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?

Tuesday, April 27, 2010

Mind your own credit status

Our continuing advice to businesses is to ensure they thoroughly and continually credit check their customers (and major suppliers and partners for that matter!) and monitor their exposure to ensure they are managing their credit risk not just letting it happen. Often the failure of a major customer (or supplier) can be devastating for a business, not only with the resulting bad debt but the loss of future business.

One thing though most business owners often forget to consider is there businesses own credit rating. If their suppliers are doing their due diligence the consequences of a decision based on a poor rating could be disastrous!

It is important therefore to check your own rating regularly with the major agencies and always consider the impact of any information that is published or how your business conducts itself in its market. Filing poor accounts, getting a reputation as a bad payer, and general poor conduct will all serve to work against you in building a good credit status.

One of the constant grips when trying to find out about a potential customer is the lack of information available. The option to file abbreviated accounts at Companies House can be a doubled edged sword. Whilst the desire to be a little secretive about your businesses finances might be understandable, surely disclosure is the price you pay for limited liability? It can also help others better understand you and therefore by being better informed reach the right conclusions (hopefully good ones!).

In recent years the ability to disclose less and less on the public record has become quite marked. The ability to file abbreviated accounts and the huge increases in the audit threshold I do not believe is in the public interest. Less information is available and it is less valuable through potentially lower quality. To add further to this there are now rumblings from the EU that may exempt small firms (the vast majority of businesses!) from filing accounts at all! This really is a ridiculous step and cannot be anyone’s interest.

The reasoning out forward is that it will help business grow by reducing red tape! How absurd is that! All businesses must produce accounts, preferably monthly for internal purposes and annually if for no other reason than to account for Corporation Tax. Where is the saving? The same logic was put forward when abbreviated accounts were introduced, yet full accounts still have to be provided to shareholders and the tax man! The world is going mad.

Saturday, April 24, 2010

Insolvency Practitioners save jobs!!

I saw a news item recently which put rather a different slant on the work of the insolvency profession. It commented on research from ComRes that suggested over 2 million jobs had been saved by Insolvency Practitioners (IP’s) over the past year and nearly 6,000 companies rescued.

Working closely with the Insolvency profession as we do with our turnaround work, we are very aware that IP’s are constantly struggling, as are Turnaround Practitioners, to change the perception of being the Grim Reaper! However, it goes further than that as there is absolutely no doubt that the earlier that a distressed business seeks help the much better the outcome. There are more options available and most of them are much more palatable than those which might still be there when matters are near the bitter end!

If the preverbal British stiff upper lip was allowed to relax would business owners and managers seek external help earlier if things are not going as they would like? I do wonder. Somehow the perception the surrounds asking for help, especially from insolvency and turnaround professionals, needs to change if British businesses are to gain from the significant benefits that can be had from early intervention.

Like many operating in the turnaround and distressed environment we have been surprised by the lack of businesses seeking help. Many have no doubt muddled through with help from schemes such as the Time to Pay arrangements from the HMRC’s Business Payment Support Service (indeed we have used it extensively on behalf of our clients), and the reluctance of banks to foreclose. However, in the long term this is probably not the solution for many. Whilst we may not have seen as many new situations as we might have expected we have been very busy intensively managing the position on a number of existing clients who for all manner of reasons (most not of their own making) have struggled in recent months. There can be little doubt some of these might have failed by now if it were not for the intensive care that our systems and processes can provide.

Traditionally the failure rate of businesses is higher coming out of recessionary periods. If businesses are to survive in the long term they must have strong financial controls and processes, and good quality timely and relevant management information from which to make decisions. There is no doubt it is this, not deals with the BPSS or the banks, that has ensured our clients have survived over the past months.

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