Category Archive: Credit Control

  1. Which Package Best Suits You for ‘Making Tax Digital’ ?

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    Making Tax Digital

    We get the point, the whole system needed to be dragged into the 21st century. After all the HMRC have historically run an antiquated process. Determining tax by asking businesses to declare how much they’ve invoiced.

     

     

    However integrating an electronic accounts package into your day-to-day working obviously leads to questions such as…

     

    Which package do we choose ?

    What is compatible ?

    Which one works best for our needs ?

     

    On a daily basis, we access many different accounts packages whilst we manage and administer our client’s credit control functions. As a result, we’re well placed to pass on our independent opinion about which accounts systems work best and why.

    Accounting Packages

    There are many different accounting packages in the marketplace such as Harvest, Kashflow, Wave etc. Some new, some old, all are unique and all fulfil a purpose. However for the sake of ease, let’s concentrate of the big three providers, these being:

     

    Sage is generally considered to be the originator and has a well-established name within the accounting industry but this may well prove to be its downfall. Although Sage are working constantly to improve its ‘user friendliness’ and are launching various different models to stay ‘in vogue’, in our opinion Sage is only great if you have a good grasp of accounts from the outset. For businesses with less accountancy knowledge then Sage may not be the best introduction to accounting software.

     

    Quickbooks has also been around for a while. They were pioneers in the low cost, static, computer based package but in turn were a little slow in developing the on-line element of their software. They are more than making up for this now and their advertising presence has increased dramatically during the last few years. However in our opinion, although Quickbooks are nearly there with the customer ‘interface experience’, there still remains further work to be done on usability and business ‘add-ons’.

     

    In our view Xero is the best starter package for a business looking to gain control of both its accounts and its credit control function. Whereas we think Sage suits accountancy people with a grasp of business, we think the opposite of Xero. We believe it helps business people in gaining a more simple understanding of their accounts. Because of this, the simple functionality and the suite of optional business ‘add-ons’ we think Xero suits the ‘masses’ more.

     

    Furthermore Gavin McBride Director of Smith McBride Chartered Accountants and Tax Consultants shares our view:

     

     “As a practice we have had experience with most if not all of the bookkeeping software on the market. Xero is our preferred choice for our clients to use. The main reason being that they find it easy and logical to use. Xero can really help a business owner to run a much more efficient business and keep track of who owes them money! It can also help them to keep a handle on how much money they are or are not make day to day”.

     

     

    When making your choice here are things to consider 

    In our opinion, a good accounts package should include a minimum of 3 key elements:

     

    1. Have the functionality to raise invoices on a daily basis, to either one individual client or a number of clients in a run. With the ability to then be able to email both the original invoices and provide copies at any given time. This allows the essential process of billing to occur without delay.

     

    2.  Allow you to create a statement of account for an individual client, with no barriers as to dates, values or numbers of transactions.  This gives you the ability to remind customers of their complete balance and so encourage ledger clearance.

     

    3. Have the ability to raise management information reports, to highlight what monies are owed to you and by whom. This can create a process for the pursuit and recovery of your outstanding monies. This provides you the ability to manage your aged debt and your cash flow.

     

    Successful cash flow and credit control is all about getting the basics right and this without doubt very much includes choosing the right accounting systems and credit management partners to work alongside your business.

     

    The more aspects of your systems you get right at the start, the lesser the problems created down the line.

     

    Over 20 years of trading, training and guidance has taught us here at Corp & Comm that…

    ‘an ounce of prevention is worth a pound of any cure’.

     

    Here are more blogs to help with credit control and debt recovery. Alternatively feel free to contact us.

     

  2. The ‘B’ Word…..Brexit! Can I plan in the Uncertainty?

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    Politics!! – It affects business whether we like it or not.

     

    Many have tried to turn a blind eye (and ear) away from the ‘B word’ or Brexit!

    However, there are some key considerations to remember when it comes to supply and the subsequent credit management.

     

    In various industries there is talk of contingency measures being taken, to mitigate potential supply problems from March. One of the measures being banded about is ‘stockpiling’.

     

    Typically, this will have a greater impact on the supply of goods but service industries may experience issues too. For example if paper prices increase, this would have a bearing on printers, training companies e.t.c. having a domino effect.

     

    Now there may be some whom will live with the mantra… ‘make hay whilst the suns shines’ but we must all be aware of the risks that increased stockholding could bring and have contingency plans:

     

    Consider:

    • You’ve carefully vetted and checked your customers and have determined a credit limit that both you, ‘the Supplier’ and the client, ‘the Buyer’ are comfortable with. Should the Buyer suddenly exceed this limit, without the guarantee of a pending order to fund the increased spend, are they going to be able to clear the larger supply invoice ?

