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?

Friday, May 14, 2010

In the face of adversity

It was my honour and privilege to once again be asked to contribute to the Business Hub last Sunday. The Business Hub is a business radio show broadcast every Sunday morning across Cambridgeshire, linked to a web site forum, and presented by my good friends Ian McKendrick and Mark Peters. You can download last weeks program here.

It has only been running for a short while but seems to be going from strength to strength. One of the regular listeners is none other than former BBC TV Dragons Den panelist Doug Richards who is based in Cambridge. Mark and Ian have persuaded Doug to appear this coming Sunday, indeed he is on for the full hour answering listeners questions. If you are interested you can post a question on the forum here.

Anyhow ...back to the subject of this piece!

Mark and Ian asked that I speak about businesses that had perhaps made good of the recent downturn or even had succeeded in the face of adversity.

It was an interesting question as over the past year or two we have seen a number of our clients have difficulties often created through no fault of their own. In some cases this has caused near terminal issues in their business and has needed pretty intensive care as a result. With some we are pretty sure that if it were not for the quality of the management information that we provide for those business, and the close cash management processes we run, they may not have survived.

I drew on two specific examples which really illustrated to my mind the strength and resilience of the management in those companies.

The first is a relatively new client, Variation Limited, run by two very entrepreneurial and dynamic individuals, Graham Williams and Bill Howie. Variation is a diverse business operating in the logistics area, which lost its biggest customer in January when it went into Administration without any real warning. This presented huge challenges not least because of the commitments the business had to deliver on this contract, and some personal liabilities that resulted as well.

Undeterred Graham and Bill were very quick to come to us and over a couple of quite dynamic meetings we were able to work with them, using the extensive management information they now had about their business as a result of our work, to consider alternative solutions. As a result we have protected the other aspects of their business, including a division which is a rather clever and inventive process for delivering significant cost savings to landlords with empty warehouse properties (which in itself is almost counter recessionary!), and enabled them to move on. Indeed when I spoke with Bill on the day I recorded my interview with Mark and Ian he said he could not be busier and was extremely up beat (but then he and Graham always seem to be!!).

The second story concerns a much longer standing client run by a close business associate and friend of many years. This business delivers training through the Government backed training programs. On the face of it a good solid model with a blue chip customer (well just!). However, a huge number of these contracts were just terminated overnight during last year with no warning as part of Government spending cuts. This left businesses like our client high and dry with no work. However, some quick thinking enabled them to look at the skills, knowledge and intellectual property they had in the business and see other opportunities for using this to turn the business around. In just a few short weeks the business has transformed itself and is now profitably delivering its courses to international students coming to the UK to gain specialist training and experience. The company has even achieved one of the highest levels of accreditation with the UK Border Agency for its work.

Both of these stories I feel just show how if you don't let the circumstances knock you back and with some quick thinking it is possible to actually get really very good results out of otherwise seemingly impossible situations.

There can be no doubt though, in both cases, and in many others, these decisions could only have been made as a result of the relevance and quality of the information the businesses had at their disposal through the systems and processes we are operating for them. Without the numbers these stories may have been very different!

So ...coming back to Business Hub. If you are interested in getting involved why not sign up on the website and make a contribution. You never know you too could be on the radio!

Tuesday, May 11, 2010

Applications for HMRC "time to pay" arrangements

It was reported in Accountancy Age, and by our good friends at KSA Group yesterday that HMRC is apparently adopting a hard line with applications to its Business Payment Support Service (BPSS).

This service set up late in 2008 to support struggling businesses during the recessionary times has doubled the number of applications it has rejected in the last quarter over the same period last year. This has lead commentators to suggest that HMRC is taking a hard line and this is all part of their general tightening up.

A Freedom of Information request by Syscap showed that HMRC rejected 11% of applications in the first quarter of 2010 compared to 5.3% in the same period last year.

Our view is perhaps a little different. Certainly we have seen no evidence of a tightening of any criteria by HMRC or of them taking a tough line to get a time to pay arrangement in place. This appears to be as easy as it ever was, with a simple telephone call. Where there is certainly evidence of a hardening approach is when companies default, and here HMRC are coming down very hard and very quickly. However, that is easily averted if a company believes it will have difficulty making a payment by simply getting in touch with HMRC again.

We have completed very successfully many deals for our clients over the past 18 months, some seemingly pushing the limits a bit. None have really seen any resistance.

However perhaps it is our approach to this that is making all the difference. We firmly believe that in seeking a deal from HMRC the company should look upon it in the same way as it would bank borrowing. It should be carefully planned and work should be done to ensure that not only is the deal sufficient (perhaps combined with other strategies) to resolve the businesses short-term cash flow difficulties but that the repayments are affordable. This means that some good solid cash planning should be completed with "what-if" scenarios and realistic assumptions. It is here where we believe we have been very successful in helping our clients, as many would have struggled to put this together properly by themselves.

There is also one other feature which determines the ease of putting a deal in place, and that is the amount that is being deferred. There is no doubt smaller amounts over a relatively short period are easier to deal with and get agreement to. Larger amounts are generally beyond the remit of the BPSS and get referred to local office. Here our experience time and time again shows that there is a huge inconsistency in approach and much more scrutiny applied. Indeed it has recently gone even further with a requirement for an "independent business review" if the amount is over £1m.

If your businesses is struggling with cash flow, please do get in touch for a free no obligation initial chat. There are many strategies available that may be able to ease the burden!

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