Small Business Matters

Want to get paid? Think like a banker and other lessons for and from SMEs

This post is by Manos Schizas, senior policy adviser, ACCA

By November 2011, the UK’s SMEs were owed £33.6 billion in overdue payments and the average wait to get paid was about two months. 

Few even try to use the legal tools at their disposal against late payers for fear of jeopardising important relationships. Is there nothing SMEs can do? Well, they can start with improving their credit management.

To help, ACCA (the Association of Chartered Certified Accountants), Experian, the Forum of Private Business, and ICM (the Institute of Credit Management) have teamed up to provide a guide on late payment: ‘Get Paid!’.

The tips in the guide are taken from an upcoming report from ACCA, ‘Getting Paid: Lessons for and from SMEs’, due to be published in March. The report includes the experiences of trade credit of large and small businesses throughout the supply chain.

See the big picture

If you sell on credit, you are, to an extent, a banker, so try to think like one! Credit is part of your cash conversion cycle - you need to balance the amount and timing of cash coming in and out of the business. Giving credit is as much a part of your business as getting orders - a profit on paper could become a loss when you add in chasing late or non-payments.

One credit controller of a large, market-dominant distribution company said most of their time was spent chasing unpaid bills and collecting little:

“Many depots just agree to deliver without going through the credit department, so there is no check, no credit agreement...it’s all done on...well, goodwill...verbally, which is useless.”

Be organised

Invoicing and collecting debts are not dirty words. Set up a routine and have a professional process.

Small business news round-up (12/2/12)

We search out key small business news stories and articles each week so you don’t have to, leaving you more time to spend on running your business.

Want to keep up with regular small business news, features and tips, why not subscribe to our blog by RSS or email?

Powers to tackle PAYE dodgers come into force

HMRC will soon be able to require employers to pay a security where there is serious risk that they won’t pay their PAYE tax deductions or NICs.

The powers will come into force from April and are an extension of an initiative that has already been successfully used for VAT, insurance premium tax and environmental taxes. 

Find out more.

Taxman to target builders and home delivery tax cheats

Home-improvement tradespeople such as roofers, bricklayers and carpenters, and people who make money from hand-delivered home catalogues are to be targeted by the taxman in the latest campaigns against tax evasion.

A peep into freelancing [Infographic]

Are you considering freelancing? You're probably wondering what it's really like and what's involved. PolicyBee has done some useful research which should give you a bit more of an insight into freelance life. 

The research was carried out at the end of last year amongst 2,000 freelancers. 

Infographic by PolicyBee Insurance

Are you thinking of becoming a freelancer? What kind of things would you like to know more about?

Test drive a new product and get a £100 Amazon gift card

Want to try a new Intuit product before it's released to the public? We have an exciting new product that we're working on and we'd like potential customers to share their feedback.

We want the product to be the best it can be so we're looking for self-employed people or small business owners to come to Maidenhead to participate in the product feedback session. 

To thank people for their time, we'll be giving everyone that attends the feedback day a £100 Amazon gift card.

How to get involved

To qualify for the research day, follow this link http://ethn.io/99933 and fill in your details. If you're selected, we'll contact you with further instructions on how to join the session.

What would you spend the vouchers on?

 

Is anybody out there? Why getting feedback is important (and a little request for your feedback!)

Feedback is important for your product or service but it’s easy to get so swept up in the day-to-day business of working that you don’t find the time to ask whether you’re actually giving people what they want.

If you don’t ask for feedback you’re unlikely to make the best improvements quickly and you might only hear about the bad things when people make a complaint – by which time it’s often too late. In addition, people are more likely to speak up when they want to complain, and quite understandably so. By soliciting feedback directly you’ll find out what you’re doing right so you can keep on doing it or even do it better.

You can get feedback in all sorts of ways, such as surveys, focus groups and social media monitoring and at Intuit we’re doing a bit of that ourselves just now through Zuberance. 

New year, new start – tips for a successful 2012

Firstly we’d like to take this opportunity to wish all our readers a very happy new year from the SmallBizMatters team. Here’s to a great 2012.

Today’s post is by Clive Birnie, managing director of Severn Delta, the company behind the Sarah Smith cleaning products.

So here we go, heading into 2012.  This time of year seems to lead inevitably to a mental audit.  I can’t do much about your willpower for your New Year’s diet but here are my suggestions for good New Year’s resolutions and ways to improve your business this year.

Making the most of the Christmas holidays

'Tis the season to be jolly but if you run a small business, you might find the drop in trade and the disruption that occurs over Christmas a little unsettling. Many small business owners simply can't bear to turn off from their business completely for over a week.

However, the slowdown can provide a chance to recharge your batteries as well as assess some areas of your business that may have gone unnoticed recently. 

If you’re one of those business owners who can’t close the door on business altogether, here are a few ideas that will help you to make the most of the holiday whilst still getting some rest and relaxation.

Financial fitness test finds entrepreneurs are in need of a workout

In lean times, businesses need to be on top of their game, but when testing the financial fitness of 155 entrepreneurs recently, Intuit, the makers of QuickBooks accounting software, found many in dire need of a workout. 

Intuit tested entrepreneurs thinking about starting or already running a business and found many are:

• Without a plan. The research found that 20% of aspiring entrepreneurs and 15% of existing business owners do not have a plan or expect to have one by the time they start their business.
  
  
• Baffled by accounting speak. Entrepreneurs aren’t always financial experts and many find even basic accounting terms confusing. Almost half (47%) do not know the correct definition of gross profit and 31% do not know what turnover means. 19% of respondents do not know what margin means and 16% do not know the correct definition of cash flow.
  
  
• Confused by compliance. Only 61% are aware that the VAT threshold is £73,000 and more than one in five (23%) do not know the correct definition of VAT taxable turnover. Tracking, recording and reporting VAT is one of the biggest headaches for small businesses and getting it wrong can have a negative impact on cash flow and leave a business vulnerable to a penalty from the HMRC.

Three key reasons that start-up businesses fail – and how to avoid them

Starting a businesses is a brave thing to do but you have to be realistic. Entrepreneurs are often full of ideas but if you don’t pay attention to the nuts and bolts of being in business your company could fail before your product or service has had chance to reach its full potential

Figures from the Office of National Statistics show that one in three businesses fail in their first three years of business. Here are some of the issues to avoid to try and make sure you don’t become one of them.

Don't forget to check out the end of this post for the opportunity to get some face-to-face help too.

Do I need a business plan? The pros and cons

While many would think it impossible to achieve any success without a well thought-out and coherent business plan, others would argue that such rigid frameworks only result in businesses being too cumbersome to react to market changes. 

We look at both sides of the argument and we’d love to hear what you think.

The advantages