Why breakeven analysis can be illuminating

If you focus your energy on sales, there is a chance that your efforts will produce losses. Which is why we always encourage our business clients to keep their accounting records using software that automatically produces monthly management accounts that reveal profitability as well as turnover and costs.

But there is another useful indicator that you can compute once you have these monthly trading results. It is the level of turnover you need to achieve – based on current costs – in order to breakeven, make no profit, but importantly, no loss.

If you provide services, rather than process goods for resale, the amount of turnover you need to create each month to breakeven will be your total monthly costs plus any remuneration you take from the business.

For example, if your costs are £35,000 and your monthly remuneration not included in those costs (dividends perhaps or drawings if self-employed) a further £5,000, then your current breakeven turnover is £40,000 a month.

The calculation is slightly different if you process or buy and sell goods for resale as each £1 of sales will need to cover the direct costs – of buying and processing goods – as well as other fixed overheads that do not change with the level of turnover achieved. To calculate a breakeven figure, you will need to divide your fixed costs by the gross profit percentage and multiply by 100. So, if fixed costs are £40,000 a month and your gross profit percentage (sales less direct costs as a percentage of sales) is 25%, your breakeven turnover would need to be (£40,000/25 x 100) £160,000. At this level of trading, you would produce £160,000 times 25% – £40,000 of gross profit which would exactly cover your fixed costs.

Obviously, to make progress financially, you would need to achieve sales in excess of your breakeven turnover. Never-the-less, this is a useful indictor to have as when you achieve this target you will know that any additional sales will be creating profits for your business.

If you have the data, we can help you produce a realistic breakeven figure for your business. Please call to organise.

Source:Other | 13-11-2023

Cash flow v supplier credit limits

In a recent article we explained how granting lengthy credit limits to customers was as good as letting them keep your money in their bank account.

In this post we describe the opposite situation, where you are granted longer terms to pay bills from your suppliers.

If you take delivery of goods and services and are granted – say 60 days before you are required to pay for those purchases – then you have the use of the purchases for almost two months before your bank account balances are reduced.

If you can process and resell goods purchased, within the 60 days, and be paid by your customers at point of sale, then your purchase will be fully-funded – from a cash flow point of view – before you are required to pay your supplier.

Obviously, many businesses are unable to sell on a COD basis (like retailers) but taking advantage of generous payment terms from your suppliers can have a positive impact for all concerns from a cash flow perspective.

Effectively, you suppliers are providing you with valuable working capital.

To make the most of this cash flow boost, reduce (when you can) the payment terms you offer your customers and take advantage of any extended payment terms on offer from suppliers.

But beware, if customers want discounts for shortening credit terms or if you lose supplier discounts for longer payment terms, then you will have to crunch the numbers to see how changing credit terms will affect your profitability as well as easing cash flow.

Source:Other | 31-10-2023

Back of an envelope

If you run a business and manage your planning by scribbling notes on the back of an envelope, you might be advised to read the contents of this article.

When the economy is vibrant, effectively when there are an abundance of buyers in your marketplace, cash flow and profitability tend to look after themselves; as long as you are selling your goods or services at a price that covers your overheads and drawings/dividends.

Unfortunately, since Brexit and COVID disruption and the current upward pressure on energy and raw material costs, buyers are more circumspect about purchasing and business profits and cash flow are under pressure.

In which case your business planning cannot, and should not, be restricted to a few notes scribbled on the back of an envelope.

Your current management accounts should show you what your current situation looks like:

  • are you making profits;
  • are you keeping within your overdraft limits; and
  • are you still solvent.

To answer these questions the use of low-cost, cloud based accounts software is the minimum you should be utilising.

A belts and braces approach should include forward planning, what will be your likely profitability, cash flow position and solvency look like in a year’s time?

If you need help maximising the use of software to achieve these basic planning objectives, or if you would like advice on business planning issues, please call. We can help you be prepared to deal with and survive the UK’s present economic challenges.

Source:Other | 31-10-2023

Cash flow v customer credit limits

If your business grants a customer time to pay – say 30 days – after the services or goods supplied have been delivered, effectively, your money stays in their bank account for 30 days.

Further, if you have incurred costs regarding a sale, that have to be paid for before your customer settles their bill, you are out of pocket until your account is settled.

Many business owners are driven by sales targets and to meet these targets many are tempted to offer extended payment terms.

There is a well-worn cliché in business that cash is king. Your business only has choices – regarding the sales it makes – once your customers’ money is in your bank account.

Actually, once you have made a sale, if you allow customers extended credit terms you are basically saying it is OK to leave your money in their bank accounts.

The major risk from offering over generous credit terms is over-trading. If you have to pay for your goods and services on terms less generous than those you offer your customers, you will run out of spending power unless you have substantial cash reserves.

Recent economic challenges have bleached away many rainy-day funds, and so, our ability to leave cash in customers’ bank accounts may place us in a position where we basically become cash insolvent, even if we are profitable and have surplus net assets.

