Insight Associates provide outsourced accounting and Finance Director services to ambitious and growing businesses. We work as your only resource or with existing staff to give you complete financial support including monthly management accounts, high level financial advice, robust controls and financial systems, funding and business planning, payroll & compliance, VAT returns and statutory compliance.

Successful business leaders have all the information they need to make good decisions…Do You?

Wednesday, January 25, 2017

Do You Know Your Credit Rating? (And Why That Matters)


One of our big projects over the coming months is to redesign our website.

It’s now looking a bit tired – and that matters, because we know that when potential clients look us up online, that’s the first place they go to.

But it’s not the last...

When someone’s looking to work with you, they will most likely check your company out on social media as well. They might visit LinkedIn, to look into the individual backgrounds of your directors.

And not least, they’ll more than likely check your credit rating to see if you’re a solid, reliable company, on sound financial footing. If it’s a potential supplier looking you up, they’re going to want to make sure you can pay your bills.


It’s the latter I want to talk about today, because all too often, companies never spare their credit report a second thought.

When was the last time you checked yours?
 
It’s worth doing, because sadly, sometimes the credit agencies do get things wrong.

We have one client which is in a great financial position, but when they filed their accounts with a credit agency which shall not be named, they misinterpreted them. Their credit rating was immediately downgraded, making it look as if they were in serious financial trouble.

The fact that it was wrong was besides the point. Once it’s online, potential clients – and others - will draw their own conclusions. Your reputation can be damaged and business can be lost.

This really isn’t that uncommon. Another client of ours here in Greater London had the same name as another company in Ireland. The credit agency got them mixed up, and as a result their accounts looked much worse than they really were.

Luckily, we picked up both cases because we monitor our clients’ credit ratings.

And that’s something you need to do for your company, as well.

If there is a mistake, get in contact with the credit agency quickly to tell them about the error. Their business depends on their having the right information so they will generally be happy to help out.
 
It’s in their interest to do just that.

And it’s in your interests to make sure that you are represented accurately, wherever you are online.

So here’s your mission for the next few minutes. Google your company name, and “credit report”.

Would you be happy for potential clients to come across the same results?


Tuesday, January 24, 2017

2 Simple Steps To Make Your Online Banking Safer


Here’s an awkward moment: You’ve just sent off a payment to D Smith, but unknown to you, there are two D Smiths on your accounts and you’ve sent the money off to the wrong one...

That is exactly what happened to one of our clients.


They had two employees with the same surname and initial – a woman and a man. One, the man, had just left the company, but was never taken off the beneficiaries list on their online banking.

The next month, the lady in charge of payroll set up a payment to the wrong D Smith, to the tune of £3,000 – approximately three times his monthly salary.

They never got the cash back.

Mistakes like this happen the whole time with online banking.

It’s quick and convenient – which is both a strength and a weakness.

It also lacks checks and balances.

Once an employee has access to your online account, it can be hard to supervise what they are doing.

We live in a paperless age, and there is no paper trail. Nor is there necessarily anyone looking over their shoulder, to check they’re doing what they’re supposed to.

I know of at least one company owner who placed all the online banking administration in the hands of one member of staff in another corner of the building. Even the directors weren’t sure what she could do and what she had access to.

So how do you avoid mistakes – and even fraud – with your company’s online banking?

As I’ve emphasised over the past few blogs, you can’t rely on your bank to make sure that all your transactions are correct and above-board. While they all talk about IT security, they can’t control what happens in your offices, from your end.

It is up to you to create robust processes yourself, internally, so that your online banking is as safe and secure as it can be.

I recommend two steps.

First of all, no payments should be made online without a director having to sign a piece of paper authorising the payment. This creates the internal paper trail -  just like, 10 years ago, a director had to sign all cheques.

Second of all, make sure as many people as possible are involved in each transaction.

For example, at Insight Associates, we make online payments on behalf of many of our clients (including payroll).

Each payment goes through four pairs of eyes before it is authorised. One person decides what payment is being made, another person altogether sets it up on the system. A third person will check that this has been set up correctly, and a fourth person approves it.

