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. 

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