     

    • So the Buyer has a warehouse full of stock ‘just in case’ but a larger stockholding is not a pre-cursor of larger revenue. In fact, it could lead to quite the opposite. Should there not be an increased demand for items, the Buyer may be forced to sell at a lesser price, which leads to lesser revenues, a squeeze on their cash-flow and decisions as to which Suppliers to pay.

     

    • Finally let’s not forget the possible issues the Supplier may face with stockholding. The costs to any Supplier in fulfilling a larger Buyer’s order obviously increase. The question any supplier should ask is… can I afford to invest in fulfilling this new order and if so, how can I mitigate the exposure and risk of the costs for same ?

     

    There are a few key principals as to how to mitigate invoice exposure and risk, we’ve covered them previously in both our past articles and on our various website blogs such as ‘The Ten Commandments’

     

    If you want to know more, then contact our team today.

  3. High street misery, Brexit…How can you manage the affect on your business?

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    Let’s make no bones about it, the next few months are a period of uncertainty for all of us.

    Brexit is finally happening!  Judging by the noises coming out of parliament, the deal is not going to be to everybody’s taste.

     

     

    The High Street is in a state of disrepair, both physically and metaphorically. A recent ……. survey claimed that inner city retail outlets were closing at a rate of 14 a day !

     

    Now more than ever is the time for you to know who you are dealing with. Also just as importantly who they are dealing with ?

     

    On face value, you may not have a direct dealing with an import or export company, or indeed that of a High Street retailer but it is imperative that you start to trace the business path.

     

    Christmas gives everybody a great opportunity to speak with your customers. Whilst you are speaking to them to wish them well for the festive season, ask them the questions that will give you the information you need to make some measured judgements.

    Examples:

     

    “I know a little bit about your business but please tell me briefly, who are your major customers,

    what type of clients are you looking to attract and are there any particular industries ?”

     

    “We were having a discussion here the other day about whether Brexit will affect us, do you think it

    will affect your business in any way ?”

     

    “What’s your thoughts on the current state of the retail industry, do you think it will

    have any bearing on businesses like your and ours ?”

     

    You’re trying to ascertain whether at some point in the future, your customers will be affected by the uncertainty to come.

    • Will Brexit impact their costs or margins ?
    • Will the reduction in High Street trade reduce their revenues and cash flow ?

     

    Remember, 8 times out of 10, a debtor is only a debtor by circumstance. Something has impacted upon their money chain. A major customer has gone bust or a supplier is delaying goods for sale. This impacts on their revenue and cash flow. Often your customer has no other choice than to pass this pain further down the money chain.  Including delaying payments to their creditors whilst they resolve things.

     

    The more informed you are about your client’s exposure and risks, the more able you are to identify changes in trading patterns and payment schedules. This will then enable you to  react faster, when taking actions to ensure your cash flow is not the one that is affected.

     

    Christmas may well be the season of good will but it must also be the season of good practice.

     

    We are here to help. So if you would like to get our advice or use our services please get in touch>>>

     

  4. Dowsing the Flames of ‘Pheonixing’ – Insolvency Regulation Change

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    Regular readers to our newsletters, blogs and social media will know that we’re championing insolvency regulation and law changes.

     

    The goal is to prevent reckless company directors from evading all liabilities, with such ease when their companies enter insolvency.

     

    The process of closing a business and then ‘phoenixing’ a new company from the flames, free of debt needs to stop. It is the scourge of all small businesses.

     

    We’re campaigning with the Government’s Small Business Commissioner Paul Uppal for changes in both law and legislation.  Reckless directors must remain responsible and be held accountable for their actions.

     

    We reported last month discussions we’d had with the Commissioner’s office about what changes needed to be implemented. This directly led to meetings both with the business regulatory bodies i.e. Companies House and in the annals of power in Parliament.

     

    It seems no coincidence then, that the Government has just announced new measures. These measures are aimed directly at forcing reckless directors to become more accountable for their actions.

     

    Notably the Government said it wants to stop the practice known as ‘phoenixing’. Plus it stated that for the first time, directors dissolving companies to dodge debts will face misconduct investigations.

     

    Change is starting to be noticed. Indeed Stuart Firth, President of the Insolvency and Trade Body R3 stated…  “The Government’s announcement that it will look to disqualify directors of such companies, is an important part of ensuring that directors are less likely to walk away from their responsibilities”.

     

    Now we’re not stating that we’re directly responsible for these steps but we’ll happily take some credit where necessary.

     

    We’ll continue to converse with the Commissioner’s office and the next stop is conversations with The Insolvency Service, to discuss how we can put these plans and ideals into general practice.

