Your year end can cost you more than you think

Preparing your year end accounts can be costly your business – and that’s before you’ve event considered the financial aspect.

In finding, organising and making sense of your paperwork and records, there are time costs, emotional costs (usually stress!) and work-life balance costs to consider.

15% off your year end with us

Cross Accounting Services can help on all fronts. We love year end and so as a thank you from us, we’re offering 15% off your first year end fees with us.

So, you get to spend time doing the things you love at a reduced all round cost – and we get to spend time doing the things we love, thanks to you!

Call Nicola on 029 2065 3995 and quote reference CA15 to receive your discount or email her asking for more information also quoting CA15 Closing date 31 March 2014

The Art Of Cashflow Management

Point 1

Always be aware of what you have in the bank Account

Point 2

Put together a short term cashflow 3 months and a longer term one 12 months

To put together the cashflow statement

Sales Income Put all you known sales turnover from your diary into the forecast Unknown your new sales turnover, use last years figures to guide you, in the absence of last year, use a realistic sales turnover.
Don’t forget VAT and keep it separate, as this money belong to the Inland Revenue
Other Income ie bank interest, dividend, insurance refunds.

Costs Cost of Sales this can be based on your average margin percentage

Overhead costs

Fixed and variable

Ie rent, heating, salaries, office costs
Bank loans and capital
The VAT return and Paye

Point 3

Update this daily or weekly, with actual figures, this will allow you to see in advance how your cash is being spent, and also if you need to fund the business. Or used for Capital expenditure and taking on staff. It’s a great predictor for being able to do operation things.

Point 4

If you see a dip in funds, make sure you know in plenty of time, as a six week window may not be able to be filled, whereas a 3 to 6 month window you can plan ahead, and build up cash funds to cover you over the slower time.

Point 5

Use other sources to save on cashflow Gain credit with suppliers Get your capital expenditure leased, or obtain a bank loan. This will also improve your credit score. You score goes up, when you are able to get credit.

Point 6

Keep this on track at all times, even when you are in a cash rich, situation. You might be wasting your money on low interest schemes. Look at saving in other areas.

Let it be used against bringing your tax bill down, investments in EIS schemes, Pension contributions.
Further investment that will give a better return. Capital expenditure. Website development.

Self Employment Vs Employed

I get asked questions about subcontractors on a regular basis, so I thought I would share a few tips with you.


You will need to register for PAYE all employed staff regardless of the number of hours they work for you.    You need to keep personal information for example.  Name, address, national insurance, date of birth, hours worked and start and finish dates.   Keep a personnel file of any discussions or grievances too.

All employees require an employment contract, this can be simply done see the business link website for a template.

Business Link Template

Or you can use a registered HR Company to prepare one for you.

It describes the employee job title, description, hours of pay.  Rights to holiday entitlement, grievance procedures and sick and maternity leave.  Confirmation of start date and a job description, along with company rules and procedures.

You as the employer allocate work as required and set the hours of work to that employee, these are likely to consistent.  They do not have the responsibility of hiring or dismissing your staff.

You will need to keep employment records and records of salary paid, and you are responsible for their national insurance and income tax contributions.  You will also pay Employers National insurance on top of their salary, after the tax free allowances are taken into account.   Normally applying to full time time or part time after earning gross pay of £625 per calendar month. 2012/13 rates.

Self Employed or Contractors

Self employed staff or sub contractors are normally used on a temporary basis, the hours can be sporadic, and they have other customers besides yourself.

They would either be set up as a Limited Company, ie they are the employees of that company  or your supplier.   Or set up for self assessment.   They have the right to take or refuse a contract offered to them.  They also have the right hire and dismiss their own staff.

They have no entitlement to holiday pay, or sick pay through yourselves, or minimum wage.  But will normally charge for work done at their agreed hourly or fixed term rates.

They will either invoice you for the contract or have a deduction made on their fee through the CIS scheme.

The CIS scheme is a fairly simple scheme where you are either the contractor or the subcontractor, the contractor will deduct and pay over 20% of the subcontractors gross pay for income tax.  The subcontractor is responsible for their own national insurance.   There is a monthly submission required to tell the Inland Revenue what deductions have been made, and payment may be required.

Subcontractors can claim any overpaid deductions against their self assessment return, once a year.

A point to be wary of, any sub contractor that works only for you, and for more than six months will automatically be classed as an employee, once this time has elapsed and you will be responsible for their tax and national insurance.

If in any doubt contact the Inland Revenue helpline on 0845 900 0444

There are many case law studies, where this issue has become cloudy, and the sub-contractor has won the case, been able to sue the customer for lost holiday pay, sickness pay allowances.   Don’t let that be you.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own.  It is not intended to be used to make all of your business decisions but as a guide only.

Top 10 Tips To Running Your Own Business

The Idea

Put a lot of energy into your business idea

Things to think about

Is my business a new start up
Have I bought the goodwill of an existing business
How am I going to turn it from an idea to a real working business
What type of business is it.
How am I to market the business
Do I have the necessary skills to make it work
Do I need the help of others
Do I need premises or can I work from home
How saturated is my market, how can I stand out from the crowd
Low cost price/versus high volume
High cost price/versus low volume
Services/Product mix
Costings of the service/product

Your USP

Unique Selling Point

Why should a potential customer buy from you?

Put together a plan detailing your USP and start promoting this from day one. This can change over a period of time as your business develops.

Think about your branding at this stage. You want to be familiar make it stand out.