The next time you are tempted to extend credit in order to win a sale, take advice. We can help you consider the wider consequences of your sales strategy and its impact on cash flow.

Source:Other| 22-10-2023

New company reporting regulation withdrawn

The Government has withdrawn draft regulations after consultation with companies raised concerns about imposing additional reporting requirements.

Instead, the Government will pursue options to reduce the burden of red tape to ensure the UK is one of the best places in the world to do business.

Draft regulations published in July would have added certain additional corporate and company reporting requirements to large UK listed and private companies, including an annual resilience statement, distributable profits figure, material fraud statement and triennial audit and assurance policy statement.

This would have incurred additional costs for companies by requiring them to include additional layers of corporate information in their annual reports.

Since July, the Government has completed a call for evidence on existing non-financial reporting requirements, which has identified a strong appetite from businesses and investors for reform, including to simplify and streamline existing reporting.

The Business Secretary has now decided to withdraw these regulations and will be setting out options to reform the wider framework shortly to reduce the burden of red tape on businesses.

The Government remains committed to wider audit and corporate governance reform, including establishing a new Audit, Reporting and Governance Authority to replace the existing Financial Reporting Council. The Government will bring forward legislation to deliver these reforms when Parliamentary time allows.

Source:Other| 22-10-2023

Recurring sales

Most business owners will appreciate the difference between one-off sales, and services that are generally described as recurring.

For example, you may sell a laptop (a one-off sale) and then bolt on a support contract (a recurring sale).

The advantage of recurring income streams is that they not only impact your current sales numbers, but they also help you build a platform of future sales for your business.

Also, the cost of “selling” or acquiring recurring sales is generally lower than securing a one-off sale as you are creating sales revenue into future years rather than just improving your sales figures in the current month. 

It is worth researching how you could develop recurring income streams for your business. Subscriptions or support are two areas ripe for development. Or you could encourage one-off buyers to join your Customer Club where for a minimum monthly fee, they would be entitled to a progressive discount on purchases.

As we strive to emerge from recent difficult economic challenges, seeking out ways to introduce recurring services into your product mix may help you build a sustainable future for your business.

Well worth getting together with your work colleagues to brainstorm ideas.

Source:Other| 16-10-2023

Repeat business

Once you have secured the attention of a customer that has purchased their initial goods or services from you, you have completed the hard part – converted a prospect into a buying customer – so don’t be afraid to follow up with cross-sales offers.

For example, when you deliver goods to a customer, do you promote other products that you supply or offer a discount for a repeat order?

Many firms adopt this strategy by:

  • Inserting a current publicity leaflet or brochure with the goods physically delivered, or by
  • Following up orders by email, a “Hope you found our recent delivery useful…”, with a link to your website and other offers.

In this way you build your relationship and increase footfall.

Three factors influence turnover:

  • The number of customers.
  • The price of your goods or services, and
  • Footfall, the number of times a customer buys from you in a trading period.

In most cases, increasing footfall will have the most impact on turnover. Footfall is the number of times you can encourage customers back to buy more from your business.

So, be on the lookout for ways to encourage your customers back. Once you start thinking in this way, you will be surprised by the number of strategies you could apply.

Source:Other| 16-10-2023

Government to support action against late payers

Most smaller businesses will have spent time chasing customers for payment beyond their agreed payment terms.

These demands take entrepreneurs away from their core tasks of business building and place unnecessary pressures on cashflow.

To assist, government is stepping in with new regulatory powers. The new measures will include:

  • Extending the Reporting on Payment Practices and Performance Regulations 2017. Following consultation, Government will take forward legislation to extend payment performance reporting obligations. They will include new metrics for reporting, including a value metric, so businesses and commentators can see the value of invoices, including invoices paid late, and a disputed invoices metric. They will also introduce reporting on retention payments for businesses in the construction sector.
  • Providing greater advice to small businesses on negotiating payment terms that better suit them, and on how going digital can help them get paid quicker and manage their cash flow.
  • Broadening the powers of the Small Business Commissioner: Introducing broader responsibilities, enabling the Commissioner to undertake investigations and publish reports where necessary on the basis of anonymous information and intelligence. This will require primary legislation, so will be subject to the legislative timetable.

The stronger measures will benefit UK businesses by fostering a stronger payment culture and providing businesses with more predictable and reliable cash flow, allowing businesses to spend and invest with greater certainty.

It will reduce the time spent by businesses chasing payments, freeing up more time for other activities that will help them to grow. Tackling late and long payments provides an opportunity to increase investment and productivity across the economy.

This will improve payment culture in the UK to support smaller businesses, many of whom do not have the resources to accommodate long or late payments from their business customers.

Source:Other| 02-10-2023

Help for businesses launching new AI

Organisations across the country will be able to demonstrate that their new artificial intelligence and digital innovations meet regulatory requirements so they can quickly bring them to market.

