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, December 31, 2008

Being Optimistic … !

Yes, that is what it says, being optimistic!

It is very easy in these extremely troubled times to write reams on this blog about all the doom and gloom and the countless issues that businesses are going to face in 2009, and there will be many … the biggest of which is probably just pure survival! However, as the New Year approaches lets just stop for a moment and consider what is needed for an optimistic outlook.

Optimism is a state of mind. You decide if you want to feel optimistic no-one else does it for you. So, if you decide to be optimistic it is likely to make you more cheerful, less stressed, and healthier for starters! Also, and most importantly you will be undoubtedly then be better equipped to deal with the turmoil that is coming your way in 2009. It is going to be very difficult make no bones about it.

I am not for one minute suggesting that you should not be realistic about the outlook, far from it. You need to act according to the conditions that we all now find ourselves in. However, doing it through optimistic eyes may just make all the difference.

Look for opportunities and new ways of doing things, for the positives that are there to be had. Many people and businesses prosper in difficult times …make your mind up to be one of them! Blow the dust off the old business plan and make it a new years resolution to rethink you business objectives both short and long term given the current market conditions. Have a brain-storming session with your team and work out what you are going to do differently in 2009 that will ensure you survive. Maybe even look at having a JUST ONE DAY session with us at Insight Associates!

Do however also leave some time for reviewing how you can make your business more robust and able to weather the storm you would be foolish not to, but look at all angles not just the retrenchment ones.

Optimists see setbacks as temporary, minor blips on their path to success. They focus on all the good things, the positive things, their successes and not on the negatives. Failures are isolated occurrences and opportunities to learn from in order to move forward. Optimists believe success is permanent and universal in that it filters through everything and brings more success with it.

A few months back I read a book called “Man’s Search for Meaning” by Viktor Frankl, it left a profound and lasting impact on me. The book describes Dr Frankl’s experience as an inmate in Auschwitz and the unimaginable things that he lived through. Alone it makes you very grateful for everything we have. However, what was so inspiring is his tactic for survival which was based on the premise that no matter what was physically done to him and the conditions he endured no-one could take away his freedom to decide how he responded to that. This one liberty could not be stripped from him, or any human, for at the end of the day however difficult it is you decide how you respond to the factors that are around you.

So … resolve for 2009 to be positive and optimistic and face the adversities that the business environment will throw at you - remembering you decide how you will respond!

A very Happy New Year to you.

Saturday, December 20, 2008

An interesting take on the credit crunch ...

The great thinker and author of 82 books, Dr Edward De Bono, recently made these interesting observations on the reasons for the credit crunch...


"You may trust a person's honesty - but can you trust that person's intelligence? This may have some relevance to the current credit crunch or banking crisis. We can pick out at least five factors contributing to the problem and reflecting habits of thinking.

  • If everyone else is doing it - it must be alright. Who wants to be left out?
  • If you spread the risk among a large number of people that reduces the risk. Probably true but not if all the people fall into the same bracket (sub-prime borrowers). That is no longer a diversified risk.

  • A mortgage is usually a very safe loan because there is the real value of the house that is being mortgaged. But if the mortgage is securitised and fractionated, no one knows who owns which assets.

  • Once a market starts to decline in value there is an incentive to drive it further down in order to buy at a lower level in a market that is sure to recover one day.

  • Bonuses and incentives for short term performance tend to ignore long term risky behaviour.
There are many more factors."


It is certainly true now that anything that used to be considered certain should now be viewed with scepticism at best!

Thursday, December 18, 2008

Business Payment Support Service

Did you know?

That HM Revenue and Customs now have a Business Payment Support Service?

This could really help your business …

In the Pre Budget Report delivered by the Chancellor Alistair Darling on 24th November 2008, he said “at this time of real difficulty for many small businesses, they need ‘time to pay’ when meeting their tax bills. I intend to meet this need. From today HMRC will enable firms facing difficulties to spread their tax on a timetable they can afford. This will cover not just VAT, as some have suggested, but all business taxes. VAT, corporation tax, income tax and national insurance. And not for six months but for as long as they need.”

What does this mean?

That you now have a real alternative to getting into difficulty paying any of your businesses tax bills over the coming months. If you are going to struggle with your cash flow and have some payments to make to HMRC then make use of this service – now.

They will not make any surcharges for late payment as they would normally do, but there will be an interest charge.

The Business Payment Support Service however only applies to amounts that are about to become due, or are just overdue. They cannot deal with outstanding overdue payments where HMRC have already contacted you about payment.

More details are available at: http://www.hmrc.gov.uk/pbr2008/business-payment.htm

What do I do?

Call 0845 302 1435 and talk about your circumstances to one of the advisors. They promise to give you a decision in about 10 minutes for straight forward cases.

What do I need?

You do need to do a little homework first. They will need your tax reference number, details of the amounts that you will have trouble paying and in their words “basic details of your businesses income and outgoings”. This really means you need to have done at least a basic cash flow forecast.