Put together a business plan

I spend a lot of time mentioning putting together a business plan. It will focus the mind and highlight any potential issues you make have to face and overcome. The financials and the competition being the main parts of the plan. Spend a lot of time on these and you will have a well thought out plan ahead for you to work to.

Soletrader, Partnership or Limited

Tax relief available for Limited, but increased paperwork. Decide your status at the beginning of the life of the business. It can change at a later stage as it needs to.

The Cashflow

In the early days you will find yourself paying out and not seeing the instant reward for a period of time. Put this together with open eyes. The Sales income may be slow to start off with.

Put together a simple cashflow and complete with actuals month on month, and always roll it ahead. You can see instantly where your surplus/deficit cashflow is.

Goal Setting or KPI’s

Set yourself some goals to achieve in year 1, 2 and 3.

Sales targets
Gross margin
Net profit
Sales enquiries/website traffic
Segmentation i.e. sales types split up by category versus margin from each type

Whatever you decide to choose, keep this in both numerical format and graphical format and compare month on month, year on year. You can see instantly that you either are going the right way, or need to take action to get back on track.

The Competition

Always stay one step ahead of the competition

Review key words on the web
Price testing of the market
Value for money
Unique product/service

Find out what the competition are doing and stay up to date. Look at both the smaller companies (they tend to grow) and the larger companies. (they may have a bigger marketing budget) you can learn from them. They were small once.

Your Customer

Know your market inside out. This needs to be specific, not too general.

The demographics. Is your business local or can it be national or international.
Age group, gender
Financial budget of the customer you are targeting

By knowing your customer you can sell to them better.

Get a website

Not all businesses need a website but most need a web presence of some kind. Look into your competition if they have a website then you need one too.

There are many low cost examples to start off with, and as you get bigger this can be something you can develop over time.


Keep your accounts in good order and you will always know where you are financially. It is key to know you’re making a profit and staying that way.

Taking action if your finances need a pick me up.

Use your Accountant as someone who you can telephone from time to time to discuss your strategy. It should be a two way street.

It’s not just about preparing tax returns and accounts, this should be part of your strategy.

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

Use your business plan to get funding

The essential elements of a business plan

Potential investors and lenders will look closely at your business plan to help them decide whether to risk their money.

There is no standard format but most plans include:

  • An executive summary highlighting the main points - to catch people's attention.
  • Details of key personnel with an organisational chart showing individual responsibilities.
  • Market research - details of competitors and how your product or service fits into the market - eg who your potential customers are and why you think they will buy your product or service.
  • Your marketing plan - how you are going to get your product or service in front of potential customers, together with any assumptions made when setting your targets.
  • Financial information - eg key ratios. These can be used to compare your business' performance against industry benchmarks. It's also a good idea to give details of any major expenditure you have made on long-term assets and explain the reasons behind any changes in working capital items, such as stock, debtors and creditors. Remember to include balance sheet and profit and loss account details. Many lenders ask for three years' financial information. If this is not available, supply details about trading to date.
  • How you will manage credit, expenditure, stock planning and control, and debtors and creditors.

When seeking funding, include:

  • A cashflow forecast indicating the amount of funding you need and why. For a start-up, include estimates of how much finance you will require for two to three years or until you start to make a profit. Indicate contingency funds that might be needed for rough patches. This is usually between 10 and 20 per cent of the total funding requirement. See our guide on cashflow management: the basics.
  • Financial forecasts for a three to five-year period. Try to present this information in the same way as historical financial information, so that straightforward comparisons can be made.
  • How a loan will be repaid, how investors can get their money back, and when.

Sources of fund are available in the form of

Bank financing in the form of Invoice financing. This allows you to raise your sales invoice and use a bank or a finance company to get a large percentage of the income immediately. Which will allow you to ease your cashflow

Overdraft facility with the bank - this is normally short term and can be recalled on demand.

A secured long term loan funding equipment or property.

Car financing with your local bank or car retail store.

There is some financial assistance to companies based in deprived areas for equipment, websites and training needs for staff. These are very few and far between and strict rules apply.

There is business assistance and courses available for new start up businesses in the Cardiff and Wales areas.

Equity financing.  This is related to gaining finance from private investors, they take a percentage of your company. In return you get business advice and mentoring, along with funding.  This option is normally suitable to fund large expansion plans, or to take your business global.  There is normally a contract in place confirming payback terms, interest and purchase of your shares back.

The Business Link website has an article dedication to informing small businesses about financing available.

Business Link Website

Another link that might be useful is the European Social Fund.  There are trained experts in the field who can apply for funding on your behalf.

What banks look for in a business

All investors assess applications for loans or investments using different criteria, and you should ensure you are aware of any specific requirements before making your application to particular lenders or investors.

However, if you are applying for finance from a bank or just setting up a new business bank account, there are some general points that almost every investor will want to take into account:

  • a good financial track record and credit history for you and your business – see the page in this guide about credit rating and scoring
  • a good management team with the right skills and expertise – involve your senior team from the start
  • a business plan that shows clear thinking on ideas and strategy – this is an essential tool for your business and should include up-to-date financial information
  • commitment from management and (as appropriate) other shareholders - the investor will need to be assured that the investment is one that everyone at the top of the business is happy about
  • security - most lenders will want their money to be secured against tangible assets, so they can be sure of getting their money back
  • your understanding of your market - the investor will probably want to make their own investigations of the market, but will need to know that you understand it as well

Even if your proposition is good, there are some things which will weigh against an application for loans or other funding:

  • unauthorised overdrafts
  • missed loan repayments
  • County Court judgements against the business or its directors
  • adverse credit rating data, against the business or its directors

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.