late for many contractors, who have already been forced down the PAYE/Staff route, but it would appear that there may be a way back for contractors who chose the umbrella route. And for those who are still operating through a PSC it’s likely to be business as usual. It remains to be seen though, what the end-clients will do. It’s still entirely at their option to refuse to engage with PSCs and they may not fancy the admin task of reversing the decision but we remain hopeful. Maybe a blanket ban will precipitate a blanket u-turn.
It’s also business as usual at Acumenica. We remain committed to Britain’s contracting workforce and we welcome enquiries from clients old and new. For more information and assistance please email firstname.lastname@example.org or call 03330 166 559. Please also keep an eye on our website as we will be providing an analysis of how this will affect our clients, and the wider contracting community in the coming days and weeks.