Before you call, spend a bit of time forecasting your cash flow out as far as you need to, so you can see with a good margin how quickly you will be able to repay the amounts due. There is no point in agreeing a deal that you cannot achieve, so spend some time beforehand getting to grips with where you are.

We can help!

We have already had experience of dealing with this service on behalf of clients, although it is very early days yet. HMRC have directly admitted to us that apparently the staff handling the calls are newly recruited and inexperienced. However, they do have a mandate to resolve all calls within 4 days, although their aim is to deal with them when you call and put in place a ‘time to pay’ deal. It is critical that you are prepared before you call as this will give you the best chance of getting a deal that works for you.

Get in touch with us now to help you through this!

If you don’t use our help, but do use the HMRC Service we would really like to know how you get on!
Please e-mail your experiences to me on gmumford@insightassociates.co.uk.

Thursday, December 04, 2008

Stop focusing on sums ...

By focusing on the top line (turnover or sales) and the bottom line (profit) many businesses could be sleepwalking to their collapse in these turbulent times. They run the real danger of falling into the liquidity trap if they spend their time concentrating on their Profit and Loss Accounts.

Businesses now more than ever before need to understand their Balance Sheets and their Working Capital. At the end of the day a Profit and Loss Account is just a load of sums, and it can be manipulated to give a number of different answers. But cash is real and it is really what could kill you if you don’t understand it and manage it. To do that you need to absolutely understand your Balance Sheet and make it work for you.

If you don’t understand your Balance Sheet, then you are in good company. Most business leaders don’t. That ignorance is no longer an option, get to grips with it and make it work for you. Hidden in there is the key to unlock your cash flow.

Yes, of course you still need to protect and build your sales, manage your margins and control your costs. But the first thing you should consider is the cash impact in doing that, and actually in everything you do.

So, stop focusing on the sums, focus on the reality. The real cash in you bank account!

Wednesday, November 26, 2008

Small Business Finance Scheme??

It has been my view for some time that in all this financial turmoil what businesses really need is help to ensure that they can maintain if not extend their funding facilities.

Often it is not the need to throw new money at the situation, but to simply secure what is already there. If bankers and other lenders are taking a fresh look at their portfolios and their definition of risk, then there is a real chance that they may withdraw or reduce facilities that were "OK" only a few months ago.

One reason why this might occur is lack of collateral or security (I accept there may be others!). If funding is supported by certain assets these may now be worth less than they were or are considered more risky.

What is surely needed then is Government intervention to provide the support in providing some sort of guarantee to give the lender the comfort they are looking for? Well, it would appear that perhaps that is coming ... but we cannot be sure! In the Pre-Budget Report Alistair Darling announced a "Small Business Finance Scheme" - a temporary guarantee scheme of up to £1 billion to be introduced early in 2009. Problem is, unless I am going blind, I cannot find any further information about this anywhere!

I hope that it is not just an extension of the Small Firms Loan Guarantee Scheme (SFLGS) which really does not work too well and certainly will not solve the issues businesses are likely to face in the coming months. For starters it must cover existing lending!

If anyone can shed some more light on this I would be very interested to hear about it!

This whole VAT thing ...

I have been watching with great interest over the past couple of days the significant furor over the announcement in the Pre-Budget Report on Monday, that the standard rate of VAT will reduce to 15% for 13 months from 1st December.

The Governments’ own press notices make it clear that they believe this measure will stimulate the economy and consumer spending. As the impact of the first change in the standard VAT rate since 1991 sinks in, it is becoming increasingly apparent that this will not necessary have that effect. In fact what it is much more likely to do is increase margins within businesses and not be passed on to the consumer.

The reason is clear, and it is in fact quite staggering that this was not seen by those making these fundamental decisions! Most retail and consumer spending is displayed inclusive of VAT, often creating “nice” numbers like £5 and £4.95. Nobody in their right mind is going to spend a huge amount of time amending these prices by what is a very small amount to create strange looking numbers (£4.89 and £4.84 in my examples) only then to have to do it all again on 1st January 2010 when the VAT rate returns to 17.5%.

Having talked with clients and other companies over the past couple of days most B2C businesses find themselves in this position and are not likely therefore to change prices – so the consumer gets no benefit. The issue is made even worse by businesses (including ours) that receive monthly standing order payments. One client has 200 a month coming in! Again, no one is going to change any of these …the admin would be ridiculous for no real benefit.

The other interesting side effect that was highlighted on one forum I read was the impact on cash flow in businesses. All VAT registered businesses that are normally in a net VAT payment position will gain a VAT cash flow advantage though their VAT quarter, as they in effect collect VAT on behalf of HMRC before they pay it over. The reduction in the VAT rate will in effect reduce this! Interesting. OK, you can argue that this money does not belong to the business in the first place, but the reality is many (if not most) businesses use this cash flow they don’t hide it away somewhere!!

So it would appear that Mr. Darling has got it badly wrong. All he seems to have achieved is creating a lot of work, a lot of confusion and ill feeling!