In their press release published 19 September 2023, the Department for Science, Innovation and Technology said:

A new pilot scheme set to launch next year will see a number of regulators develop a multi-agency advice service providing tailored support to businesses so they can meet requirements across various sectors while safely innovating – including through innovative technologies such as AI.

Backed by over £2 million in UK government funding, the streamlined service is intended to make it easier for businesses to get the help they need, by bringing together the different regulators involved in the oversight of cross-cutting AI and digital technologies.

In turn, businesses will be able to take their new innovations to market responsibly and more quickly, helping to grow the UK’s economy.

With digital technologies such as artificial intelligence needing increasingly to demonstrate compliance with a range of regulatory regimes, there is a growing need for joined-up advice across the regulatory landscape. This pilot scheme will meet business demands for coordinated support and help innovators navigate regulations, so they can spend more time developing cutting edge new products.

The service will be run by members of the Digital Regulation Cooperation Forum (DRCF), made up of the Information Commissioner’s Office, Ofcom, the Competition and Markets Authority and the Financial Conduct Authority, and known as DRCF AI and Digital Hub.

The DRCF came together as a voluntary collaboration in 2019, launching formally in 2020, and works to explore emerging regulatory issues which cut across the remits of the four regulators with the goal of making it easier for industry to comply with multiple regulatory regimes.

The trial is expected to last around a year, and will assess industry take up, service feasibility and how innovators are interacting with it. Innovators and businesses requiring advice will be invited to apply in due course with the DRCF expected to run a competition for innovators to outline where they need support from regulators to ensure innovative new technologies comply with cross-cutting regulatory regimes. Successful applications will be selected against criteria agreed jointly by regulators and the department.

Source:Other| 25-09-2023

Charity Trustees Quiz

The Charity Commission has launched the next phase of its trustee campaign which aims to increase charity trustees’ knowledge and drive a positive change in charities’ governance.

The campaign encourages trustees to check what they know about their duties and aims to increase their awareness of the Commission’s 5-minute guides.

As part of the latest phase of the campaign, the regulator has released a new Trustee Quiz to enable trustees to test their knowledge of their duties and responsibilities.

The quiz is designed to engage trustees with a variety of questions based on everyday scenarios that they may encounter at their charity. It has been designed to help identify knowledge gaps and is an ideal refresher for trustees at all levels of experience. Research shows that the majority of trustees feel confident in their ability to manage their charities, however there may be areas of knowledge they can improve. The quiz is intended to encourage trustees to think again about what they know, to inspire upskilling.

The quiz takes around three minutes to complete and gives busy trustees an interactive means to quickly check what they know and help them uncover potential knowledge gaps they may not have been aware of. It prompts participants to test their knowledge on a range of topics, such as conflicts of interest and safeguarding. Feedback is provided for each question, and users are pointed to further guidance from the regulator to strengthen their knowledge.

Each participant also receives a score out of 10, allowing them to benchmark their knowledge.

The quiz can be accessed at https://beingacharitytrustee.campaign.gov.uk/take-the-trustee-quiz/

Source:Other| 25-09-2023

Changes afoot at Companies House

Due to new legislation working its way through Parliament, Companies House will be making a number of significant changes. In a recent blog post, they made the following announcement:

We’re approaching a pivotal moment in the history of Companies House. This legislation, The Economic Crime and Transparency Bill, will fundamentally change our role and our purpose and will give us the powers we need to play a more significant role in tackling economic crime. Over time, we’ll become an active gatekeeper of the data on our registers rather than a passive recipient, and we’ll have the tools to go further to prevent the misuse of corporate entities.

It's widely known that the UK has one of the largest and most open economies in the world. However, it’s become increasingly apparent that this openness exposes the UK to criminals who want to use our corporate structures for illicit purposes. This is one of the things the new Bill will address.

The measures in the Bill will make sure the UK continues to be a great place to do business, while enabling us to take a tougher stance against economic crime.

The measures include:

  • introducing identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies;
  • broadening the registrar’s powers so that Companies House can become a more active gatekeeper over company creation and a custodian of more reliable data;
  • improving the financial information on the register so that the register is more reliable and accurate, reflects the latest advancements in digital technology, and enables better business decisions;
  • providing Companies House with more effective investigation and enforcement powers, and introducing better cross-checking of data with other public and private sector bodies; and
  • enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.

As more details are published more information will be posted on our newsfeeds.

Source:Other| 18-09-2023

Companies House fees increase?

Companies House have published information that suggests their fees may be increasing in the near future. And it’s all to do with the ECCT Bill currently passing through parliament.

To give it its full name, The Economic Crime and Corporate Transparency (ECCT) Bill will change the role and purpose of Companies House and will provide the powers needed to improve the accuracy of the information on their registers and to play a significant role in tackling economic crime.

