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eFinancial ManagementWho Is A Finance Director Anyway? 14 May 2012, 1:43 pm A significant number of SMEs never achieve their true potential as they may not fully comprehend the role of finance in building a successful business. Routine operational activities such as sales and production have usually been regarded as the core aspects of a business while the finance function is relegated to the background as a back office function. While it is true that most entrepreneurial abilities are in non-finance areas, finance provides the wheels on which original ideas are carried beyond the starting point and is an important function in every stage of a business from startup to growth to exit/ sale. Generally, finance refers to the process by which funds are managed to generate additional wealth/ income. It enables businesses to balance risk and profitability and helps guide the proper use and acquisition of funding. Traditionally a bookkeeper would be employed or contracted to handle the basic record-keeping requirements of the business and an accountant (external) would deal with the statutory reporting and regulatory obligations. However, after a period, a business grows beyond the point of collating and recording information for external use and itself needs financial information for more strategic and commercial use- that is when a Finance Director needs to come in. The Finance Director (FD) is the bridge between the bookkeeping process and the external Accountant/ strategic goal. In most instances, the Finance Director is an accountant, with commercial experience and highly transferable skills that would apply to most industry sectors and would be actively involved in helping management run their company the client company. The Finance Director will be trusted to provide an independent and unbiased viewpoint on business issues as well as understand and provide analysis of the financial implication and risk of each major strategic decision made. The Finance Director will look at practical commercial issues including profit margins, resource implications, products, prices, and cashflow. The FD will help develop and review business plans, appraise budgets, evaluate contracts, and manage external relationships with auditors, accountants, banks and funders as well as internal relationships with sales, marketing and production. The Finance Director will assess inventory levels and requirements, provide advice during growth periods including mergers, acquisitions, organic growth and expansion. Support can also be provided on a project basis, to cover a period of absence or to help with crisis management during challenging times. The Finance Director will provide assistance in coaching staff, succession planning, exit, disposals and sale. The Finance Director would also have traditional financial management responsibilities that would involve financial modeling, portfolio analysis and financial reporting. The level of support available through a Finance Director can be extensive at times but rarely full time and for SMEs, it may seem like an exorbitant cost to employ a full time Finance Director. However, it is usually not necessary for an SME to have a full time Finance Director available on a permanently employed basis, and there are now several options to acquire these crucial skills without paying the full cost. A part time Finance Director service for companies who do not want to compromise skills levels is becoming the norm and is provided by specialists such as e-Financial Management. E-Financial Management provides a pay-as-you use service to clients, especially SMEs including UK subsidiaries of larger groups, thereby making the service available to those businesses who would otherwise be unable to access strategic skills, at accost that is affordable and only due when they use the FD’s services. For more information, please visit http://www.efm.uk.com/ or email clientcare@efm.uk.com . To find out more about our Finance Directors and other financial management specialists, please visit http://www.efm-network.com/  The New Cost For Employers- Pensions 2012 10 May 2012, 1:43 pm As thousands of workers strike over pensions today, we are reminded that from October 2012, all employers will be required to enroll eligible staff into a pension scheme and contribute towards their retirement. How prepared are employers? The 2012 pension reform will, in its current state not affect single director companies or employers who choose to opt out. However, employers themselves will not have an option to opt-out. The potential impact and cost for companies without an existing scheme could be quite high as every other eligible business will be affected by this change.Offering reduced contributions or the minimum 3% employer contribution rate may result in some sort of hostile reaction from employees, who will be required to put in 5 percent (a 1 percent tax relief is included) of their salary /band earnings into their pension. Every company needs to determine its affordability and the effect this could have on staff members. Employment contracts need to be reviewed and possibly renegotiated. Alternative pension arrangements may have to be introduced to cut down accrual rates and there is always the possibility of salary sacrifice which could be considered. Companies may consider possible options such as ring-fencing contribution levels for existing schemes or ways to level down employer contribution levels in order to manage costs, cashflow and manage staff expectations. It is important for businesses to start talking to a specialist now, and to start some planning early to minimise the impact on their staff and company It is vital to asses all existing arrangements and if necessary, get external help as soon as possible. For a no-obligation discussion to see how we can help you plan, visit our website at http://www.efm.uk.com/ or email clientcare@efm.uk.com. See our network of financial management specialists here http://www.efm-network.com/. You may also call us on 0845 129 9900/ 01582 516300  Increasing Return On Investment Through Part Time Interims 12 April 2012, 10:37 am Management teams of large companies have had to scale down projects, reduce budgets and make more efficient use of limited resources. For smaller companies, being cost conscious has always had to be a priority. It is a survival issue for them. However with legislation getting more stringent, employer liabilities and responsibilities increasing and competition getting tougher, companies may sometimes get to the point when they need specialist input or additional part-time resource. This need could arise even in the larger corporations. Unfortunately, many providers of interim management solutions only offer full-time fixed terms such as 5 days a week for 6 months. Or full time for 9 months or 1 year. This makes it virtually impossible, or expensive if an SME needs an interim manager for specilaised projects, turnaround projects or restructuring. The need may even be simply to provide maternity cover or sickness cover, or support during year end but on a part time basis. Obviously the part time interim sector has been overlooked for too long and the need for the service is growing in the harsh economic climate. Yet, the choice simply does not exist for interims looking for part time roles or for client companies with part time needs or a budget that can only cope with a part time solution. This is one of the reasons why the company eFM Interims exists . eFM Interims is a specialist interim management business run by accountants for accountants and senior business leaders. The company has operated for a number of years specialising in executive maternity / paternity cover under its Babyinterims brand. Following the success