However, considering the practicalities …if you are concerned about how this impacts you or your business, or what you need to do to comply, give us a call 0800 180 4265 and I am sure we can help you.

Monday, November 10, 2008

Unpleasant reading ...

Last Friday the Insolvency Service issued the insolvency statistics for the third quarter of 2008 – they do not make very pleasant reading.

As has been widely predicted there has been a dramatic rise in business insolvencies in the period. Liquidations increased by 10.5% over the previous quarter, and 26.3% over the same quarter last year to stand at 4,001. The movements in Administrations, 50.7% up on last year, Receiverships 237.5% up and Company Voluntary Arrangements (“CVA”) 29.5% also all tell their story. These last three mechanisms are often seen as potential recovery or rescue methods (particularly CVA’s and sometimes Administrations, much less so Receiverships) so there may be some hope that these figures indicate that at least some businesses are being saved.

However, the reality is that these statistics are probably just the thin edge of the problem ..and we will continue to see further dramatic rises in the quarters ahead.

Let us not also forget the huge rises in personal insolvencies that have been seen in the past couple of years (Bankruptcies and Individual Voluntary Arrangements), which are again predicted to reach new record levels this year. This position could become much worse if small business start failing at an increasing rate as this will then lead to increased unemployment and the consequences on personal finances.

Over 95% of all UK businesses employ 10 or less people … and it is those very businesses which are now increasingly vulnerable.

Not only are there very many fragile businesses which will easily fall, there are also many business leaders who have never operated their businesses through a downturn – let alone one that is likely to be as dramatic as this one. Many are fair weather sailors. They need to quickly learn new skills and run their businesses quite differently in the months ahead if they are not going to become one of next years insolvency statistics!

Thursday, November 06, 2008

Lots of interesting numbers ....

Well they did it! The Monetary Policy Committee (MPC) of the Bank of England rose to the challenge! The markets were crying out for something bold and they got it! At a stroke the base rate in the UK is two thirds of what it was earlier today!! An unprecedented cut in recent times of 1.5 basis points to bring base rates to their lowest level since the 1950's!

What is more, those who should be in the know are suggesting it will go lower still, maybe to around 2%!

Now it is up to the banks to pass on the benefits .... something which has not been happening up until now. In fact we have seen attempts by the banks and asset based lenders to increase margins recently because of the high rates in the wholesale markets.

It is all a huge shift in a very short space of time. Early in the summer some were suggesting rates were going to go up to deal with inflationary pressures! Now it seems the general wisdom is that inflation will fall. You have to be quick on your feet these days to keep up with this!!

Turning to other related numbers ...the rise in small business failures. A recent poll of its members by insolvency trade body R3 showed that they believe failure rates will increase by 41% over 2007 levels in 2009 to reach levels last seen in the early 90's. In addition a recent report in The Telegraph discussed recent aggressive tactics from banks resulting in a 152% increase in receiverships in the last quarter! Receiverships have fallen dramatically since the Enterprise Act of 2002 as banks were prevented from putting the power into new lending, instead using the Administration process. However, it seems where they can the Receivership process has found more favour again as it gives banks more control over their ability to collect out their debt. Worrying trends.

What is the advice to smaller businesses? Well the cost of borrowing may be coming down (quite dramatically), but it is clear that the banks are being very cautious and monitoring their lending books very closely. Make sure you stay close to your bank relationship manager and keep him well informed about your business to give him the reassurance he needs. Then focus on cash generation above all else ...it is the only way you are likely to get cash into your business for the foreseeable future - generate your own!!

Interesting times ....

Monday, October 27, 2008

Don't Quit ...

Something to perhaps help motivate those running businesses that are beginning to find life a little more challenging!!

Don't Quit

When things go wrong, as they sometimes will,
When the road you're trudging seems all uphill,
When funds are low and the debts are high,
And you want to smile but you have to sigh,
When care is pressing you down a bit,
Rest if you must, but don't you quit.

Life is queer with its twists and turns,
As every one of us sometimes learns,
And many a failure turns about,
When he might have won if he'd stuck it out.
Don't give up, though the pace seems slow -
You may succeed with another blow.

Often the goal is nearer than
It seems to a faint and faltering man;
Often the struggler has given up
When he might have captured the victor's cup,
And he learned too late, when the night slipped down,
How close he was to the golden crown.

Success is failure turned inside out -
The silver tint of the clouds of doubt,
And you never can tell how close you are -
It may be near when it seems afar;
So stick to the fight when you're hardest hit -
It's when things seem worst that you mustn't quit.

Author Unknown


However ...if you need some constructive help, with no obligation, a call to Insight Associates on 0800 180 4265 may be more helpful!!

Monday, October 20, 2008

Fiddling whilst Rome burns?

Well apparently it's nearly official - we are in recession! According to a report from Ernst & Young's ITEM Club today, which forecasts the UK economy will not bottom out before the second half of next year and expects only a weak recovery in 2010.

