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, October 26, 2012

Apparently all is good - we are out of recession!


I have blogged about this before, but it does stagger me how the media hype the most basic of statistics.

A BBC news reporter stating “now that we are officially out of recession” …. and then went on to imply everything is simply wonderful now. Is it all a load of nonsense?

Yes, the statistics for the third quarter of 2012 are very encouraging (at last), but are they not all rather distorted, and one swallow does not a summer make!  In fact Aristotle’s entire quote works quite well too: "One swallow does not a summer make, nor one fine day; similarly one day or brief time of happiness does not make a person entirely happy".

As commentators have acknowledged, the quarter is heavily distorted by the Olympics, and also the bounce back following the extra Jubilee holiday in the previous quarter. In fact apparently if we take these one off, non-repeatable, events out of the equation the reported 1% growth becomes only 0.3%. That is such a small figure as to be hardly noticeable, a point I made in my blog about the “double dip”.

A more relevant and important statistic is perhaps that the UK economy contracted by 6.4% between the start of 2008 and the middle of 2009, and had since recovered only about half of that output. Whilst we applaud an upbeat attitude and positive thinking there is still a long way to go before the nation as a whole is out of the woods and we can rest on our laurels.

There is no doubt that we are seeing a multi-speed economy, something we are also seeing with our broad spread of clients at Insight Associates. Some sectors doing extremely well, while others are struggling. The various measures and statistics all paint a varied picture. Reducing unemployment, but slow overall economic growth. Some large companies increasing employment, whilst others like Ford this week undertaking quite dramatic restructuring.
Interesting times indeed.

Finally another rather odd anomaly with all these statistics. It takes two quarters of negative growth to enter recession – but only one quarter of positive growth to come out!

Let us know what you think?  Post a comment below.

Tuesday, October 16, 2012

In the Daily Telegraph today [16 October 2012]


Garry Mumford, Managing Director of Insight Associates, has an opinion piece published in the Daily Telegraph today (16 October 2012)

As part of a Business Turnaround supplement, Garry discusses the issues with businesses not getting a grip on their numbers ultimately leading to failure.




The article reads:


It’s common knowledge that a large percentage of the population are poor at managing their personal finances, so why do we expect anything different when those people go into business?

Their primary objective is to make money, yet many choose to ignore financial management because quite simply they don’t understand it. Something in their subconscious tells them that if they pay attention to the money; where it is; how it’s flowing; where it’s produced; and where it’s consumed; then they would have to act on it – and they really would rather not.

We witness the same pattern time and again in the distressed businesses we work with. The common thread is a lack of understanding of their financial position, no reliable accounting and financial information, and perhaps most importantly of all, no appreciation that the lack of this has contributed significantly to their failure.

From the outset, ‘doing the books’ is viewed as a burdensome task that must be done to satisfy the bank manager or to get the VAT return done rather than as a means to create useful information to aid decision making.  Accounting records are invariably way out of date, incomplete and of highly questionable quality.  

Often a low-paid bookkeeper is tasked to keep on top of the accounts but given no support.  An external accountant makes an occasional appearance, but never really has an understanding of the business, and produces historical score-keeping information, which is of no help to management.

If a business is to be successful it must think like a big, successful business. It is necessary to engage with competent professionals, perhaps through outsourcing, to ensure relevant, timely and high quality management information is available.

Armed with accurate information specifically tailored for the business, the management team will have a better understanding of their financial position and the ability to make informed decisions.  

Surely that sounds like a better solution than ignoring problems until the business fails and the only option is a turnaround (for the lucky ones)?


What is your experience?  Do give us your comments below.

The full supplement is available here, and our article here

Monday, September 10, 2012

Is relaxing the audit requirements a good thing?


The UK Business Secretary, Vince Cable, last week (6th September 2012) announced subtle but significant changes in the requirements for UK companies to be audited.