of this, the company has now launched its Part time interims service to plug a gap in the interim market offering a flexible part-time interim service to clients who do not need interim managers full time nor for a fixed, continuous period. The majority of its candidates are finance and general management specialists with board level experience across a wide range of sectors. The unique service offering The company specialises in offering a unique, flexible interim solution that matches clients’ exact requirements with a particular emphasis on supplying candidates on a part time basis so that clients only pay for what they need for the duration of the assignment. Flexible: Candidates are professional interim managers, dedicated to working with clients on a flexible basis to provide business support only when it is required. The company does not represent candidates who merely want to clock up hours on the timesheet for the sake of it. Cost effective: Interim projects rarely need a candidate full time, every week of every month, therefore because the company is able to supply a flexible resource, costs are kept to a minimum and they can often deliver a solution within your existing budget for a full time equivalent member of staff. This significant cost saving is a major return on investment to clients To discuss an interim assignment please contact eFM interims now on 0845 129 9900/7 or 01582 516300 or by email to andrew@efm.uk.com or chinwe@efm.uk.com . We are very keen to meet clients to discuss how we can complement and supplement your team at critical times. You can find out more about babyinterims, parttimeinterims, charityinterims and Healthyinterims by visiting the website at http://www.efminterims.com/  eFM's Survey In The Herald & Post - 'Half Work Here' 6 February 2012, 10:32 am A LUTON company’s survey has proved the answer to the old joke “how many people work here?” The answer is of course, half. Outsource specialists eFinancial Management (eFM), based in Maxet House, Liverpool Road, conducted its Efficiency Of Employment Survey 2011 and found that employees in finance roles are spending only 55 per cent of time on the job they are paid for. Please read the full article here: http://www.lutontoday.co.uk/news/business/half_work_here_1_3401748  The Christmas flop 13 January 2012, 12:28 pm More and more figures coming in are pointing to the same story: the expected revitalisation of the retail sector over Christmas has failed to appear. Although some well known names are reporting better than expected results: most notably John Lewis and Sainsbury’s, the wider picture is one of low sales, low expectations and struggling finance. If there is one lesson for businesses to learn from the period, it is that the expected “good times” are not ever going to come back if they just sit and wait for them. Between squeezed pockets, outrageous parking charges and of course the internet, there is little to lure shoppers to the high street and all the neon SALE signs in the world will not change the fact. So what should these shops do? It is clear that people, despite the troubles, are spending money: John Lewis is certainly not a bargain basement store, but people want to shop there. Businesses need to look at themselves to see where the problems lie. So for your new years’ resolution, instead of asking “when will people start coming to us”, ask “why aren’t we attracting customers?”  eFM Survey Shows Low Utilisation Rate In Full Time Employment 16 December 2011, 1:38 pm The eFM Efficiency Of Employment Survey 2011 reveals low staff efficiency rates with employees spending only 55% on the job Specialist financial management company finds that permanent employees in financial management roles are spending a significant amount of time on non-core jobs, and just about half their working time doing the actual job they were employed to do. According to survey results released today by e-Financial Management, employees in finance roles are spending only 55% of their working hours on core responsibilities. The results show how counterproductive full-time employment models can be with employers paying their staff not to work efficiently or in areas not relevant to their employment. HIGHLIGHTS Only 1% of respondents responsible for a finance function spend 100% of their working time on their core function. The average utilisation rate for the other ninety-nine percent is 55% 98% of respondents in finance roles take a holiday annually and of these, 35% take 30 days or more off work. 54% of those in financial management roles spend at least half an hour on internet usage not connected to their job during the day. 83% of financial management specialists including Finance Managers and Finance Directors spend up to one hour on administrative duties during the day including planning diaries, booking travel, making drinks and other such activities. 59% take sick leave during the year. It is worthy to note that 1% of respondents do not take any leave during the year and have never taken any time off during their working life. 88% of respondents in finance teams spend at least half an hour a day on banter, non-core communications, emails, letters and letters. Of these 2% spend about two and a half hours on this. 88% of respondents spend up to 20 days a year on self directed learning, courses and seminar and are away from work ‘for good reason’. Direct full-time employment has in the past, been the preferred recruitment route for many employers, but with alternative routes becoming more popular, legislation becoming more stringent to the detriment of SMEs and employees increasingly having to multitask and spend less time on core responsibilities that outline the basis of their employment, many business owners now question the efficiency of employment. More favourable productivity-based employment models will now be of critical importance especially in the current economic climate. Gary Jesson, MD of the eFM Network commented that the results confirm that eFM’s approach to providing a flexible, scalable financial management resource focused on the core activity of running the finance function is the way ahead for growing companies. ‘It allows employers to avoid complex employment legislation and gives them a cheaper and more efficient resource than employing a full time member of staff. e-Financial Management Limited is a financial management outsourcing company that offers a wide range of expert financial management solutions on a pay – as – use basis from bookkeeping to Finance Director levels. http://www.efm.uk.com .Contact number: 0845 129 9900, 01582 5163900. For a full copy of e-FM’S Efficiency of Employment survey, please click here or email chinwe@efm.uk.com Tags: accountant, accounting, efficiency, efm, employment, finance, finance director, survey, utilisation, utilization, More…zoomerang ..  