It predicts that UK GDP is likely to drop by 1% next year – the first year of negative growth since 1992 and growth is forecast at only 1% in 2010. They warn that the supply of credit is likely to remain restricted and corporate profitability will suffer, with the consequential impact on investment and employment.

This is serious stuff for the UK's smaller businesses, and the time to act is now!

What is quite staggering is the initial political response. Mr Cameron seems to think reducing Employers National Insurance Contributions by 1% for six months is part of the solution - saving employers with four or less staff a whole £600 - WOW! That will really help I don't think! And not wishing to be politically bias, our incumbent Government believes not introducing further flexible working requirements will help too ....really!!??

What smaller businesses will need is some real help, not this petty fiddling around the edges. They need help to ensure their cash flows are not shot to pieces by draconian actions by the banks, or customers dragging out payments. A good start might be extending the Small Firms Loan Guarantee Scheme to cover existing lending so that businesses can support the funding they need when their own security is weak?

Businesses do not need hand outs, what they need is the reassurance that they can operate profitably in this climate, and the help and support with the funding they need to do that. I don't think £600 will go very far!

This is really going to impact everybody, so review where you are at now! A good start may be our new "Nine Lives" guide from our friend "Kitty" who helps promote our Outsourced Finance Department.


While you're running your business in a recession, who's watching your kitty?



Monday, October 13, 2008

Will things change?

In the past week I have heard directly two stories of where bank lending has been withdrawn at very short notice just as happened in the early nineties. Fortunately neither of these were Insight Associates clients, although we have had this happen to one situation we have been working on - but that was to be honest not a huge surprise. There can be no doubt that banks are getting tougher and money is harder to find.

Then as if to confirm it, last Wednesday I heard a senior manager with HSBC's Special Situations Group (where their problem customers end up) tell a meeting of the Turnaround Management Association ("TMA" - of which I am a director in the UK) that their referral rate had trebled in the last three months, and they were expecting much more to come.

I have been saying recently that businesses should make their bank manager their best friend! This may seem odd, but if you want to avoid getting on your banks target list surely a good start is to get close to your manager and make sure he/she has everything they need. Are you up to date with providing information and are you complying with all of the conditions and covenants in your bank lending. If you can make your manager comfortable about your business, then there is much less chance that they will focus on you.

But ..the title above is "will things change". Today (13 October) has been an historic and momentous one for the British economy. In effect two of our biggest banks have been part nationalised to save them from their past misdemeanours if you like. However part of the deal is ... to quote Robert Peston from the BBC:

"RBS and Lloyds TSB/HBOS have promised to the government that they'll maintain mortgage lending and small-business lending at 2007 levels - which is massively more than they are currently lending (this is hugely significant - given that a shortage of credit is to a large extent behind the economy's deceleration into recession levels)."

Mr Peston went on to say this evening that this cannot mean a return to the reckless personal mortgage lending that we have seen in recent times, but it should be good news for smaller businesses concerned about their credit lines.

Let's hope so, as more than anything a return to the situation of the early nineties where bank lending was withdrawn from so many business causing them to fail will make the recent events just the beginnings of our troubles.

My concern is, it is all well and good the banks making this promise (they, it appears, had little choice if they wanted the Government to bail them out - and it is a perfectly sensible condition to make on the deal) but how and who is going to police it?

These are difficult and interesting times and more than ever you need to ensure your business is in good order. We are happy to meet and review your position free of charge and with no obligation. Get in touch.

Tuesday, October 07, 2008

How the stockmarket works ... a little light humour!

A little light humour from my old friend and associate Steve Shepherd ....

Once upon a time in a place overrun with monkeys, a man appeared and announced to the villagers that he would buy monkeys for $10 each. The villagers, seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, they became harder to catch, so the villagers stopped their effort. The man then announced that he would now pay $20 for each one. This renewed the efforts of the villagers and they started catching monkeys again. But soon the supply diminished even further and they were ever harder to catch, so people started going back to their farms and forgot about monkey catching.

The man increased his price to $25 each and the supply of monkeys became so sparse that it was an effort to even see a monkey, much less catch one. The man now announced that he would buy monkeys for $50! However, since he had to go to the city on some business, his assistant would now buy on his behalf. While the man was away the assistant told the villagers, "Look at all these monkeys in the big cage that the man has bought. I will sell them to you at $35 each and when the man returns from the city, you can sell them to him for $50 each."

The villagers rounded up all their savings and bought all the monkeys. They never saw the man nor his assistant again and once again there were monkeys everywhere.

Now you have a better understanding of how the stock market works!

Saturday, October 04, 2008

Banks putting on the squeeze ...

Keith Steven, Managing Director at our good friends KSA Company Rescue has highlighted on his Blog an article in the Telegraph Online on Thursday about the banks lending policies.