This dramatically reduces the chances of mistakes and of fraud. Had the client who sent a payment to D Smith had this in place, the mistake could never have happened – because a third party (quite literally….) would have checked all the payments were set up correctly.

We’ve had plenty of opportunities to refine our processes because we handle payments on behalf of so many companies – over the years, we’ve seen every scenario that can go wrong! So our methods are particularly robust.

Can Former Employees Access Your Bank Account?


A few years ago, one of our directors left Insight Associates. She had authorisation to access our bank account and withdraw funds.

The day she left, we changed the mandate on our account to remove her access and give it, instead, to her replacement.

Unfortunately, the bank claimed they never received our instruction – which has severe implications.

First of all, if the person leaving your company does so on bad terms (you’ve possibly even fired them), you are opening yourself up to fraud if they can still access your bank account. In this case, our director left on excellent terms – that still doesn’t make it right!

Second of all, it is extremely frustrating when your staff members can’t do their job because the bank won’t allow them to sign for the right amount, or requests an additional signature – when your mandate says differently.

I can well imagine a situation where no one from your company has access to your account, simply because the bank never updated the mandate. 

Indeed, another client of ours has decided to leave his current bank, because it refuses to talk to him even though he’s been on the mandate for three whole years. They simply haven’t updated their records properly.


What happened to us, then, is actually surprisingly common. It’s not your bank manager who you trust implementing the changes to your mandate – an entire system has to work, and often it doesn’t.
So when things change with our clients, we always change the mandate on their behalf. But the next step is equally important.


You need to follow up with your bank, to make sure they’ve actually implemented your instructions.

You can’t just trust that the bank has done what it’s supposed to do. You must double-check.

Getting this right is a small but essential part of managing your company’s finances smoothly and professionally.

How We Caught a Major Error In Our Bank Account


Recently, a new client of ours made an error when sorting out their direct debits.

The business owner was filling out forms for various insurance products, but picked up our bank details by mistake, instead of his own. So, while he put his company name on the forms, he assigned all the direct debits to Insight Associates.

The first we heard about it was just before the debits were due to go out. We check daily that what is coming in and out of our account is consistent with our expectations – a service we perform for all our clients as well.

Looking at the forward transactions, we noticed a group of direct debits which we didn’t recognise were due to come out the next day.

It took a while to figure out where they came from, and sort it out. But once we did, naturally, I wanted to know how this possibly could have happened.
 

I met with the bank’s area senior commercial manager, who told me frankly: “All too easily”.

Shockingly, the bank has no process for checking the signature on a mandate, and the burden of proof to get it right is with whoever sets up the direct debit.

The good news is that there is a direct debit guarantee. So if money is mistakenly taken out of your account you should get it back.

But that only happens if you actually check what’s going out of your bank account.

The lesson we learned from this? Keep a close eye on your direct debits to make sure they all “belong” to you. That’s something we now do monthly for all our clients, since we discovered the weakness in the system.

If you don’t recognise a transaction you should always raise a query with a bank. If you do cancel it, you can always reinstate it later, if it does indeed turn out to be legitimate.

But most importantly: Never rely on your bank to check everything is right with your account.
It is up to you to monitor it, and ensure everything is in order.

As I said, we perform that service, daily, for all our clients – and catch mistakes the entire time!
 
The key lesson here is you cannot rely on your bank to check everything is correct with your account.
 
The burden is on you to double-check. 

Wednesday, December 21, 2016

How NOT To Pay For Your Christmas Gifts


It’s that time of year again, when business owners start thinking about their tax returns – and this is when we start to notice strange things popping up in their accounts.

Over the years, I’ve seen it all. I’ve seen people charging their mortgage to their business who are flabbergasted when I tell them it was taxable income. Perhaps the best effort was a client who put his au pair on the payroll. It took some time to work out because her name was just one among many employees, but I got there in the end.

The thing is…

Many business owners dip into business funds in order to pay for personal things. This phenomenon is particularly noticeable around Christmas, when people need a bit of extra cash to get them through the festive season.