Access to finance 6 October 2011, 4:06 pm A better understanding of the alternatives available and the different ways in which a company can access funds, will help directors and business owners secure the facilities they need to develop their business. Bank loans and overdrafts are not the only way; additional funds can be made available through better Balance Sheet management as well as through a variety of products including invoice discounting and factoring, asset finance, even inventory finance. One of the key mistakes made by businesses is to mismatch their requirements with the type of finance they are asking for. This is where advisers can play an important role in helping Directors and Shareholders take a more strategic approach. For example, an important point to make is that banks are more likely to see cash flow as a deciding factor in a loan request rather than property values. For a number of years there has been a move away from overdrafts. Whilst a bank overdraft can be used for anything, it is not the best way to finance items such as a capital purchase. Such a purchase suits a structured product that is controlled, which in turn means that the cost of capital is lower. This is reflected in better pricing and allows for more availability of finance. However, the first port of call must be managing the Balance Sheet to maximise the present facilities within the business. Make sure that the business is not carrying assets or inventories that are not in use, and very definitely control the debtors to ensure that your customers are not using you as their finance providers. Be strong when negotiating payment terms with your suppliers, but once terms are agreed make sure that you keep to these. It is a good time for business to borrow for long term investment. While there has been a demand from government for banks to do more to help business, the reality is that many businesses are paying down debt rather than taking on new loans. However, with base bank rates at an historic all-time low of 0.5%, it is possibly the best time to borrow for long term investment. The overall cost of funds is presently low and, it is felt, unlikely to rise in the next year. Therefore potentially now is the time to consider borrowing over a three to five year period. Contribution by Richard Keighley 07845 671204  Is a strong customer in a weaker position than they appear? 22 September 2011, 3:01 pm In the current economic climate it is a critical part of financial management to be able to spot the warning signs that things could be going awry at one of your customers. One bad debt can be the difference to your business having a profitable year, or suffering a damaging loss. There are various ways of spotting potential issues with customers which an experienced Financial Director will pick up. One of the first signs with regular customers is when their payment pattern, established over time, changes suddenly. A delay in payment can be a sign that things are getting difficult. In this instance, the approach to take is to pick up the phone and pursue it – quite often it will be a mislaid invoice or dissatisfaction with a delivery. Always try to resolve any issues as quickly as possible. If a customer changes their pattern of placing orders with you, this can be a sign that not all is good in their world. If your customer’s orders suddenly triple it could be a cause for celebration… or it could be that their other suppliers have stopped delivery. Don’t be afraid to investigate. Next there are the delaying tactics, with unnecessary queries or unjustified complaints about product quality, delivery or invoice accuracy. Establish whether there is a genuine cause for complaint and ensure that after buying your products the customer isn’t now trying to buy time. Connected to this, if your regular contacts are suddenly “unavailable” to take your calls, alarm bells should ring. Communication here is key - a company refusing to engage in a dialogue with a creditor is normally in some sort of discomfort. Finally, take note of unexpected changes. Whilst changes in personnel could be prudent efficiency or cost-saving measures, they can also be desperate acts to stave off business failure. Changes in bank could make good business sense, or may be due to their previous bank changing their terms of business. Contribution by Richard Keighley 07841 504 079  Cost management 16 September 2011, 5:08 pm After three years of unabated cost cutting, how can we continue to maintain the profits within our business, whilst ensuring that our suppliers maintain their own position of generating profits to stay in business? The importance here is to focus on obtaining value from suppliers rather than just targeting lowest cost. Reducing costs is not just about going to a cheaper supplier. Instead we need to cultivate closer worker relationships in which we can identify value creation strategies which generate savings without affecting or disrupting standards of service through changing suppliers. By engaging with suppliers and understanding their needs, as well as fully assessing and communicating our own requirements and objectives, we can obtain cost savings and develop good working relationships. An area of focus must be on the question “is the proposed expenditure a need-to-have item or a nice-to-have item”. This really comes into its own when considering the management of non-core business expenditure. How many costs do we have that go unnoticed and unchecked for years, and are still in the business because we have always incurred them? By focusing on, monitoring and examining such costs businesses can make major savings which go to straight to the bottom line. To drive such cost savings we need to create a cost conscious culture driven from Board level down with the Financial Director primarily responsible for creating this environment. That said, whilst some Financial Directors were able to provide strategic guidance, they sometimes fail to be in touch with the operational impact of some types of cost reduction. What is imperative is for all the business to be closely involved in implementing savings and managing change. Contact one of the team at e-FM for an informal discussion to see where we can together take on the challenges of the coming months and build your business into the successful operation you desire. Contribution by RICHARD KEIGHLEY 07845 671204  Many Interim Managers To Be Affected By AWR In October 2011 30 August 2011, 11:28 am From the 1st of October 2011, the Agency Workers Regulations (AWR) will become effective. Surprisingly, it has been reported by an IIM Interim Management survey that a massive 38% of interim managers have no idea how this law will affect them.  Enterprise zones: a shot in the arm or a waste of time? 23 August 2011, 10:55 am A group of new enterprise zones have been announced across the UK, creating an estimated £150m combined tax break, new jobs and areas of simplified planning rules. Whilst every action like this should be welcomed as it shows the government is listening to the concerns of small businesses, this author cannot help but think that these zones will not make the impact promised. Why? They have been tried before. Under the previous Conservative government, the general consensus was that rather than creating jobs and new businesses, the most common use of these zones was for established corporations to move into them to take advantage of the benefits. Jobs were not created, but moved. The impact will be small. The few jobs created, even if they range into the tens of thousands, will not make much of an impression in the nearly 2.5 million unemployed, especially the younger unemployed who need training; not usually the domain of start ups. The loosening of regulation will be temporary. The tax breaks will be short lived. As I said, I do not want to discourage the concept. But to identify individual areas and exclude them from the ‘normal’ rules is not a good way to encourage entrepreneurship. If the government wants to give the impression that Britain is open for business, admitting that areas need more ‘help’ to encourage people to start up is an admittance that, in general, the government’s policy on business is failing. Any changes to tax, any relaxation of regulation, must be across the board so nobody loses out, and everybody wins.  