In a survey produced, significantly, before the events of the last couple of weeks the UK banks stated that they would aim to reduce the amount of credit they would offer businesses and consumers. Reporting that losses and defaults were already on the rise, they indicated that lending criteria would be tightened and they would look to improve their margins through higher charges. This predates the recent turmoils, so undoubtedly it will be even more the case than it might have been.

This certainly confirms our recent experiences, where propositions that would have been relatively easily fundable a year or so ago are now proving to be very difficult indeed to get any interest in. We have also seen changing attitudes with credit insurers, which will not help matters either. It therefore is critical that you keep close to our bank contacts and manage carefully any existing facilities so that it is not at risk at renewal time, or even before. The common reaction is to fear the bank, and whilst there may be reasons to do this, most often not keeping your bank in the picture only gives them good reason to be concerned and pull their facilities.

Keith points to the need to ensure you are in control of your business, and he is absolutely right. Now more than ever it is critical that your business has good quality up to date financial information (like timely monthly management accounts that allow you to make good quality decisions about your business), and that the focus is on cash management and preservation. Given this it continues to stagger me how little attention this is given by directors, who are often far too complacent about the information they receive - if any at all!!

We at Insight Associates are expecting to get increasingly busy over the coming months as businesses wake up to the fact that their financial management and control is weak and they need to do something about it - and fast! Now more than ever services such as our Outsourced Finance Department are an essential ingredient in running a strong business that can weather the coming storm. It is going to get tough undoubtedly, and only the strong and prepared will survive.

If you want to look at the full Telegraph item you can find it at http://www.telegraph.co.uk/finance/economics/3125502/Banks-plans-for-lending-cutback-will-tighten-the-screw-on-businesses.html

Tuesday, September 23, 2008

Quality in the Numbers …

I recently had lunch with a long standing associate and good friend, Bob Westrip. Bob is a former banker and now works with businesses helping them to develop and become investor ready. Bob told me that one of the major banks was increasingly expecting it’s customers to have an annual external audit, regardless of the fact that it might be well below the £5.6m turnover threshold.

Under normal circumstances company law only forces a company to have an audit when its turnover reaches £5.6m.

This is I feel quite an interesting development, and perhaps reflects banks general concerns in the current climate about the risks associated with their lending. However, whilst it might tick a box as far as the bank is concerned, it is questionable if the business concerned really gets any value out of this quite expensive process.

A well managed business will have good quality, accurate and timely management information continuously. This is often monthly for management accounts, but should be daily or weekly for “commercial” statistics like order intake, order book, sales raised and perhaps other key performance indicators (“KPI’s”) relevant to the business. If this information is produced from a well run and managed system, and management use it, then this adds value to the business and builds a good foundation.

I say a well managed business, actually it probably goes further than that. If a business is to survive in the long term it simply must have these processes in place and the relevant and detailed management information to make decisions from. Otherwise you are simply working in a vacuum – and that leads to suffocation and certain death!

The alternative, of having a mediocre accounting system which is “checked” just once a year (and then some months after the date) by an external accountant who is not really overly familiar with the day to day running of the business is simply hopeless. However, this is where most businesses are, and arguably perhaps this recent move by the banks may force them further down this road.

When Insight Associates get involved with a business, the concept of a “year end” becomes much less significant. It is after all just another month. Yes, there may be a little more work to provide some additional analysis for the annual statutory accounts (which of course as a management tool are about as much help as a chocolate fire guard!), but other than that if the other 11 months of the year are done properly what is the big deal! The business needs good information, like I say, continuously, not just when the year end arrives, so every month must be “right”!

Having said all that there is great value in an external audit, and I feel from the businesses we get involved with that raising the threshold over recent years has actually done no one any favours. Most businesses do not have the benefit of “independent” eyes looking at their accounts on a regular basis (as they do of course when we are involved – but that is another story!!), and so things can “go wrong” without being noticed. There is much value in an external overview. However, the really important bit is to get it right all the time and have a good process in place that produces accurate results regularly.

Thursday, September 11, 2008

Cash, cash, cash ...

Cash is the very lifeblood of business, something which seems too often forgotten.

Time and time again you see talk of turnover or profits, and cash really not getting the attention it deserves. In the present market cash is becoming rather scarce, customers are paying later, and lenders are making new loans or overdrafts much more difficult to come by. So the focus must be on preserving your own cash flow at all costs.

I notice this week, that even our good friend Keith Steven at KSA Company Rescue is writing on his blog that they are having great difficulty being paid. KSA specialise in rescuing businesses in distress, mainly through the use of the Company Voluntary Arrangement (CVA) mechanism - indeed they are the countries leading experts on the CVA. Over many years we have worked very closely with KSA and have both saved many businesses through innovative solutions and good quality financial management. If their clients are having trouble paying them in order to save their businesses (despite not having to pay historical creditors) then it really does make you wonder what is happening with liquidity.

So, the message is simple. Focus on cash. Get your sales invoices out quickly, make sure you are only giving credit to people who can pay you (take a look here), and then ensure you get paid in a timely manner.


Cash really is king!