Companies House are quoted as saying:

“We want to be ready to take action, and we’re working hard on a number of different workstreams to make sure we’ll be ready to implement many of the measures as soon as possible after the Bill achieves royal assent.”

As a reminder, the measures in the ECCT Bill include:

  • introducing identity verification for all new and existing registered company directors, people with significant control, and those who file on behalf of companies;
  • broadening the registrar’s powers to become a more active gatekeeper over company creation and a custodian of more reliable data;
  • improving the accuracy of financial information on the register so that the register is more reliable and accurate, reflects the latest advancements in digital technology, and enables better business decisions;
  • providing Companies House with more effective investigation and enforcement powers, and introducing better cross-checking of data with other public and private sector bodies; and
  • enhancing the protection of personal information provided to Companies House to protect individuals from fraud and other harms.

If implemented in full, Companies House costs will increase to meet the additional functions dictated by the Bill.

Companies House fees are set on a cost recovery basis. This means their fees must cover the cost of the services delivered. They do not make a profit on fees charged.

In a recently published blog post Companies House said:

“We review our fees every year to make sure they’re set at the right level. This year, we’ve taken new future expenditure into account as well as making sure we recover costs from our existing expenditure.

Companies House fees are much lower than the global average and have not changed since 2016. Many believe our fees are too low. During the debates while the ECCT Bill has moved through Parliament, there’s been a focus on the low levels of our fees and on making sure we’re adequately funded in the future.”

Source:Other| 11-09-2023

Are you a company director?

There is more to being appointed a company director than accepting the title.

According to Companies House directors formal, statutory duties and responsibilities include:

  • filing an annual confirmation statement;
  • filing your company annual accounts – even if the company is dormant;
  • notifying Companies House of any change in your company’s officers or their personal details;
  • notifying any change to your company’s registered office address
  • filing details of any allotment of shares;
  • dealing with the registration of any charges (mortgage); and
  • notifying Companies House of any change in your company’s people with significant control (PSCs) or their personal details.

Additionally, directors need to record minutes of company meetings that impact returns to Companies House and HMRC. For example, when dividends are voted and paid.

Directors should be aware that if you use a sensitive address like your home address as your company’s registered office or single alternative inspection location (SAIL), it will be available to the public. You cannot remove a registered office or SAIL address from the public register, even if it’s your home address.

If you are a director of a registered company, some of your details will be made public. This includes your:

  • name
  • nationality
  • occupation
  • month and year of your date of birth

A director must provide two addresses:

  • a correspondence address for the public register – known as a ‘service address’; and
  • their home address – known as the ‘usual residential address’.

A correspondence address is one you can use to receive communications about the company. This can be the same as the registered office address of the company, or it can be somewhere different.

A residential address is a director’s usual home address. You must tell us your home address, but it will not be available on the public register for everyone to see. It’s kept on a private register.

We will only provide home address information to credit reference agencies and specified public authorities, such as the police. In certain circumstances, you may be able to restrict the disclosure of your home address to credit reference agencies.

Source:Other| 28-08-2023

The best and worst of British banks

Personal and small business current account holders were asked how likely they would be to recommend their provider to a friend, relative or other business. The survey also covered the quality of online and mobile provision, branch and overdraft services and, for small businesses, the quality of the relationship management they receive.

The results show customers how their bank is ranked on quality of service and make it easier for people to compare offers. They also promote competition between providers, resulting in better experiences for all account holders. Customers who find another bank offering a better deal can use the Current Account Switch Service to help make the process of switching much simpler. This free service is available to anyone with a personal or business current account in the UK.

Results are for the period July 2022 to June 2023.

Overall, the top-ranked personal current account providers in Great Britain are:

  • Monzo (1st)
  • Starling Bank (2nd)
  • First direct (3rd)

Overall, the bottom-ranked personal current providers in Great Britain are:

  • Virgin Money (=15th)
  • Royal Bank of Scotland (=15th)
  • TSB (14th)

Overall, the top-ranked business current account providers in Great Britain are:

  • Monzo (1st)
  • Starling Bank (2nd)
  • Handelsbanken (3rd)

Overall, the bottom-ranked business current account providers in Great Britain are:

  • HSBC UK (15th)
  • The Co-operative Bank (14th)
  • Virgin Money (13th)
Source:Other| 20-08-2023

Who is your ideal customer?

If there is a particular type of customer that is ideally placed to benefit from the goods or services you sell it makes sense to target any marketing activity in their direction, rather than adopting a scatter gun approach.

Take a good look at your present customers and select those that buy from you on a regular basis and seem to appreciate your company’s supplies. For example, are they:

  • Easy to deal with.
  • Pay on time.
  • Reorder on a regular basis.
  • Approachable for cross-sales.

These will be your “A” clients/customers. Once you have your list look for similarities. Are they:

  • In a specific market sector.
  • Is location a feature, local to your base of operations.
  • Are they owner managed.

Once you have defined these characteristics you have a “prime avatar” of your ideal customer, and you can start to market to win more customers with similar characteristics.