     

    Watch this space….

     

     

  5. Can a Leopard really Change it’s Spots?

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    Large company failures…. They make the news on an almost weekly basis.

     

    Big high street brands such as Toys R Us and House of Fraser have suffered high profile insolvencies this year and others like Debenhams and Marks & Spencer have been forced into an aggressive program of store closures.

     

    In fact The Centre for Retail Research confirms that 41 high street names have entered insolvency so far in 2018… and it won’t end there.

     

    Now we realise that not everybody deals directly with these big high street brands but the likelihood is the chain of supply will work it’s way to your clients and suppliers in some way and will they be forced to pass on their pain to some degree ?

     

    The question is, what can you do to avoid being a victim in these trying times.

     

    The answer is simple, keep doing your diligence.

     

    Regular readers will know that we often speak about employing good checking processes and systems into your credit control procedures. In these trying times, let’s quickly revisit them.

     

    1. Conduct REGULAR credit checks on your client and suppliers.

    • Check for any adverse profit warnings, reduced credit scores and credit limits. All of these are indicators that the reference agencies and regulators are concerned.

     

    2. Reference Companies House and other business databases.

    • Check your existing and new information with the databases. Have new businesses been set up by the same directors ? Does this point to an imminent change in the business ?

     

    3. Do your diligence on the internet.

    • The internet is a great source of news and notices. If there are rumblings of troubles and insolvencies on the horizon, it’s better to be forewarned so you can act first, not last.

     

    Now we’re not saying that by you conducting the correct diligence, the rate of company insolvencies will fall, far from it.

     

    What we are saying is that in these days of companies closing, entering insolvency and then ‘pheonix-ing’ from the flames overnight into another business, you are better forewarned.

     

    For 2018 has definitely shown us that your leopard can indeed change it’s spots.

     

    If you would like to learn more about the diligence, credit control processes and methods to improve overall cash flow in your business check out our other News Blogs or attend our Seminar, that is taking place as part of Leeds Biz Week.

    Register to attend the Seminar  

     

     

  6. Do you give your cash-flow a holiday ?

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    It’s that time of year when we’re all thinking about getting away from it all and relaxing. However as a small business owner its not always straightforward!

     

    After all, wages still need to be processed and paid. Bill and invoices still require payment. Therefore you need ‘your’ invoices settled promptly and accurately too, in order to keep the cash flow flowing and ultimately to allow you to have a stress free, well deserved holiday.

     

     

    If you’re already a Corporate and Commercial credit control customer, then you can just kick back and relax,

    knowing that you have a dedicated credit controller to be on top of it all for you. However if you are short on time, resource or desire, you may need these tips:

     

    3 Easy Steps to Avoid Cash Flow Stress when on Holiday

    1. Keep your word. If there’s a query or issue that you’ve promised to resolve, get it done. Invoices are not going to be paid whilst an issue remains. Don’t give a debtor a perfect excuse for delaying payment by leaving a query on an invoice.

     

    2. Invoice promptly and correctly. If there’s an invoice that can be raised, raise it. Even if it’s for part of a project, get the invoice raised. It’s better to have some monies coming in whilst you’re away than none at all.

     

    3. Plan for payment. Send an email with the invoices that fall due in your absence to your customers. Something along the lines of…. ‘Dear John, just a quick note to supply you with your invoice that will fall due on the 16th August. I’m away for a few days then so felt it prudent to get this across to you beforehand just in case. My accounts team are on hand should you wish to discuss this further, otherwise we’ll keep an eye out for your payment on the day’.

     

    In short, treat your accounts as you’re treating your impending holiday. Make a plan, prepare and execute. By taking these simply steps before you go can guarantee a good night’s rest whilst you’re away, safe in the knowledge that you’ve done what you can.

     

    If you would like to know more about the benefits and costs involved in outsourcing your credit control to Corporate and Commercial please get in touch. We’re a friendly and professional team who want to help your business succeed. Email info@corpandcomm.com or Call 01535 654 594

     

  7. Did you know the ‘A’ Team now has a ‘B’ Team too ?

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    Finally the Government are listening to us….!

     

    For those of you that know us well, you will know that our editorials are always packed full of advice and guidance about :

    -how to try to avoid a bad debt occurring in the first instance, then

    -secondly should you sadly have the mis-fortune of experiencing a delayed invoice payment, how best to attempt to recover your debt thereafter.

     

     

    Well it now seems that our publications are reaching higher plains ? The essential advice and guidance that we’ve been passing on to our valued contacts over the last few years has reached the corridors of power in Government.