Tuesday, September 09, 2008

Don't be an Ostrich


There can be little doubt that a well managed business will constantly look forward and consider all of its options, others are likely to be doing a very good impersonation of an Ostrich with its head in the sand.

In these changing times being ahead of the game is key. Review all of those accepted assumptions and be tough in your expectations for the future. It is important to remain sceptical about the strength of trading conditions going forward, and be prepared for the possible outcomes, including the worst and unthinkable ones.

Businesses that do not follow this path, and either keep praying it will all be alright, or like the ostrich just hide until the danger passes, are significantly more fragile. Should the tide turn against them the possibilities of rescue are much more limited, be that through new funding or formal or informal insolvency routes.

So, make sure you are managing the cash harder, cut out the luxuries and excesses, and ensure you have a clear plan (or two or three!) that is likely to win the support of outside stakeholders should it be needed. Take a day out from your day to day routine and make a start.

Thursday, August 28, 2008

Latest News Insight

The latest edition of "News Insight" our e-newsletter was published today.

Containing many updates on recent news from Insight Associates and also our new article on Credit Management.

If you have not received it you are probably not on our distribution list ...if you want to be just e-mail your details to info@insightassociates.co.uk and we will soon rectify that!!

In the meanwhile you can read it now by clicking here

Monday, August 25, 2008

Business and financial planning in an economic downturn

As concerns over the UK economy continue to grow, it is essential that all businesses, are properly prepared for financially-testing times. Sound business and financial planning is always important, but especially so in an economic downturn.

The following few tips can help you weather the ‘credit-crunch’ storm (also check out our ten tips in our news section); but remember, there is no substitute for one-to-one discussion, so contact us today to give your business the best possible chance of success.

Debt management

This is essential in an economic slowdown – you will soon encounter difficulties if you allow outstanding debts to accumulate, a problem which is all the more likely in lean times. Make sure you have a clear policy for collecting debts and that customers are aware of it. Above all, ensure you enforce it. Pursue outstanding debts with letters and telephone calls, and threaten legal action if you have to (Solicitors letters are very effective and cheap!).

Ensure that your terms of business allow for adding interest on overdue accounts (again a useful threat). If your terms set credit limits, stick to them and stop supplying as credit limits are reached or invoices go unpaid.

Take a look at our white papers.

Maintain customer loyalty

In difficult times it becomes harder to attract new customers. Therefore, it is more important than ever to maintain loyalty amongst your existing ones. Consider ways of developing and rewarding customer loyalty, such as selected discounts (especially for early payment), regular mailings or loyalty cards.

Beware of cutting prices

If receipts begin to taper off, it can be tempting to cut prices. But this can be a mistake. In a recession your costs will inflate and as a result you may be forced to raise prices to cover this expenditure. Cutting prices can also have the negative long-term effect of devaluing your image in the marketplace. Remember that suppliers might raise their prices as well, so try to negotiate a long-term discount or fixed prices with them.

Don’t skimp on marketing

The marketing budget is often the first casualty in a recession, but smart businesses continue to market through a downturn and position themselves to take full advantage of the upturn as soon as it starts. In tough times the marketplace becomes more competitive – you may need to market more vigorously, not less. If you do not have a strategic marketing plan, now is the time to draw one up.

Look after your employees

While job cuts may be necessary in some circumstances, you should always try to retain your key employees: their strengths will help you through an economic downturn, and you will need them when business picks up. You should use any dips in workload as an opportunity for key staff to develop new skills and coach newer members. Remember, employee motivation can rapidly deteriorate in times of economic uncertainty, so maintain good communication with your staff to prevent a decline in morale.

Planning ahead

Planning is vital for the success of your business. Always remember the old saying: “if you fail to plan, you plan to fail”. You need to plan the changes that can strengthen your enterprise against tough times, and how those changes will be put into action.
However, planning is not just about ‘worse case scenarios’ – you should always have an up to date strategic vision which flows through to a well thought through business plan with key actions and objectives. Our JUST ONE DAY strategic planning session is a great way to start the process, helping you see the wood from the trees - contact me to learn more!

Tuesday, August 19, 2008

Approved Mileage Rates

Those that use their own cars on company business, will be familiar no doubt with the Inland Revenue’s Approved Mileage Allowance Payments (AMAPs). These are the amount per mile that you can reclaim from your employer without any tax or NI issues. Many of Insight Associates clients make use of this system.

AMAPs were introduced in the 2002/03 tax year and were set at 40p per mile for the first 10,000 business miles and 25p per mile thereafter (in any one tax year). AMAPs were meant to be a contribution towards the depreciation and running costs incurred by the employee in using the vehicle for work purposes (including the cost of petrol). This rate has not been revised at all since, despite very significant rises in fuel prices and the cost of motoring generally. However, over the same period there have been a number of upward increases in the approved fuel only mileage rates used by company car drivers who do not get all fuel costs paid by the employer.