Just one in four workers gets a pay rise in 2011 8 August 2011, 4:56 pm Pay rises are always a topic treated with some hesitation. Most Brits are uncomfortable with asking for one, especially in the current tough economic times. The common perception is that asking for a pay rise is a sign of cheeky disobedience; if you deserve a pay rise management will have noticed your efforts and recognised it with a discreet note. The issue digs down to British unwillingness to discuss pay; not the topic we wish to be exploring here! The Chartered Institute of Personnel and Development has published the figures, which also highlight the fact that one in twenty workers have seen their pay decrease, and that here the gap between public and private pay rises is huge; one in five public workers got a rise while half of private workers did. When comparing these figures to the note that public workers have a higher average pay than private, it brings some relief to the feeling that the public sector is in a bubble, unaffected by the “real world”. But what do these figures mean for SMEs? Ever increasing living costs and (for most people) longer, harder hours do not go well with no, or low, pay rises. Many small businesses would love to give a pay rise to their staff; despite all the tropes about self-serving middle management and penny pinching entrepreneurs, most businesses realise that their staff are the ones that make the business great and would like to reward them accordingly, especially when they work longer and harder in times of economic downturn. With cash always being squeezed, a pay rise might be out of the question. So how else can employers reward their staff without damaging their business? As a previous blog has pointed out, pay is not the only reason most people work. Employees spend a large amount of their lives helping their employer’s business grow, and often expect rewards other than monetary for the effort. Some employees simply want their efforts noted. If a pay rise is out of the question, a note from a senior manager or director praising their efforts might go just as far to ensure the employee remains satisfied. Other employees may prefer a different reward; awards might be cheesy but if the sentiment is behind them is genuine (and the person the kind who enjoys these ceremonies!) the resultant happy employee will be worth it. The nature of your business might offer a ‘reward’ structure; if you sell desirable goods something as basic as a staff discount can encourage happy employees. If you operate a service business, flexible hours or home working might be a possibility. As an employee gets higher in seniority, the rewards become exponentially more costly for the business. A 5% pay rise might mean thousands in extra expenditure. This becomes doubly a problem when such a senior employee operates competently rather than excellently; there is an expectation that directors and senior managers get extra rewards every year unless they have performed poorly. These considerations are just another few of many to add to the list of things to consider when employing people; if you would like the skillset of a senior financial employee without the hassle of pay rises or rewards, why not try outsourcing? Call e-FM on 0845 129 9900 for more information.  Participate In The eFM Efficiency Of Employment Survey 2011 And You Could Win A Case Of Wine! 2 August 2011, 3:31 pm Staff Utilisation- How Effective Is Employment?  National Insurance holiday "a total flop" 1 August 2011, 3:28 pm The National Insurance holiday, widely welcomed by businesses at its inception, has been branded by the Opposition as “a total flop”, with initial data showing that the scheme has barely been used by businesses, and has cost more to administrate than it has saved. Just 1% of the predicted 400,000 businesses actually used the scheme, which refunds Employer’s NIC for new businesses with less than 10 employees. This kind of story is becoming typical. Officials are wondering why so few businesses took up the offer, when the financial benefits seem obvious. A quick bit of research about the offer will show any business owner why the Holiday is not worth it. Exploring the labyrinthine HMRC website is daunting whenever it must be done, and this is no different. Businesses must check if they are eligible, then see if they are within the incredibly exact starting dates, then check with HMRC anyway. There are EU regulations about certain sectors being ineligible. This is all just to find out if the business is allowed to apply for the holiday. Businesses need support, not more paperwork. So what can the government do that would be productive to job creation? Rather than the holiday, employer’s NI contributions should be abolished altogether. National Insurance has ceased to be the ‘insurance’ policy it was designed to be, and has become just another tax. The employer’s NI contribution is a direct tax on employing somebody, and needs to go. On a similar thread, merging NI and income tax would simplify the employment process considerably. This process would be wrought with difficulties, but the result would be much less confusion for employers. The topic of employee benefits is one that always causes arguments. Maternity leave, holidays, flexible hours and sickness are just the beginning. The arguments for both sides are convincing: we have worked hard to win these rights for decades, and they provide us with a comfortable working life. But on the other hand, the regulations discourage employment. What use are all of the rights if nobody is employed to enjoy them? A solution would be to relax, rather than remove them. Extend the current ‘probation’ period before the rights become fully realised. If the government wants to encourage businesses to employ people, the solution is not schemes like this. Paperwork, risk and outside (ie not the wage) costs are the barriers to employment; the government cannot regulate its way to higher employment. Taking a step out of business should be the focus of any further changes.  The gap between public and private 25 July 2011, 11:39 am Recently, the news was published that the pay gap between the Public and Private sector was widening, to a massive 7.8% difference in favour of Public Sector workers. In a time of supposed government austerity, such a discrepancy needs to be investigated. It always used to be the case that a typical job in the Private Sector had better pay, whereas a job in the Public sector would present better benefits such as pension schemes. Now the Public sector appears to have both, and without a doubt it causes resentment amongst private workers who have seen their hours, pay or benefits cut in recent years. A lot of this resentment comes from the way Public jobs have an inherent security lacking in any private job. The government cannot suffer a downturn in sales resulting in a tough month, the government has a reputation for not laying off workers when their positions become redundant; instead transferring them, and there is a widespread (imagined or not, the belief amongst private workers is there) culture of being ‘laid back’, rolling into work at 9.30, taking extended lunch breaks, and even a set number of sick days a worker is allowed to take above regular holidays (figures back this latter up, public workers took an average 8.3 days off last year compared to an average 5.8 private sector days lost). The public sector is also the last refuge of large scale union activity. The issue is certainly not simple. It can be tempting to demonise Public workers as lazy and demand they work for lower pay and pension (a topic for another blog!), but the Public sector has a different raison d’être to the private sector. The private sector, at its core, exists to make money. The public sector exists to serve the public, be it through providing healthcare, managing a region’s economy in physical ways like administering the leasing of buildings, or dealing with the concerns of citizens through the council. Although arguable, none of these require the kind of competitive, cut-throat attitude the private sector demands. Hence private sector workers would get paid more for their proactive work, and the public workers would have