To assist with these marketing efforts, approach your present “A” list and ask for testimonials. These are likely to resonate with prospects you approach.

As you are fishing for customers in a pond alive with many different types, many of which you may not want as customers, it makes sense to get clear on who your ideal customer is and concentrate your marketing activity in their direction.

Source:Other| 13-08-2023

Landlords’ obligation to repair property

Landlords have a legal obligation to keep their rented property in good condition, and any gas or electrical systems must meet specified safety standards.

There are different rules for making repairs in Scotland and making repairs in Northern Ireland.

When you can enter the property

You have a legal right to enter your property to inspect it or carry out repairs. You must give your tenants at least 24 hours’ notice, although immediate access may be possible in emergencies. Your tenants have the right to stay in the property during the repairs.

You are normally responsible for repairs to:

  • the structure of your property
  • basins, sinks, baths and other sanitary fittings
  • heating and hot water systems
  • anything you damage through attempting repairs

If your property is seriously damaged by a fire, flood or other similar incident, you do not have to rebuild or renovate it. However, if you do, you cannot charge your tenants for any repairs made.

Common areas

If you own a block of flats, you are usually responsible for repairing common areas, like staircases. Councils can ask landlords to fix problems in common areas, or to repair a tenant’s flat that’s been damaged by another tenant.

If the property is temporarily unfit to live in

You can ask tenants to move out during major repairs. Before this happens, you should agree in writing:

  • how long the works will last
  • the tenants’ right to return
  • details of any alternative accommodation

You cannot repossess a property to do repairs. However, if you’re planning substantial works or want to redevelop the property, you can apply to the courts for an order for your tenants to leave. The courts are more likely to grant this if you provide alternative accommodation.

Repairs and charging rent

If the repairs are very disruptive, your tenants may be able to claim a reduction on their rent known as a ‘rent abatement’. This will depend on how much of the property is unusable.

You may have the right to increase the rent after carrying out repairs and improvements, depending on the tenancy agreement.

Source:Other| 13-08-2023

Amazon offers to change Marketplace rules

Amazon has offered to change the way it treats third-party sellers using its Marketplace platform in the UK, by submitting proposed commitments to the Competition and Markets Authority (CMA) in response to competition concerns it raised with the technology giant.

The CMA considers that these commitments – if accepted – will ensure third-party sellers’ product offers have a fair chance of being prominently displayed to customers in the ‘Buy Box’ on a product page when they are competing against Amazon’s own product offers. The commitments also aim to prevent Amazon from using data that it obtains from third-party sellers to give itself an unfair competitive advantage.

The CMA launched an investigation in July 2022 into concerns that Amazon was abusing its position as the UK’s leading online retail platform by giving an unfair advantage to its own retail business over competing sellers that use Amazon Marketplace, or to sellers that use Amazon’s own warehousing and delivery services, rather than rival organisation businesses.

The CMA’s preliminary view is that the offer from Amazon addresses its competition concerns, and the CMA is now consulting on the commitments put forward before deciding whether to accept them.

The commitments offered propose to:

  • Ensure Amazon does not use rival sellers’ Marketplace data to gain an unfair advantage over other sellers. This follows concerns that Amazon’s access to commercially sensitive data relating to third-party sellers helped its retail business to decide which products to sell, manage stock levels for those products, set prices and make other important commercial decisions.
  • Guarantee all product offers are treated equally when Amazon decides which will be featured in the ‘Buy Box’. This relates to concerns that products being offered by third-party sellers were less likely to appear in the Buy Box than similar offers from either Amazon’s own retail business or third-party sellers that use Amazon’s delivery services.
  • Allow third-party businesses using Marketplace to negotiate their own rates directly with independent providers of Prime delivery services so that customers can benefit from lower delivery costs where better rates are negotiated.
  • Require Amazon to appoint an independent trustee who will monitor the company’s compliance with these commitments. The CMA will have a direct say in this appointment, ensuring they have the necessary skills and expertise for the job.
Source:Other| 01-08-2023

South Yorkshire first UK Investment Zone

South Yorkshire Paves the Way as UK's First Investment Zone

In an effort to stimulate economic growth and create new job opportunities, the UK government announced in its Spring Budget 2023 the establishment of twelve Investment Zones throughout the country. Taking the lead in this groundbreaking initiative, South Yorkshire has been declared the first UK Investment Zone.

As a business in the UK, it’s essential to understand what this significant development means for you, especially if you’re in or around South Yorkshire. This transformative venture is designed to spur investment, generate new economic activities, and support growth and jobs.

Investment Zones: The Gateway to Business Prosperity

Investment Zones are strategically designed to fuel business investment and speed up development. Businesses operating within these zones will benefit from more relaxed planning frameworks and lower taxes, ultimately catalysing growth and promoting innovation.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

South Yorkshire Investment Zone: A Hub for Advanced Manufacturing

The inaugural Investment Zone in South Yorkshire will specifically target Advanced Manufacturing, a sector with strong roots and potential in the region. If your business operates in or relates to this sector, this presents a golden opportunity.

