Global recession

Recently, the media published many articles centered around the global recession is coming. Is this true? If it is, what can you do to keep your business thriving during recession?

Streamline your business operations

It is time to audit your business operations costs, to see if you can get cheaper provider elsewhere with the same quality of service.

Generally, the UK electricity supplier always put their prices up on renewal. Usually, even their cheapest contract price for renewal would be higher than your current contract price. For this reason, It may be worth for you to shop around for cheaper electricity suppliers available in the market nearer to your contract renewal period.

If the office building belong to your business, is it possible for you to install solar panel so you produce your own electricity and if there is any excess, you can sell it back to electricity companies.

Do not be put off by the changing supplier and paperwork stuff to swift supplier. The amount of time you spent on sorting out the paperwork would save you a chunk of money which you can save it or use it on something else.

The same goes with renting your office space. Can you get an office space for lower rent somewhere else? Take into consideration of your staff travelling to work time. Preferably, your location not going to be resulting in your staff have to pay more for travelling. Otherwise, you either increase their salary or you give travelling allowance or you take the risk that they are willing to absorb the extra travelling time and cost. Just be fair.

Encourage your customers to pay

During recession, people usually hoard on to their money and want to spend less. You may like to offer your customers an attractive discount to make them pay you upfront or early settlement. By doing this, you avoid bad debts. So why not?

Similarly, if you must also be mindful before you increase price with your existing customers. Passing on your increasing business costs to your existing customers may not be a good move. You risk them to swift to other provider whom can offer more affordable products and services similar to yours.

If your existing customers come to you with cash flow issues, help them to pay you. Devise an installment payment plan for them. For instance, say, they owe you £5000. You allow them to pay you in equal installment of £1000 per month and they will settle their invoice on the 5th month. With this, zero bad debts for your business.

Companies House and HMRC

In some cases, Companies House and HMRC allow installment payments. However, you must write to them with your proposed payment plan and explained why you cannot pay your late filing penalty and/or your company taxes on due date. Your proposed installment payment plan would not be automatically approved, Companies House and HMRC will review your proposal and get back to you in writing.

For example, you incur late filing penalty of £1500 because your company accounts were late for more than 6 months. Ask your accountant to write to Companies House with a proposed installment plan that what your business can pay. Say you can pay £500 per month,then state that in your proposal. After you settle your late filing penalty invoice, make sure you file your company accounts and confirmation statement on time every time.

Contact our London accountants if you have any questions about your UK company.

Kindness out of Thomas Cook collapse

The act of kindness out of Thomas Cook collapse is touching, after the travel company declared bankrupt after serving in holidays industry for 178 years.

Let take a few moment to recognize the kindness of people stepping in to help Thomas Cook staff and customers.

A Thomas Cook staff even after she received the news that she is officially unemployed, she still turn up to work to help Thomas Cook customers. You are a star, Lucky Beatrice. I salute your kindness.

Passengers raised £5000 for Thomas Cook staff after the they become aware of the news that the staff would not get paid and this was their last flight. Another story a woman raised £650 for Thomas Cook staff. These passengers have a heart of gold. Thank you for your kindness out of Thomas Cook collapse.

It is also very kind of other airlines like easyjet, flybe, Tui, British Airway and Virgin to offer jobs to Thomas Cook staff. Kudos for your kindness.

Sir Richard Branson said declare it in virgin.com website that their wonderful teams at Virgin Atlantic will do all they can do to find people jobs and bring stranded people home. He is such a kind person to encourage his organisation to help people in need during this time. Bravo Sir Richard Branson.

Another way to help sole breadwinners of Thomas Cook Staff

Another way you can help Thomas Cook staff especially is that if you know they are single parents or sole breadwinners for their family with school age children consider paying for their children school meals. This would help the parents not worry about their children go hungry at school.

I know for primary school meal per day is about £2 for secondary school, the school meal spending is capped at £5 per day for state school.

For private school children, their school fees significantly higher. Hope more generous donors would help this group of parents too.

Children also require school uniforms and stationery. If you can somehow help in this area would be great for the sole breadwinners Thomas Cook staff.

You can be anonymous donors if you do not want your names be revealed.

According to Guardian, directors could face inquiry with regard to their previous bonuses. You may also be interested to learn people who are bankrupt would be disqualified as UK company director for a long time.

Cash handling

Business to have a cash handling policy for efficient cash management and to prevent fraud.

It is a good idea for your business to draw up internal control procedures for your staff who handle your business cash and monies matters in your business premises.

Generally, the cash handling procedures shall consider covering the following.

Bank Deposits

Firstly, when paying a cheque or cash into a bank account, a deposit or paying in slip must be completed. Deposits can be made in person, by mail, or an automated teller machine (ATM). Cash should not be made by mail.

Receipts From Customers

Secondly, you must update Cashbook, individual customer’s ledgers and trade debtors control accounts to keep track of your customers’ outstanding balances.

At the same time, send reminders to follow up on outstanding sales invoices. Document the payment methods your customers used to settle their invoices. For example, cash or cheque or by bank transfer or combination of the three.

For high volume transactions business, it is advisable to maintain your accounting records using well-known bookkeeping software like Clearbooks, Xero, Sage or Quickbooks. As this will cut down the administrative burden and fewer errors.

Issue cheque

On the other hand, the cheque must be signed by authorized signatory only and approval must be obtained for payment.

Ideally, the person authorizing the invoice for payment should not be the same person signing the cheques.

There are computer software packages available that write cheques and reconcile a bank amount automatically. Using computer software is the quickest and accurate way of writing cheques. The computer prints the cheques and records the payments for accounting purposes.

Regularly, prepare bank reconciliations. The use of computer-prepared cheques simplified the bookkeeping process.

Paying Bills Electronically

Another way to pay Bills is by electronically as an alternative to writing cheques. This has become increasingly popular and convenient.

There are different types of electronic payments:

  • Paying Online,
  • BACS payment,
  • Electronic Fund Transfer,
  • Standing Order,
  • Direct Debits,
  • Bank transfers,
  • Telegraphic transfer

These facilities have made global trading possible.

For instance, you may pay your staff directly by deposit salary to their bank accounts. You may electronically send PAYE and NIC to the HMRC. Besides, you also pay Companies House for your confirmation statement fee online.

Besides, Handling cash electronically also enable monies available sooner between banks and there is less chance of fraud.

Security is extremely important when paying bills online. Passwords and identification numbers are key to your company’s bank account. For this reason, they should never be left where unauthorized staff or the public can see them.

However, it is still a best practice to perform an accuracy check by reviewing the payments made electronically on a regular basis.

Bank Accounts Reconciliation

Doing bank reconciliation frequently is compulsory to ensure there are sufficient funds in your bank accounts to fund the payments made electronically. This includes direct debits, cheques issued, standing order and BACS payments.

Likewise, you must also update the suppliers’ accounts frequently to ensure no overdue payments. Keep an eye on any discounts offered by the suppliers for early payments. Because this provides further savings for your business if there is sufficient cash in the bank and payment can be made.

Petty Cash

Normally, petty cash is for paying small items, ad-hoc expenses, stationery, taxi fares, and for reimbursement of staff expenses.

You can usually set a maximum amount for withdrawals from the petty cash fund. For example, for expenses claimed up to £200 will be reimbursed from the petty cash.

Correspondingly, the person claiming petty cash must sign the petty cash voucher. Attached the expenses receipts to the petty cash voucher.

On the other hand, an effective cash handling procedure gives confidence to your Auditor that your accounting system is reliable and your company accounts give a true and fair view.