greater security for their role but less cash in hand. So where did things change? Several reasons can be put forward. In a drive to reduce costs, low skilled jobs in the public sector are being outsourced to the private sector. From knocking on doors to collecting rubbish, it is cheaper to hire a company to do the job than pay workers minimum wage with the associated administration and extra costs. With low paid jobs being outsourced, average pay will certainly increase. Union activity surely has a part in the discrepancy; there are very few unions working for the private sector and collective action on behalf of the private worker is a thing of the past. Minimum wage is seen in a different way in the public sector. In the Private sector, workers of a wide range of skill levels earn minimum wage for an assortment of jobs. It is seen as the default pay, with any extra to be earned through results. In the Public sector, a salary is given, rather than an hourly rate, always at a higher figure than £12,335. So what can be done to alleviate the pain of the Private Sector? A rise in minimum wage seems the first port of call; but at the first hurdle we fall. Few would argue that minimum wage is too low to be considered a living wage in most of the country, but to raise it would mean the end of thousands of small businesses. Bakers, cleaners and restaurants are already struggling to make ends meet; with even a small rise in minimum wage to their unskilled staff meaning extra costs of hundreds of pounds per week it would not be long before they crumbled. It could be argued that a rise in minimum wage would increase consumer spending, hopefully increasing sales in these companies, but it is a risk not many are willing to take. A better idea might be to reintroduce a level of collective bargaining to the private sector workers. Unions have proven to be little more than cash cows for their owners, so a different approach is needed. Pay should not be the only issue, and campaigning efforts do not need to be directed at the employer. Several costs to the employer by the government could easily be passed on to the worker; employer’s NI is a contentious issue and removing it could pave the way for an increased minimum wage; the cost to the employer is the same. Relieving the administrative burden on employers will reduce the hostility some have towards their workers; if they feel like their employees are a time sink rather than an asset they will not go out of their way to make them feel valued. Private sector working hours feel like they are ready to shift away from the 9-5 office; if companies can have their employees work from home, or on shifts to suit their family life the position of the employee will become happier. Simple employee benefits can make workers feel valued; be it offering the company’s products for free/at a discount, or offering training courses which can be funded by the government. In time, private sector wages will rise to meet the public sector. But with inflation increasing the cost of doing business as well as living week by week, the government needs to look at other options and ask if a raise will do more harm than good.  One in three workers "admits skiving" 18 July 2011, 12:16 pm A study by PwC suggests that British absenteeism, already at a long-time low of average 6.4 days per worker in 2010, might be even lower if not due to the abundance of workers taking days off work through choice not necessity. 34% of those surveyed said they had ‘skived’ work, with the largest excuse being given as illness, but outlandish examples included amnesia and “lime scale from the shower falling into my eye”. These days are even premeditated, with some workers feigning symptoms in the office days in advance. These figures are worrying enough, but to pass them off as lazy workers would be to ignore the issues behind them. Those surveyed said family time was often the real reason for the time off, with others including a lack of work leading to boredom and feeling unappreciated for their hard work. Each of the above present complications for the employer. Employees can request flexible working time when they have young children, but for a large number of offices there is not a lot of room for flexibility outside of the 9-5 working day. It is strong in e-FM’s belief (and our business model!) that a worker’s worth should not be valued in how much face time they put in, but how much they produce. For many people 9-5 is not convenient: the school run, commuting during the rush hour, and a late start for early risers means you are going to be getting tired and stressed workers when in reality it is the office hours causing the trouble, not the worker. The ever increasing shift towards internet and Cloud working is alleviating this issue; with people able to do work from home they never would have been able to 10 years ago. If you have the capacity; consider offering your workers the option to work from home at the morning and evening with any required office time taken late morning/early afternoon. We suspect productivity will not be affected negatively by such arrangements; you may even notice an increase as they can work on their own terms around their lifestyle. The “lack of work” reason is slightly trickier to address. Employees often have a fixed workload, and when this is done there can be an unwillingness to tackle any new projects because they know their regular workload will soon refill. Others can work at a faster pace than their colleagues, but do not want to ‘put their heads above the parapets’ because they do not want a promotion or to be put on a pedestal above their co-workers. Whatever the reason, an employee who is underworked is a cost to the business owner. Obviously if they have not spoken up about it they do not wish to raise the issue, and asking them directly is not likely to get reliable results. Instead, you might consider ‘pooling’ some administrative work, work that any employee can access and work through at any time. There is always something to do in a business, and sharing the load out like this might ease the burden on those already at capacity. Employees feeling underappreciated are tempting to ignore. Every employee will need a different motivator, and to expect them to find it themselves is asking for trouble. There are tools available to find out what makes employees feel valued, with results ranging from a public declaration of their achievements to a private note from a high up director. If an employer wishes to do this, the recognition must be serious; ‘employee of the week’ on a rota of staff members will not motivate anybody! It must also be tailored to the person receiving it, as to continue the above examples a public statement about a person who prefers private praise might have the opposite of the intended effect! Being demotivated can come from frustrations other than a simple lack of recognition, however. Bad pay, long hours or trouble at home can all cause problems, and though it can be hard to provide solutions to these problems, if the employee knows that their boss shares their concerns and is listening to them the problem becomes less private and less likely to boil over. Managers should take the time to hold regular evaluations with their employees, and seriously consider options like shifting pay schemes onto results based (if possible, and if the employee wants it) or considering flexible hours to help them with family issues. Employment is never a simple matter of paying a person to do a job. When you employ somebody, you trust them with a stake in your business, and they trust you to take into account the fact that they spend around a quarter of their lives with you and treat them well accordingly. Sometimes outsourcing can provide the solution you are looking for; the epitome of paying a price to get a job done. But when the job gets too big it becomes more cost-effective to employ somebody to do it. The cost of an employee is far greater than the number on their salary line, if you are going to employ make sure you are ready for that range of commitment otherwise you will not be getting the best value for your money.  