Cities within South Yorkshire, including Sheffield, Rotherham, Doncaster, and Barnsley, are expected to reap significant benefits. By 2030, it is projected that this Investment Zone will deliver an estimated 8,000 new jobs and £1.2 billion of private funding.

Notable partners such as Boeing, Spirit AeroSystems, Loop Technology, and the University of Sheffield Advanced Manufacturing Research Centre (AMRC) have already pledged support for the initiative, with an initial investment exceeding £80 million.

Looking Ahead: Investment Zones Across the UK

This new economic venture will also extend its reach beyond England. The government is collaborating with devolved administrations and local partners to drive local growth in Scotland, Wales, and Northern Ireland.

If your business is situated in or connected to these regions, keep an eye out for more information on prospective Investment Zones. Glasgow City Region and North East Scotland are reportedly the front-runners for hosting Investment Zones in Scotland.

Need Assistance from an Accountant?

We’d be more than happy to help you with your accounting needs in London, or anywhere else in the UK!

Reach out to us by completing this form and one of our staff members will get in touch within one business day. 

Wimbledon Accountant

165-167 The Broadway



SW19 1NE

Farringdon Accountant

127 Farringdon Road




What do we mean by cost of living?

A simple dictionary definition of cost of living would probably say something like:

The level of prices relating to a range of everyday items…

The problem is, the price inflation for food, or fuel for your car, or heating costs will vary. Although inflation is quoted as just under 9% in the UK, this disguises the true rate of cost increases in different sectors. For example:

  • Petrol and diesel prices were much higher in 2022 that currently. In which case prices in this area have reduced.
  • In the year to May 2023, food and non-alcoholic beverages rose by 18.4%, much higher than the current rate of published inflation.
  • According to the Office of National Statistics energy prices rose 8.1% in the year to May 2023. However, energy price caps will have artificially held down price increase due to government interventions.

To further complicate the issue, inflation is measured in two ways:

  • CPI – the Consumer Price Index, and
  • RPI – the Retail Prices Index

The Retail Prices Index (RPI) is no longer classified as a National Statistic because the way it is calculated does not meet international standards.

In general terms, when the press discuss inflation, the measure they are quoting is the CPI. The CPI inflation rate in May 2023 was 8.7%, the same as in April 2023.

The other factor that is entering the equation on this topic is interest rates. The Bank of England only has one weapon in its armoury to bring down inflation and that is to increase interest rates to dampen demand.

As rates increase, the cost of repaying loans – particularly mortgages – is increasing. Stories abound of monthly repayments doubling in recent weeks.

And so, care should be taken when interpreting price increases. The CPI hides a wealth of price increases and decreases that are no where near 8.7%.

Source:Other| 18-07-2023

Ideas for increasing your cash flow

Business owners are not exempt from the effects of inflation, but unlike waged individuals, they may have more options to increase cash flow. Here’s a few ideas you may like to consider:

  • If you have slow-moving or dormant stock sitting on your storage racks, consider a sale. Anything you can convert into cash will have a positive impact on cashflow.
  • Are staff fully utilised? If not, could you offer short-term placements via employment agencies? Failing this option, do you need to consider redundancies?
  • Do you have unused storage or production space that you could rent for short periods?
  • Are your company vehicles fully utilised? Could they be hired to other firms on short-term hire contracts?

Wage earners will have other options to increase their monthly cash flow. For example:

  • Taking on a second job, albeit part-time.
  • Make a list of all those unwanted items languishing, unused, in your loft, outhouse or storage spaces and consider selling on E-Bay or similar platform.
  • Could you let out your drive 9am to 5pm to workers unable to find regular parking spots in your area?
  • Do you have underutilised equipment that you could hire out?

And earning £1,000 or under in a tax year from either renting out part of your home or selling/hiring under-utilised assets is tax free.

And finally, if you have spare rooms in your home, you may be able to rent these tax-free as long as annual rents received do not exceed £7,500 and you are resident in the same building.

If you would like to expand on any of these ideas, be happy to discuss your options. Please call.

Source:Other| 10-07-2023

How copyright protects your work

Copyright protects your work and stops others from using it without your permission.

You get copyright protection automatically – you don’t have to apply or pay a fee. There isn’t a register of copyright works in the UK.

You automatically get copyright protection when you create:

  • original literary, dramatic, musical and artistic work, including illustration and photography
  • original non-literary written work, such as software, web content and databases
  • sound and music recordings
  • film and television recordings
  • broadcasts
  • the layout of published editions of written, dramatic and musical works

You can mark your work with the copyright symbol (©), your name and the year of creation. Whether you mark the work or not doesn’t affect the level of protection you have.