Previously companies in the UK would have to have had an annual external audit if they had either a Turnover of more than £6.5m, or Gross Assets of more than £3.26m. Now the Government has aligned the criteria to that of the official definition of a small company, which is one that meets two out of three of the following:

•             Turnover of more than £6.5m
•             Gross Assets of more than £3.26m
•             More than 50 employees

The Government suggest that this will allow 36,000 companies in the UK not to have an Audit, should they so choose.

In addition in return for a guarantee from their parent against their liabilities, most subsidiary companies will escape audit, as will dormant subsidiaries. How effective this change is will depend upon individual group’s perceptions on loosing limited liability over saving the cost of an audit.

This is yet another move, in the name of reduced regulation, to exclude the vast majority of UK businesses from any form of independent check and inspection. Is this a good idea?  Shareholders enjoy the benefit of limited liability, but what checks exist to ensure they are running their businesses properly?  External parties rely on the quality of the information reported by and about these businesses, yet fewer and fewer have any audit now; does this reduce the perceived reliability of this information?  What reassurance does an audit bring?

Having seen the quality of accounting records of many businesses when we first become involved with them, it could be suggested that relaxing external checks and controls could be a retrograde step

Let us know what you think?  Post a comment below.

Friday, August 24, 2012

Have the banks forgotten their customers?


An essential part of the work we do at Insight Associates is to build and maintain strong relationships with all the banks and other lenders.  These relationships add huge value to both our clients and also to the banks as we can help deliver what they need to support their customers. We enjoy many strong personal relationships, and they in turn understand the value that brings.

However, something has changed. Not just in one or two banks, but it seems across all of them in differing ways. Somewhere it seems from our direct experience (almost every day now) the banks have forgotten the value in these relationships, the value in the relationship they need to have with their customers, and the very thing that can differentiate them. Business in general is about personal relationships; destroy that and what is left?

Bank of England governor Sir Mervyn King recently called for a change in the banking culture, accusing the banks of shoddy treatment of their customers. UK Prime Minister, David Cameron, supported this by saying: "British people are crying out for a return to good old-fashioned banking”.  They are both so right.

The UK banks have seen a lot of change and reorganisation in the past couple of years following the recent scandals, and with more coming out all the time I fear this is all far from over. Unfortunately those at the top seem to have forgotten in this the critical importance of the relationships their front-line managers enjoy with their customers. One major UK bank we understand has changed nationally over 60% of all customer facing relationships in the past year. Whilst there may be sound business and structural reasons for the changes, how can anyone in their right mind believe that is in anyone’s interests? Particularly their customers!

We have struggled in recent months to manage the banking relationships for most of our clients, and have had to commit a huge amount of time to dealing with the issues that have arisen. We have not seen in most cases the same level of commitment coming the other way from the banks. We have been faced with numerous changes in personnel; nonsense procedures that are changed when challenged; and a massive inconsistency between the banks on security issues and other procedures. We are currently looking at re-banking some of our stronger clients to try and get some sort of relationship back.

The banks have lost touch with the very people who are the most important to them, their customers. Sir Mervyn King is right “…we need a real change in the culture of the industry”. As the Institute of Directors have said that will probably mean “(that) … there should be a clear-out of leadership in many of the banks and "new blood" brought in”.

Let us know what you think?  Post a comment below.

Monday, June 25, 2012

Does the tax on businesses make any sense?

I recently read through the very interesting report from the Institute of Directors (IOD) entitled “Tax the weighty burden 2012” which discusses the true tax burden on UK businesses and how this is way beyond just the headline corporation tax which everyone thinks of.

Their point is that UK businesses are far too heavily taxed and that this in turn deters enterprise and risk taking. They may just have a point.

A number of key issues come out of the report which really makes you think:

  • In addition to corporation tax at between 20 and 24%, companies also pay the following taxes: business rates, employers national insurance, road fuel duty, climate change levy, irrecoverable VAT, insurance premium tax, vehicle excise duty, and so the list goes on! Most of these are not influenced by profitability or the ability to pay as taxes on profits are.