Retailers facing a reduction in Christmas credit lines 11 July 2011, 10:51 am Accountants Ernst and Young have made the announcement that they expect High Street retailers to struggle this Christmas to buy the stock needed to fill their shelves. With muted growth and depressed customer spending, retailers are facing tough times and are already struggling to pay debts and rent. Ernst and Young’s report says that this has been noticed by suppliers and to protect their own businesses, they look likely to remove the credit lines many retailers rely on. Without a good Christmas stock, businesses which, according to EY spokesman “only really make money at Christmas” will be forced to shut down. Larger retailers often have the security of their name and brand behind them, but what of the smaller retailers, and the independently owned shops? They will be facing the reality of having to convince suppliers to keep credit lines open; not an easy prospect given the tough times. It takes more than a good speech to convince a supplier: you need the financial figures and knowhow to prove your case. If you know your business can make the profit if you have the credit, you need to prove it. In-house bookkeeping staff may not be suitably qualified to generate or use this kind of information: you need executive level experience and input. If you would like the skills and experience of a board level finance person to help you keep your credit lines open, on a pay-as-you-use basis this Christmas, give us a call and we will see how we can help.  Is offshoring losing appeal? 8 July 2011, 10:55 am Following several years of complaints, Santander has announced that it is moving its call centres back from India, to the UK, hiring 500 new staff in the process. Santander follows New Call Telecom, who also recently announced a move from India to Lancashire. The shift has been presented as a move to improve customer service and take on board complaints from customers, but the cynic in every reader would be more tempted to believe it is due to increased costs in areas such as real estate, salaries and accommodation in India. Outsourcing is often confused with offshoring, and brings certain images and memories to mind: deserted factories, the infuriation of trying to pass on a complicated problem to a person with limited English and a general negative feeling of costing the British economy jobs. But with the trend away from offshoring, we need to reinvestigate what outsourcing really is, and what benefits it can bring to a company. Outsourcing can be described as the process of hiring a professional company to do a job your company needs doing, relieving the need to employ somebody in-house to do it. Outsourcing gets a bad press because of the way it often removes the need to employ somebody; with unemployment rampant this is doubly a problem, and when certain services are outsourced the effect can be damaging to office morale and the ‘personal touch’ of the business. e-FM strive to debunk some of these myths. When we say the word ‘outsourcing’, we want our clients to imagine it in its purest form. A job needs doing - for example, your business has just received funding and you suddenly realise the need for board level financial support. Your existing bookkeeping and administrative staff are not suitably qualified, but to bring in a full time Finance Director would be a gross misallocation of costs and skills. Aside from the (often) 6 figure salary and associated employment costs, you would now have a highly qualified and restless staff member when you are not certain of the roles he/she will perform. If under-utilised, they may begin stepping on the junior financial staff’s toes and getting involved in areas of the business best left to those with industry specific knowledge: HR is a common example. This is a situation in which e-FM could help. We identify exactly what your company needs from its new senior accountant, and break down the time this will take using our decades of combined experience. Then we allocate a single person to your business, who will work from your premises, for just as long as you need them and not more. We will always be available in a crisis, and we see ourselves as ‘your FD’; we just do not need to be on site 5 days a week to do the jobs we were hired for. It is outsourcing with a difference - we insource one of our staff members to your office and they become an integrated part time member of your team, and you avoid the administrative headache and ever increasing costs associated with employment procedure. Outsourcing is not for every company, and when a role gets to a certain size it becomes more cost efficient to employ somebody into it. But if you have a skill gap that your existing staff cannot fill, consider outsourcing as an alternative to employment as a means to fill it and you may be pleasantly surprised with the expertise a professional can bring.  Councils to keep their business rates 29 June 2011, 5:15 pm Nick Clegg has announced that councils will gain control over the spending of their Business Rates, rather than the current central pooling and granting. “Every government preaches localism”, says Clegg, “this government will practice it. In terms of real decentralisation, money talks”. The move is seen as one of many to provide councils the measures necessary to attract businesses to their part of the country. The theory is that relatively reliant areas such as the North East will be able to lower rates to attract new and foreign businesses, whilst places such as London and Birmingham who attract business due to their location will be able to control their revenue, knowing that some businesses will set up there regardless of the rates. The changes have been welcomed by business groups, though full details have yet to be released. Nick Clegg has claimed that poorer areas will not get less money than they currently do, which seems to be at odds with the basic principles of the change, but without any extra information speculation on the full nature of these proposals is pointless. So, knowing what we know, what will happen should these changes come through? Despite Clegg’s assurances, it is inconceivable that all areas will remain equally well off. Net contributors, limited to the economic powerhouses of London, Manchester and the like, will have more to spend. They will be able to invest further in their own economy, and because of their scale they will be able to lower rates to attract new businesses. The trouble starts when we consider that net users, which make up the majority of councils in the country, will have greater control over their spending but will have less money. Often small businesses in these areas are reliant on grants and exemptions to survive, but without income, the councils will struggle to provide these breaks. Councils are notoriously reluctant to look for savings within their own ranks, and the likely response is not to lower rates to attract more businesses, but raise them to get more from the existing businesses there. This will discourage further investment, leading to a cycle of problems that will not be easily broken. However, these proposals are a clear sign that the government is listening to the concerns of businesses, especially SMEs. But they seem to have been written on the assumption that economies are local; that people live, work and spend in the same place. These days, a business can operate in Newcastle, with its offices in London and most of its workers in India. Larger businesses, those that can afford these operations, will set up exactly where it is cheapest and it is the local economies that suffer. The focus of business rates should not be on where a business is, but what it gives to the local economy. If councils want to attract big businesses, lower rates will work. But when these businesses offshore their jobs and profits, their contribution to the local economy is low. If councils want to attract businesses that will be a local investment; providing jobs, paying taxes and reinvesting profits into their business and the local economy, they need to consider more progressive measures and make these investments attractive options to businesses. Without further information, speculation lacks credibility. But the announcement is a very welcome one which shows that the government is listening to the concerns of SMEs so we are hopeful for any future developments.  