Copyright prevents people from:

  • copying your work
  • distributing copies of it, whether free of charge or for sale
  • renting or lending copies of your work
  • performing, showing or playing your work in public
  • making an adaptation of your work
  • putting it on the internet
Source:Other| 05-07-2023

Protecting intellectual property

Having the right type of intellectual property protection helps you stop people stealing or copying:

  • the names of your products or brands;
  • your inventions;
  • the design or look of your products; and
  • things you write, make or produce.

Copyright, patents, designs and trademarks are all types of intellectual property protection. You get some types of protection automatically, others you have to apply for.

You own intellectual property if you:

  • created it (and it meets the requirements for copyright, a patent or a design);
  • bought intellectual property rights from the creator or a previous owner; and
  • have a brand that could be a trademark, for example, a well-known product name.

Intellectual property can have more than one owner, belong to people or businesses, and be sold or transferred.

If you have concerns that your ideas or business brands are vulnerable contact a professional patent or trademark attorney.

Source:Other| 26-06-2023

New powers for charities

From 14 June 2023, the latest set of changes mandated by the Charities Acts 2022 came into force.

Changes now in place include simplified legal requirements that charities must comply with before selling, transferring or leasing land, and new statutory powers to enable:

  • Charities to spend, in certain circumstances, a proportion or all of their permanent endowment fund where the market value of the fund is (£25,000 or less) without Commission authorisation.
  • Charities to borrow, in certain circumstances, up to 25% of the value of their permanent endowment fund without Commission authorisation.
  • Charities that have opted into a total return approach to investment to use permanent endowment to make social investments with a negative or uncertain financial return, provided any losses are offset by other gains.
  • The Commission to direct a charity to stop using a working name if it is too similar to another charity’s name or is offensive or misleading.
  • The Commission to delay registration of a charity with an unsuitable name or delay entry of a new unsuitable name onto the Register of Charities. Working with the principal regulator, the Commission can also use these naming powers on exempt charities.

The Director of Legal & Accounting Services at the Charity Commission said:

“The latest changes introduced by the Charities Act 2022 give the charities we regulate more flexibility and greater powers. These are positive changes that will impact a significant number of charities, so it is important all organisations, big or small, take the time to check what this means for them. This is especially important if they are looking, for example, to dispose of land. We have updated our guidance to help trustees understand the changes, and our contact centre is open to those who need further support.”

Source:Other| 18-06-2023

New life sciences growth package announced

The Chancellor, Jeremy Hunt, has announced a new £650 million package of measures to help boost UK life sciences.

The new ‘Life Sci for Growth’ package brings together 10 different policies including £121 million to improve commercial clinical trials to bring new medicines to patients faster, up to £48 million of new money for scientific innovation to prepare for any future health emergencies, £154 million to increase the capacity of the UK’s biological data bank – further aiding scientific discoveries that help human health – and up to £250 million to incentivise pension schemes to invest in our most promising science and tech firms.

The package also includes plans to relaunch the Academic Health Science Network as Health Innovation Networks as well as changes to planning rules to free-up lab space and updating a route for East West Rail to improve connections between the UK science powerhouses of Oxford and Cambridge.

Launching the package, the Chancellor said:

‘Our Life Sciences sector employs over 280,000 people, makes £94 billion for the UK each year and produced the world’s first covid vaccine.

These are businesses that are growing our economy while having much wider benefits for our health – and this multi-million pound investment will help them go even further.’

Source:HM Treasury| 11-06-2023

What you can and cannot patent

The GOV.UK website offers the following guidance if you are considering a patent application.

A UK patent may help if you want to take legal action against someone who uses your invention without your permission. For example, if they sell or manufacture your product in the UK.

A patent lasts 5 years. If you want it to stay in force after that, you must renew it every year, up to a maximum of 20 years.

What you can patent

Your invention must be:

  • new – it must not have been made publicly available anywhere in the world, for example it must not be described in a publication
  • inventive – for example, it cannot be an obvious change to something that already exists
  • either something that can be made and used, a technical process, or a method of doing something

What you cannot patent

Things you cannot patent include:

  • literary, dramatic, musical or artistic works
  • a way of doing business, playing a game or thinking
  • a method of medical treatment or diagnosis
  • a discovery, scientific theory or mathematical method
  • the way information is presented
  • ‘essentially biological’ processes like cross-breeding animals or varieties of plants
  • software that has a ‘non-technical’ purpose

Only software with a technical purpose can be granted a patent. For example, software to control a driverless car could have a patent, while a chess playing app could not. If your invention is software, you may need professional advice whether it can be patented (for example, by consulting with a patent attorney).

Source:Other| 11-06-2023

Voluntary “give-aways”

In a recent post we warned of the likely loss of billing opportunities if you give away service advice just to demonstrate how informed you are.

In this post we outline when it may be appropriate to volunteer information or other free offers in order to secure additional sales.