  • The impact of this is that businesses effectively pay between 32 and 41% in tax, meaning that the first four to five months of their annual profits are for the benefit of the state and not their stakeholders!

  • That this overall rate of tax increases with the size of the business. So the more successful you are the higher the rate of tax you pay!

Does this make any sense? Is it fair? Does it encourage enterprise? The IOD argues that it doesn’t and that it is counterproductive. In fact a lower tax burden would encourage businesses more and overall the economy would benefit.

There are many elements of the tax system on businesses that do not make sense and certainly could be argued not to be fair. Business rates are proportionately much higher than Council Tax, yet businesses only use a fraction of the services that private residents use. In fact they drive economic prosperity to the area where they are located. Through employers national insurance employers are penalised for growth and taking on extra employees. Something which will be even worse with the introduction of auto-enrolment pensions.

One other nonsense area of business taxation which the IOD report does not cover is the huge differential that exists now between the owners taking income and the capital gains tax they pay should they sell the business. Presently with Entrepreneur’s Relief available on up to £10m of lifetime gains, a business owner will only pay 10% tax on the sale of his business. However, if he chooses to continue to run his successful business and income he takes out will be taxed up to the highest rates of 50%, plus national insurance. This seems to be a huge incentive to sell rather than build further for increased prosperity.

It really does seem that the tax system is working against the huge need for smaller enterprises to grow to get us out of the doldrums!

Tuesday, May 22, 2012

The Euro according to Blackadder


Baldrick: "What I want to know, Sir is, before there was a Euro there were lots of different types of money that different people used. And now there's only one type of money that the foreign people use. And what I want to know is, how did we get from one state of affairs to the other state of affairs"

Blackadder: "Baldrick. Do you mean, how did the Euro start?"

Baldrick: "Yes Sir"

Blackadder: "Well, you see Baldrick, back in the 1980s there were many different countries all running their own finances and using different types of money. On one side you had the major economies of France, Belgium,Holland and Germany, and on the other, the weaker nations of Spain, Greece, Ireland, Italy and Portugal. They got together and decided that it would be much easier for everyone if they could all use the same money, have one Central Bank, and belong to one large club where everyone would be happy. This meant that there could never be a situation whereby financial meltdown would lead to social unrest, wars and crises".

Baldrick: "But this is sort of a crisis, isn't it Sir?".

Blackadder: "That's right Baldrick. You see, there was only one slight flaw with the plan".

Baldrick: "What was that then, Sir?"

Blackadder: "It was bollocks".

With grateful thanks to Nigel Cook and apologies to Richard Curtis and Ben Elton I suspect!

Thursday, May 17, 2012

Is there a safe haven?


One of the very interesting and diverse aspects of our work here at Insight Associates is the huge variation in the fortunes of our clients. At any one time we can be working with businesses which are distressed where we are helping nurse them to health again (often including intensive cash management), and the others doing very well and generating cash.

This has perhaps been even more noticeable in recent years.

It is the second of these areas interestingly that is presenting a challenge at the moment. We have clients who are holding reasonable amounts of cash, generated through profitable trading. They are naturally risk adverse, so want somewhere to hold these funds and also get a reasonable return.

The big four clearing banks have in the main forgotten what it means to pay interest on deposits, with many offering such low rates it is hardly worth their while doing it. There are exceptions but mainly for long term bonds etc.

So, if you want to get any return worth talking about (and we should be looking at the very least keeping up with inflation) then you need to move the funds to other banks and institutions. Most of these are overseas or have significant overseas interests or ownership. Then are you looking at risk?

I have just this week had an interesting exchange with a senior manager with the UK arm of a certain red Spanish bank (an excellent manager incidentally, so this is no reflection on him). This bank are offering very strong rates for short-term deposits, and have been for some time. On the face of it attractive. But what of their exposure to the rather shaky Spanish economy?  They show very compelling statistics and facts about their rating and how the UK is ring-fenced, which yes shows that they would not fall if their parent in Spain fell or had difficulties.