Will StartUp Britain help entrepreneurs? What else can the government do? 20 June 2011, 5:10 pm Several months ago, David Cameron’s initiative of StartUp Britain was launched. With the idea of encouraging budding entrepreneurs to start their own businesses, it was met with general praise; the feeling is that there is never too much the government can do to help small businesses. But several months in, to look at the website is to think ‘what a waste of money’. There are just a large number of links to service providers and the occasional instructional article, any of which a quick Google search can provide. The ‘offers’ promoted on the website are not unique to it - most are freely available to the public. So, what can the government do to help kick start an entrepreneurial revolution? There are dozens of answers, but the common theme will be thus: stop making the idea so unappealing! When somebody decides to start up on their own, the troubles begin at the outset: a huge pile of paperwork arrives from Companies House and HMRC. Paperwork is one of the biggest barriers to entry to starting your own business. Box ticking, returns and different forms for every situation imaginable will put off the entrepreneur who just wants to get going. Next on the list would be: relax the regulation. Health and Safety is without a doubt a good thing, especially for businesses which run the risk of bodily harm. But with stories abound of businesses forced to run Risk Assessments before lifting a new desk into place, workers going through ‘stepladder training’, has it gone too far? Likewise, employment legislation seems to actively discourage employing people by making it risky, time consuming and expensive. A final grouping of changes would be in the tax department. “Taxes are the price we pay for civilisation”. This may be true, but the government seems determined to make it as difficult as possible to actually know what you are supposed to pay and when, and are equally determined to ‘make examples’ of non-payers, be they criminals or just beleaguered business owners who could not figure out the labyrinthine HMRC website. Most businesses accept paying tax as a necessary evil, to ensure their workers are educated, the country’s infrastructure is sound and the markets are regulated. But the wide array of taxes confuse people whilst the bigger corporations can pay people to help avoid them. Lowering and simplifying taxes, whilst making it far more difficult to avoid them, would be a move welcomed by small business owners across the country. The message from SMEs across the country to the government is this: back off. We know the government has an essential role to play in our lives, but by infiltrating every aspect of business, demanding to know every detail and forcing the business owner to do the paperwork, they are placing a burden on those they claim to encourage. Thankfully, we are seeing aspects of this already; the government is relaxing some of the regulation on start ups, but there is a long way to go before starting a business will be something that can be done by anybody with the drive. There is however, as always, a balancing act to be done here. It would be simplistic to think that the government is intrusive because of institutionalised paranoia, or any other petty reasons. Crime is, at its heart, about money. Working through a business gives crime a face that the outside world might mistake, and it is through some of these intrusions that the government can deter and catch such crime. Whether it is the passive crime of mistreating workers to increase profits or the active crime of money laundering, businesses can harbour criminal activity in such a multitude of ways that if the government was to back out completely the activity would explode. Perhaps in the future technology will allow the government to see the activities of businesses without any action needed on the part of the business owner. But for now, some (but not all) of this interference is a necessary measure to prevent crime.  Are summer holidays damaging your business? 15 June 2011, 11:30 am Summer is approaching, the sun is (almost) out and people are on their well earned summer holidays. But with so many staff members taking time off, it is a good time to reassess the efficiency of your business. Employment is the traditional and time-proven way of getting a job done but the summer holidays just begin to show employers that it might not be the most efficient. Employees have 28 days required holiday every year, which is a whole month in which you pay them for taking time off. Add a national average of 6.4 sick days every year (CBI survey 2010) and you could be paying your worker for one day off work in every 7.5 days. Are these days off damaging your business? For a small, high growth company when every day is full steam ahead, they certainly could be, especially when they are taken in blocks of a week or more as is common in the summer. If a vital staff member such as your in-house accountant takes time off, you may be faced with a very difficult choice. Do you accept the slow-down in your business, or find somebody else to temporarily fill the gap? Both options will cost you money and time. Another thing to consider is this: are your employee’s jobs so time consuming that they can readily take two days off every three weeks with no consequences? Even when working, do you believe that 100% of their time is focused purely on the job? Employment brings a huge list of distractions with it; HR issues, administration, timekeeping, unimportant emails/phone calls, and much more. With traditional employment, we suspect that at very least a whole day’s worth of time, every week, is spent on activities other than the job written on the business card; added to the above figures your employee’s job might be one that can be done in 3 days! e-Financial Management would like to open your mind to an alternative way of getting a job done. Without employee cost or regulation, contracts or required holidays, you can use the skills of our highly experienced accountants on a pay-as-you-use basis, meaning you only pay for what you need. And best of all in these holiday-filled summer months, we work on your timetable, not you on ours!  Public sector budget cuts - will your private business be affected? 13 June 2011, 4:43 pm It has been some time since the public sector cuts were announced, and soon we will see the effects. Politicians, economists and men at the pub all have their opinions on what the results will be, but whatever happens we can be sure of several things: 1. Unemployment will rise. An obvious point, but with 500,000 job cuts announced the labour market will be substantially increased. The private sector will have more choice when looking for candidates when recruiting, though the public sector candidates will have to fight against the perception that they all take many sick days and tend to bunk off work early. 