The AA has calculated that the actual cost incurred by a driver of an average car (costing between £13,000 and £20,000) over 10,000 miles is something close to £6,500. This compares to the 10,000 x 40p = £4,000 that can be reclaimed. Therefore the driver will subsidise employment related travel by almost £2,500.

It is very clear that this whole area is in very urgent need of attention by the Government.

However, in the meanwhile there is a little known extra that can be claimed, that may go some way to plug part of the gap. This is the Approved Passenger Rate. This is an additional tax free 5p per mile that can be claimed when one or more employees are passengers in the vehicle and also travelling on business. The amount is fixed at one x 5p regardless of the number of passengers unfortunately! So make sure you keep a note of the journeys that you make when you have a fellow employee with you and claim the extra 5p. Thanks go to our good friend Nick Paterno of Vantis for letting us know about this one - thanks Nick!

Thursday, August 14, 2008

Is this another sign of the times ... ?

I have just read on "Accountancy Age" - the weekly journal for the accounting profession (yes - sorry - a small concession to being an Accountant!!), that two of the largest firms (PWC and Deloitte) are actually running specific training for their staff on spotting early warning signs in their clients.

I am determined not to fill this blog with constant talk of the credit crunch - but I do find it rather interesting that these guys feel it is worth investing what is no doubt not an insignificant sum on ensuring their staff are "ready". I am sure they would not do it if they did not feel it was worthwhile.

They are focusing on compliance and banking facilities, and the managements view on risks and prospects - as well as cash flows of course.

It is no doubt true that what might well have been valid positions to take only twelve months ago do not hold true now. We have seen the fortunes of businesses turn rapidly, often made worse by the managements apparent complacency in their position.

You must constantly review where you are and what is going on around you - and ensure that your financial management and control is really giving you what you need to run a strong and robust business that can weather this storm ...however strong it turns out to be!

Sunday, August 10, 2008

A real alternative ...

In the early stages of a businesses life the founders are so busy just getting on with running and developing the business that they see "doing the books" as an annoying extra that has to be done when time allows.


Invariably this is on the kitchen table on a Sunday afternoon when there is some impending deadline - like the VAT return or to get numbers for the bank manager!


As the business grows the founders find they have less and less time for all of this admin and they employ a part-time bookkeeper or accounts assistant. The mentality does not change though and this poor sole is often pushed into the corner of the office and still just seen as an overhead.


What a huge missed opportunity!


"Doing the books" should never be seen as necessary evil but as an essential way to manage and add value to the business. This is not normally the case as the people who create and build businesses are often technicians who understand the work that the business does but not all of the aspects of actually running a business that does that work! Financial management is an essential and critical part of the whole picture - the very foundation on which the business is built.


Just picture this. Imagine that you are the MD of a multi-million pound business - you've done it! - your business has annual revenues of £30m, maybe more. There you are sitting in your big office presiding over your success. Outside your office is a long corridor and at the end of it is a door with "Finance" written on it. If you have any sense you never go through that door - why would you? Inside there are a team of people dealing with all the day to day accounting and finance issues in your business. Receiving the post, paying the bills, collecting cash, paying the employees and generally counting the beans! Everything from an accounts clerk, credit controller, payroll clerk, to accountants and the like.


No - you don't need to deal with all that now (unlike you did when you were smaller) as you are a big business and you have people to do it for you.


Also, you have your Finance Director - he's the one in the know - he knows what is happening the other side of that door, and what's more he understands it!! He is your candid friend, your confidant. He has a grip on the numbers and can help you make quality decisions about your business. What would you do without him?


But back to know. Your smaller business where you are still concerned about the minute detail of every piece of paper - but don't really have a grip on what it all means.


Why should it be this way? Why does the small business have to make do and mend, or have a bookkeeper who is always a compromise and often just taken for granted and ignored. Why can't the smaller business have that wonderfully orchestrated finance team that the bigger guys have and then you can get on with running and developing your business - what you do best.


Well now with our OUTSOURCED FINANCE DEPARTMENT the smaller business can have what the big boys get - no more compromises - now you can have the finance team that your business deserves - one that can add true value to your business.

Tuesday, August 05, 2008

Paying the VAT bill ...

I found it interesting to read in the accountancy press recently, that there has been quite an increase in "time to pay" deals with the VAT man!

Many businesses often find that the quarterly VAT bill creates quite a spike in their cash flow, but the suggestion is in these difficult times that with tight cash flows this can be a bridge too far.

The article suggested that HM Revenue and Customs were open to making arrangements to pay by instalments, but will charge interest. It is certainly our experience that they will allow this if a proper approach is made, but with VAT they rarely let it roll over to the next quarter. Which in effect means you have three months to get up to date.

The trick is not to bury your head in the sand but plan forward and approach HMRC in good time and with a well thought through proposal. We have significant experience of dealing with these situations as do our colleagues at KSA, who run the fabulous web resource companyrescue.co.uk where you can find further information.