However, I say, banking is based entirely on confidence. No-one can argue that the confidence in the UK bank would not be badly shaken, at best, if things happen in Spain, and regardless of the facts that may well lead to a run on the UK bank. No bank however strong can survive that can it?

So are there any safe havens left?  The financial world is a very uncertain place at the moment.

Thursday, April 26, 2012

Double dip recession? What double dip?


I find it all quite bizarre. The Office of National Statistics publishes a number and all of sudden it’s all doom and gloom again. Oh no, we are in recession. Oh no a double dip!  Woe is us!


What a load of nonsense!


Show me some hard evidence that we have been out of recession since the end of 2007?  The reality is we haven’t. Just because the “official statistics” have to show we are negative for two successive quarters to be “technically” in recession, does not miraculously mean that if it is positive – no matter how small – that all is well. Of course it isn’t.


This time around we shrank by 0.3% in the last quarter of 2011, and it seems by 0.2% in the first quarter of 2012. However, when you look deeper, the new number for the past quarter is based is an estimate using only 40% of the data available and subject to two further revisions. So, to add insult to injury all this hype is about an intelligent guess based upon less than half the facts!!


As the graph shows (courtesy of the BBC) with just one exception when we have been positive since the beginning of 2008 it has always been below 1% …not something to write home about.


Until we get sustainable growth (well above the 1% - remember China has been in double figures for years) then the UK, like most main industrialised nations will just keep bumping along the bottom. We need a pick-me-up, an injection of adrenaline to get something moving, and not fill up all the headlines with “oh dear a double dip recession”.


We have been here all too long – nearly five years!  No Government initiatives, no amount of talk, no analysis has moved us on.  And, if we are not careful that is how it will stay for a good while yet unless something changes. Most small businesses, those that employ 97% of the UK non-public employees, are just keeping their heads down waiting for the storm to pass. In the meanwhile they are doing nothing, not innovating, not taking risks, not moving forward. Like a frightened animal they need encouraging out, reassured, incentivised and shown a better option.


I am not entirely sure what the right answer is. Perhaps no-one really knows. But it certainly isn’t nonsense schemes like the new National Loan Guarantee Scheme, which does not do what it says on the tin!  All this appears to be is a scheme to very slightly reduce interest costs, it does not guarantee anything, it does not encourage lending, and it does not encourage the banks to change their attitude towards the propositions they are seeing. We need something that will change the landscape, not play around with it!


So, let’s be serious here. We need the leaders of smaller enterprises to change their behaviour. What is going to make that happen, so we can get real growth and prosperity? Certainly not the media worrying about how many times we have dipped within a sub one percentage point band!

Friday, February 10, 2012

Staying ahead of the pack


With the budget date set for 21st March, now is a good time to think about what it may contain and the implications on your business and your independent wealth.  We often discuss the benefits of cashflow planning and thinking ahead about the financial strategy for your business. 
Nobody can predict what will happen but with the Government’s austerity measures still high on the agenda, one area attracting media attention is ‘tax relief’ – particularly tax relief on pension contributions which do not stimulate the economy.
Our good friends at Richmond House Group provided us with some interesting facts and figures:
Tax relief on pension contributions currently stands at £36.4 billion!
What is more interesting is that Mr David Laws (former chief secretary to the Treasury) wrote a letter to the Chancellor in December 2011 asking what the cost savings of restricting tax relief on pension contributions to 20% on incomes over and above £100,000 p.a. would be? For 2012/2013 the saving would be £3.6bn.
Also on the agenda was how much tax relief allowance would be saved if the current £50,000 level was reduced to £30,000 or £40,000.  This saving could equate to £600m to £1.8bn.
So is this a sign of things to come?  We can’t be certain but, for those thinking of making lump sum payments to their pension, it might be a good time to consider accelerating these to 20th March rather than waiting until 5th April.
Remember forewarned is forearmed!

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