2. Customer spending will drop. Another obvious point. People out of work do not spend money on the luxuries that make up a huge portion of the private sector, so sales will drop for many private providers. 3. Private contractors will be forced to rethink their business plans. There are substantial businesses which survive purely by selling their services to public sector QUANGOs, and with this work drying up they will be forced to face the reality of finding new business. 4. Opportunities for working with the public sector will change. Some commenters believe that all public sector opportunities will dry up, but this is highly unlikely. Instead of wholesale products or services, the public sector will be looking for ways to save money and often the private sector is best placed to do this. e-Financial Management, for instance, allows companies to save money when they need expert financial assistance, as we offer a totally flexible, pay-as-you-use service that the public sector can take full advantage of as and when they need it, rather than hiring a full time accountant. To pretend that the public sector cuts are nothing but good news for the private sector is to risk. Public workers make up a substantial amount of private spending and a lot of businesses have public sector contracts. For help planning for the future of your business, call e-FM on 0845 129 9900  Businesses Under Pressure To Improve Record Keeping. 6 June 2011, 9:44 am The Liverpool tax office has sent letters informing businesses that were part of a mandatory pilot scheme in March that they could be visited by inspectors to check whether they had improved their record keeping after a first visit from the inspectors.  How secure are our emails? 2 June 2011, 10:54 am The latest in a long string of news stories relating to online security has revealed that Chinese hackers have intercepted the private emails of hundreds of US officials, from politicians to the military. Google indicated that this was not due to their security being breached, but because users unwittingly entering their details into false websites, making it a crime of fraud. Although it was just private emails intercepted, it reminds us that internet communication is vulnerable in more ways than one. This is, of course, the cost of instant communication. Security companies may make claims otherwise, but the truth is that no online system is infallible. Sony are under a lot of fire for their recent loss of millions of people’s data, but to take a step back and examine the facts shows a lot of unreasonable demands on internet security. The business deals with a huge quantity, millions every day, of online transactions. The sector is so cutting edge that, should these transactions be anything but instantaneous, users will leave for competitors. To combine these demands with demands of top level security is simply impossible. Users want to purchase at a moment’s notice, and this is obviously beneficial to the business as well. This means it must be kept together and in an easily accessible place. Should the data be secured in the matter many would wish, it would increase transaction times to several minutes. Data needs to be decrypted, gathered from several sources and confirmed by several methods (password, confirm postcode, etc) by the user. Most of us would not admit it, but when given the choice between instant and safe(r), I imagine the former will be the common choice. There is also a level of unreasonableness amongst internet buyers. Details will be entered into dozens of websites, saved in browsers, written on post-its beside the PC and sent by email, and yet fraud is still treated as though it is entirely the fault of the person holding the data. To bring this back to the original argument, we see that over a very short space of time we have developed in a huge way. The internet allows for amazing things, and instant payment has, in a way, revolutionised business. Businesses can quite reasonably demand this kind of payment, instantly dismissing the age-old problem of non-paying debtors, and emails have wormed their way into every level of our lives. But if we accept that the online world will never be totally secure, do we accept the risks that go alongside the benefits as acceptable, or do we stick to the slow, secure, tried and tested chequebook and memo?  Bank lending falls, Private Equity rises. Which is best?
31 May 2011, 4:48 pm Project Merlin, designed to encourage more banks to lend to hard-up SMEs, appears to be failing. Lending £16.8bn of the required £19bn, it raises the question that has been on a lot of people’s tongues for a long time now: what do SMEs need banks for anymore? Corporate lending is still on track, but for the majority of people in the country who work in SMEs, or are planning to start their own business, this news is discouraging. The consequences of this failure are unknown at this point, but several trends are apparent and we might predict several possible scenarios. The populist view is that banks and the corporate world will continue to grow off of each other. Banks are guaranteed (comparatively) risk free lending to huge companies that some might argue do not need the money, and corporations get the advantage of low-interest cash to put towards new projects. Given the government’s hesitation in tackling either party’s negative effects on SMEs in the past, this ‘in-club’ seems likely to continue for some time. However, pressure from increasingly frustrated SMEs (who still make up the majority of business and employ more people in the country than any other sector) is growing and many are seeking other solutions for their needs. With banks not lending, SMEs are looking elsewhere for the money they desperately need. Private equity activity has been steadily increasing over several months, with the local Venture Capitalist taking the place of the local bank manager of years past. The most obvious reason for the migration is the reluctance of banks to lend, so businesses go to those that will. But there are other benefits private equity can bring to SMEs. The bank manager used to be the first point of call when a business faced a new problem, but now a business simply cannot get the advice they need. After a lengthy trial with a call centre a business owner might get to see a junior staff member who will be reading answers from a list. VCs take a personal interest in their investments and have many contacts in the world of ‘real’ business, so if they do not know the answer they will hand the problem to somebody that does. The relationship with a VC might be a more expensive one, but it is far more fulfilling and advantageous to the SME. VCs are notoriously difficult to please. Without the security that banks are afforded, they need to be sure of their investment. A strong business plan is just the first assurance they require, with their due diligence being thorough and a condition of their funding is often the strengthening of financial controls. e-Financial Management are ideally placed to both help SMEs get the funding they need, and ensure VCs are confident in their investment. We can offer a range of financial health checks and due diligence reports at a fraction of the cost a typical accountant will charge, and our reports will be written with the confidence of hundreds of years of combined commercial, rather than practice, experience. Our core service of outsourced financial management can help both before and after an investment; ensuring that figures are accurate and that there are no underlying issues, then providing the financial direction a senior, experienced FD can provide, without the accompanying required huge salary and administrative headache of employment.  |