And that can be dangerous.

HMRC hates this behaviour because it’s an attempt to get money tax-free.

If you decide to pay for personal items through the business you have two choices: Pay it back really quickly or be prepared to pay tax on it.

Most people know when they are wrong to charge personal items to the business, and are consciously trying to bend the rules to see how far they get. We often get asked some variation of “What can I get away with charging to the business?”

Others make an honest mistake. The rules can be complex, and people are not always aware of some of the finer points.

But that’s your responsibility. You really need to be clear about the rules – and if you’re not then you need to check. And most importantly of all, don’t push your luck and hope HMRC fails to notice.

Even within the past two years, they are taking this much more seriously. If they discover you have been taking money out of the business for personal purposes, they can charge penalties and levy punitive interest.

Even if they don’t notice, don’t do it. Taking money out of the business to fund personal expenses is a terrible, unprofessional way to run your company. You are depriving it of funds it needs to function, thrive and grow.

Even if you’ve founded the business and consider it ‘yours’, look at it as an entirely separate entity – not an extension of your personal world. Your neighbour has no responsibility to pay your mortgage or shell out for your Christmas presents – neither does your business!

There are areas where the lines might blur, but stick to this general rule of thumb: If you didn’t have the business, would you have paid that expense anyway? If the answer is ‘yes’ – for example, you would have met that friend for coffee regardless – don’t charge it.

Ultimately, claim for what you can. You should ever be out of pocket for expenses that are genuinely business-related. So, if you travelled by car to a business meeting, claim that mileage even if it was only a little. It all adds up.

But make sure you are honest and transparent about what you’re charging to the business. It’ll save you a lot of hassle in the long-run.

What to Read This Christmas


As Christmas approaches, everyone is relaxing – well that's the theory! – so with that in mind, I thought I’d do something a little different during this festive season, and tell you about some of my favourite business books.


















Actually, that’s a little inaccurate.

Only one of the books is, strictly speaking, a business book. The others are about personal development.

Still, I consider everything they say directly transferrable to a business context. If some of these make their way onto your Kindle, or into your team members’ Christmas stockings, your business will only benefit….

1. The Seven Habits of Highly Effective People by Stephen R Covey

What makes certain people more successful than others?

The late American businessman Stephen Covey narrows it down to seven key habits in this bestselling classic.

Three concern mastering your own time and priorities. Three concern how you work with others. The last is about seeking continuous improvement in every sphere.

My favourite passage asks you to think about your funeral. Who would appear and what would they say? Build the kind of life which would ensure they say nice things – and do the same for your business. What would people say about it, if it wasn’t there anymore?

I’m also very keen on Covey’s time management grid. We must learn to differentiate between things that are important and things which are urgent, he says. We so often spend time on the latter that we forget to focus on the former – and that will harm any business.

2. Raving Fans by Ken Blanchard

This easy-to-read book by business consultant Ken Blanchard uses simple storytelling and parables to show you how to create a service which people will truly love.

He doesn’t want you to have customers; he wants you to have raving fans, people who not only buy your products, but spread the word to others.

Blanchard recommends a process of small, incremental improvements to your customer service. If every day, you find a way to do 1% more than your customers expect, over time, your service will improve enormously.

He runs through a useful list of areas where you can – must – do a little more, including the way you deal with queries, answer phones and generally interact with your customer base.

So think about the words your customers use to describe your service. If they say it was “fine”, you’re in trouble.  You want them to rave….

3. Eat that Frog by Brian Tracey

Business trainer Brian Tracey thinks that every morning, you should eat a frog.

By that he means, take on the one thing you were dreading that day, instead of constantly putting it off.

Chances are, it will be an important task which will have a big impact. You’ll feel much better to have it out the way, and it will help your business.

Like Covey’s time grid, Tracey forces you to think about how you spend your time. This is a key challenge for many of us, as modern life – emails, social media, phone calls – can prove very distracting, and take us away from our real priorities.