For example, when you deliver goods to your customers, do you insert information about other goods or services that they might find of interest? A car dealership may be the place where you go to purchase or lease a car, but once you have chosen your vehicle you will likely be offered insurance or service plans as add-on sales.

Fishermen will “give-away” bait by broadcasting it in areas of water where it expects fish to reside. This process is an invitation. Invite your customers to sample more of your goods and services, don’t be shy.

Don’t assume that customers will know what is on offer, tell them.

You have done the hard work and converted business prospects into business customers. Be sure that each sales point is also a business development opportunity.

Source:Other| 05-06-2023

Involuntary “give-aways”

Unlocking the Power of Value in Service-Based Businesses

Are you a service provider looking to maximize your earnings? If so, it’s crucial to be mindful of the potential pitfalls of giving away your expertise for free. While there may be situations where offering complimentary advice can be beneficial, it’s important to strike a balance that ensures your services are properly valued.

So why would you ever consider giving away your hard-earned knowledge without charging a fee? There are a couple of scenarios where it might make sense. Firstly, if you’re enticing a prospective client to join your customer list, offering free advice can serve as a valuable incentive. Additionally, if you have existing clients who are experiencing a temporary downturn in their business, you might be willing to provide limited pro-bono advice to help them weather the storm.

Require accounting services?

Get in touch with our expert accountants today! Contact us via WhatsApp for personalized financial solutions.

However, it’s essential to exercise caution when faced with a client’s specific problem that you can solve immediately. While it may be tempting to blurt out the solution, it’s important to resist this urge. After all, the skills you’ve honed to deliver your services deserve a return on investment, and giving away solutions, while pleasing the client, undermines the purpose of being in business.

Instead, when confronted with such situations, consider suggesting that you have a potential solution to their problem. However, explain that you’ll need time to gather additional details and propose a comprehensive plan. Promise to get back to them the following day. This approach allows you to solidify your ideas, present a clear outline of what you can achieve, highlight the benefits for your client, and, importantly, discuss the cost associated with delivering the solution.

By adopting this approach, you’ll not only safeguard the value of your expertise but also ensure that your services are appropriately compensated. Remember, striking a balance between providing value and maintaining a profitable business is key to long-term success.

The importance of being interested

Conversation takes a turn for the worse if you have an opinion that your client has no idea how to solve their problem(s) and all they need to do is listen to your solution.

And you may be right in your interpretation of the facts, but will the client appreciate your apparent unwillingness to listen?

If AI systems ever crack this particular nut and develop the ability to listen, empathise and then advise, human advisors will quickly find themselves out of a job.

Being interested in your clients’ problems is different to knowing what they need to do to solve the problem. For instance, how is the problem impacting their stress levels, their family life. Have they been so worn down by their issues that their GP has prescribed anti-depressants?

Sometimes, we need to be heard, and communicating how we feel is as important as having the underlying problem solved.

As a bonus, if you are interested in your clients, they will return – and willingly – to share their difficulties and seek out your advice knowing that you really understand how they feel.

A simple process to exercise your empathic muscles is to ask open questions. It may take no more than a “How are you?” to create additional advisory fee billing opportunities.

Source:Other| 23-05-2023

The winds of change

A new King, the possibility of a change of government next year, and signs that we may, at last, be emerging from the disruptions created by Brexit and COVID.

Meanwhile, back at helms of our small business sector firms, entrepreneurs are obliged to deal with the challenges that have arisen in recent years. Including:

  • Inflation
  • Crippling energy cost rises
  • Supply chain difficulties, and
  • The lack of qualified staff – affecting service industries, farming and manufacturing.

It’s as if the UK economy is becalmed, in the doldrums, waiting for the winds of change.

What do we need?

  • Price stability, inflation reduced to 2% not 10%.
  • A reduction in the cost of energy.
  • Less red tape when trading (importing and exporting) in the EU post Brexit.
  • Access to European and other global labour markets.

Readers who are suffering from these and other issues would do well to keep revisiting their business plans for the coming year to head-off cash-flow and solvency concerns. Please call if you would like to discuss your options.

Source:Other| 08-05-2023

More financial support for energy intensive sectors

Some businesses could see their bills slashed by as much as 20% off predicted wholesale prices, thanks to further government support launched on 26 April 2023 for sectors using high amounts of energy.

Applications have now opened for energy and trade intensive sectors that are most affected by the unprecedented rise in global energy prices to claim further discounts on their bills between 1 April 2023 and 31 March 2024 – helping deliver on the government’s priority to halve inflation.

Ceramics and textiles are among the wide range of sectors potentially in line to benefit. These companies use high amounts of energy to deliver their goods, but also are exposed to strong international competition, meaning they cannot raise their prices to cover the increase in costs they have faced.

Ministers are today urging companies to check their eligibility and submit their applications at the earliest opportunity, as the government continues its unprecedented support package that has protected businesses and as of April has saved them £5.9 billion on energy costs – over £30 million a day.

Source:Other| 01-05-2023