Doing a time to pay deal like this is though only a very short-term fix. In planning and thinking your position through you need to consider if perhaps your problems are deeper - in which case there could be better and more appropriate solutions.

At Insight Associates we have 16 years of experience of dealing with businesses which are financially distressed, in all ways and for all reasons. If we can help give us a call 0800 180 4265.

Monday, August 04, 2008

Woolly Mammoths and other ramblings ....

We are very fortunate at Insight Associates to have a great loyal and committed team, who all have tremendous talents and are totally focused on providing our clients with a quality service. Everyone makes a great contribution to enable us to deliver to our clients, and as in any team each have a role to play.


One long standing member of our team is Shirley Hoy our Office Manager. As well as being a great and talented administrator Shirley is also phenomenally creative and the following piece written by her is a great example of this ... I would never have been able to see this connection ...


I watched a television programme on the history channel last night detailing the struggles that early humans went through for survival around 10,000 BC and it got me thinking about how some things haven’t changed.

The programme mentioned an area of America that had naturally occurring tar pits (where oil pushes up through the ground) creating what they affectionately termed ‘naturally occurring carnivore traps’. These tar pits had been excavated and revealed a huge selection of beautifully preserved bones from woolly mammoths and giant sloths to sabre-tooth cats.

What happens is an animal such as the woolly mammoth accidentally stumbles into one of these tar pits where they get stuck and die. The dead or injured animal’s carcass attracts attention from carnivores such as the sabre-tooth tiger looking for their next meal. That animal falls into the same trap and dies and the circle continues.

Starting or growing your own business can be full of pitfalls. You are merrily getting on with what you do best and then all of a sudden you find yourself in a sticky situation and you’re not sure how you got there or how to get out.

That’s why you need to make sure you surround yourself with people who can bridge these gaps in your knowledge to help you get over the sticky situation before you get bogged down.

There are some businesses who have faced difficulties in the past and have just about managed to scrape through because the economy has been buoyant.

However, with the current economic downturn and the dreaded credit crunch (where borrowing cash is increasingly difficult) things may not be so easy next time around. That’s why it’s vital you understand why your business keeps heading for the ‘dark side’ and give yourself the tools to fully understand the hazards of your environment and avoid the pitfalls.

So, don’t stick with your Neanderthal accounting practices – try using the Outsourced Finance Department to help you through the here and now so you can be assured of a bright future.



Brilliant!

Tuesday, July 29, 2008

Shiny new offices ...

After over three months of sharing our limited space with builders, decorators, electricians, plumbers and who knows who else ...at last we have our shiny new offices completed!

Insight Associates have been based on the old Maltings now known as Riverside Business Park in Stansted Mountfitchet (near London's Stansted Airport) for nearly 10 years. At the end of last year we were fortunate enough to be able to acquire the unit next to ours, and have just completed the extensive work to convert the two units into one and completely redecorate and refurbish the whole area.

The end result is stunning and such a great improvement on how we were before - rather cramped up in too little space.

So now ...we are ready for even more expansion! After a 40% growth last year - the challenge is to keep going!!

A little about our thinking ....

Is your business thriving and growing faster than you can manage it? Or perhaps your business is struggling and you are concerned about what the future may hold?

Either way, one crucial thing you need to know is what your exact financial exposure is? It is critical at this stage of your businesses development not to let the finances get out of control. This is exactly where Insight Associates are best placed to help.

There are plenty of good accountants already providing adequate services to businesses but The Outsourced Finance Department that Insight Associates provides takes the whole of your company's financial management and drives it to a completely different level.

Our unique style of working within your business hand in hand with you and your staff on a daily basis means we can gain an immediate Insight to the peculiarities of your individual business needs. This enables us to develop a strong, accurate and forward thinking financial strategy for your business.

Our in-house Finance Director skill set (including quality management information, interpretation and analysis, strategic development, stakeholder relationships etc) blends perfectly with our Transactional skill set (book-keeping, accounting, payroll, VAT returns, credit control, daily cash flow management etc) to create an efficient, knowledgeable, dedicated and focused Finance Department – all working for you – at roughly the same price you would pay for your present solution.

Getting sound financial management shouldn't be a lottery and with The Outsourced Finance Department taking care of this for your business you won’t be gambling with your company's finances.

Insight Associates has been established since 1992 so we have a proven track record in this field.


If you would like some further information about what we do feel free to browse through our website at your leisure.

A whole new world ....

Well here we are ....the first posting on the all new Insight Associates Blog!

The aim of this Blog is to provide comment and views, and maybe even some discussion!, on matters relating to the financial management of smaller enterprises. What do we mean by smaller enterprises? Well typically (although not exclusively) independently owned businesses in the UK between around £500k and £15m turnover? Ones where perhaps they need to or are already employing and paying for resources to looking after their accounting and financial affairs - rather than the owners still doing it on the kitchen table on a Sunday afternoon!

This whole area is critical to business success, so I hope that over future posts we can provide some interesting commentary on how financial management impacts businesses.

Keep watching!

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