Tracey provides a series of useful tips to help with time-management, and to get our priorities right.

4. The Inside Out Revolution by Michael Neill

Michael Neill has made a name for himself as a transformative coach and author. His TEDx talk, ‘Why Aren’t We Awesomer?’ is expanded upon in this book.

His main message is that people are more in control of their actions than they believe or realise.

We often assume we are victims of external events, but Neill emphasises that you are in control. No matter what situation you find yourself in, you still have the power to determine how you react.

The best example I know comes from the least business-like book I can think of, Man’s Search for Meaning by Viktor Frankl. In this classic book Frankl relates how, as a prisoner in the Nazi camps, he told himself the Nazis could physically do anything they wanted to him, but only he could control how he felt and how he responded to it.

Ultimately this rather harrowing lesson can be used to challenge yourself about your own mental habits, including in business. When your company is on the backfoot, perhaps faced with negative feedback or a setback, do you panic – or are you determined to solve the problem?

Neill’s approach will help you develop resilience.

So there you have it. A good reading list for a new year. If you have any others, get in touch. I’d love to hear about them.

My Key Messages For 2016


Occasionally people ask me what is the biggest single step they can take towards gaining financial control of their business.

Well, as we approach 2017, I’ve spent some time re-reading the Blogs I wrote this year.

I’ve covered so many topics – from cash flow and credit control to your relationship with your bank, systematising your finances and knowing when to upgrade your accounting software.

Yet one theme came up again and again: The importance of planning your finances.


Here are some of the essential steps we talked about:

• Plan your cash: So many good businesses fail because their CEOs are caught by surprise when they run out of money.

You must get to know your figures intimately. Make sure you know what’s coming in, what’s going out, when bills are due and what your cash situation is.

We recommend a daily review of your cash position to help spot problems before they become urgent, and deal with them.

Securing your cash flow is the most important thing you can do – too many businesses go bust despite being profitable simply because they run out of cash.

• Plan your budget: Plenty of companies set ambitious financial goals as part of their budget, for example a 20% rise in revenue. Yet all too often, they have no real plan for how they are going to achieve them, so those “goals” remain wishful thinking.

Understanding what actions your business needs to take in order to fulfil their goals should be the basis of any good budget. If you know that to achieve a 20% rise in revenue you’ll need two extra salespeople, make sure that happens!

• Plan your business: Build your business deliberately rather than allowing it to develop haphazardly.
Think carefully about how you want your business to look when it’s ‘done’ – what kind of turnover do you want to achieve? How many employees? Then put the right processes and foundations in place. Your company will develop more smoothly.

• Plan for emergencies: Be a pessimist – plan for the worst financial eventuality. Make sure you have a contingency budget in place to ensure your survival in case the worst happens.
As you can see, financial planning is essential for both positive and negative reasons. It makes it easier to achieve your growth goals, and to function smoothly. It also help you pre-empt disasters that could potentially sink your business. 


On a personal level, with good financial management in place, you will find running your business much less stressful.

When you’re not constantly fire-fighting…

When you don’t have to worry about nasty financial surprises….

You will feel much more in control, and have more time to devote to other tasks that are essential for growth.

As I explained a few weeks ago, there is even value in the process of planning itself. Properly planning your financial goals, budget and cash flow forces you to look carefully at your business’s priorities, structure and the way it functions. You will learn a lot about your own company, and make better decisions as a result.

So here we are, just a short while away from a new year. If there’s one thing your business does differently in 2017, I urge you to do a more thorough job planning your cash and finances.

It will make an enormous difference to the success of your business.

And if that’s something you would like help accomplishing, watch out for my regular blogs.

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Insight Associates, Insight House, Riverside Business Park, Stoney Common Road, Stansted Mountfitchet, Essex, CM24 8PL, UK
Tel: +44 (0)1279 647447 Fax: +44 (0)1279 814512
Insight Associates is a trading name of Financial Catalysts Limited. Registered in England and Wales Number: 5670047. Registered Office as above. Disclaimer | Cookies