     

    It is clear that our wise words have been both read and understood in Parliamentary circles, as the very same steps, hints and tips we’ve been preaching for some time can now all be found on the website of the recently created Small Business Commissioner https://www.smallbusinesscommissioner.gov.uk

     

    This Business Commissioner role is to act as a national champion for small businesses and support them in payment disputes with their larger customers.

     

    The role was established in response to the discovery that nearly half of the UK’s small businesses experience late payment.

    Payment processor, Bacs estimated that a total of £26.3bn was owed to these businesses and given that we all rely on the UK’s 5.5 million small and medium sized businesses for jobs, goods and services, an unfair payment culture that hurts these firms has no place in our economy.

     

    “There is simply no excuse for a business culture where supply chain bullying or poor payment practice are acceptable. FSB research shows that poor payment practice is on the rise, causing 50,000 business deaths each year.” Mike Cherry, national chairman at the Federation of Small Businesses commented

     

    Our advice is to keep the above link handy and use the information as a reference, to help you create a strong and robust credit control process.

     

    We see our role in industry to be there for comment and to reflect both sides of any argument. As a result, we are often drawn into discussions on public forums such as LinkedIn and Twitter about the need of some people to name and shame the companies who purposely delay payments.

     

    Although there used to be such forums as ‘Credit Circles’ in the past where like-minded similar industries shared knowledge on bad payers, this practice has fallen out of favour given the rise in credit compliance and data protection regulations.

     

    Well now one of the Commissioner’s roles is to be that point of reference when it comes to naming. The Commissioner actively encourages that people who have suffered through unfair practices at the hands of late payers contact them and complain.

     

    The naming part of the process may prove cathartic to some but sadly the likelihood of these companies being shamed will probably not materialize.

     

    That being said, the creation and potential evolution of the Commissioner is a step in the right direction to resolving issues of late payment and we for one advocate the best practice the Commissioner’s office encourages… even if they have straightforwardly stolen from the industry experts… 😊

     

    To read more of hints & tips check out our blogs

     

  8. How to Avoid the ‘Ripple Effect’ of Insolvency

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    Bad things happen in threes ‘they’ say…

     

    First it was the ‘toys for big boys’ retailer Maplins that entered insolvency. Then there was ‘the toys for toddlers’ retailer Toys R Us closing down. Now there’s talk of the’ toys for tots’  retailer Mothercare having to seek protection from its creditors after posting two recent profit warnings.

                                                                                            

     

    Couple these big high street brands failings with several other high profile industry giants like Carillion and Dukes of London, you quickly realise there is no logic in the saying… ‘they’re too big to go under’.

     

    Ripples from high profile insolvencies travel much further in the pond of business than just the immediate suppliers. Yes, unfortunately many major suppliers may also face insolvency now that their ‘meal ticket’ has gone under and this insolvency will reflect upon their own suppliers who will face the prospect of not being paid.

     

    However the big question is… how and where are these ‘middle’ suppliers going to pass their burden of debt on ?

    What must we, as smaller businesses, do to heed the lessons to be learned from the ripple effect of this debt pain.

     

    1 Try not to earn only big ticket items.

    Tempting as it is to chase ‘the Golden Goose’, recent events show that no business is too big to go under. Use the big ticket invoices to re-invest in practices to also bring in smaller but more frequent residual clients.

     

    2 Limit your risk through sensible invoicing.

    Analyse what your invoicing for. Can you break an invoice down into parts and invoice smaller but more regular accounts. A none payment of a smaller invoice is an indicator of bad things to come.

     

    3 Be aware of your exposure at all times.

    Good credit control is all about being vigilant and organised. Regularly monitor your credit limits and analyse the payment days of your customers. If you find a customer exceeding both, take action to reduce that exposure before it’s too late.

     

    We were once taught that business is all smoke and mirrors and recent events show that some of that may be true. The key for smaller businesses is to reverse that mirror, look closely at yourself and your practices and ask… ‘what can I do to avoid the ripples of debt pain lapping at my door ?’

  9. Have you GDPR Proofed your Credit Control Process?

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    Have you ‘GDPR proofed’ your Credit Control Process?

     

    Data is at the heart of any credit control process. Regular readers know that we stress time after time the importance of having as much information as possible to inform your credit control methods.

    Our reliance on digital tools, search engines, electronic communications, online accounting systems and the data trail, means that the new GDPR legislation will affect the way we work. Therefore actions are required to safeguard ourselves and our clients against the potential impacts.

     

     

    What is this GDPR ?

    GDPR is the General Data Protection Regulation. It is EU legislation, due for implementation in May 2018. This legislation is an enhancement to existing data protection legislation and its intention is to bring the rules up to date for the modern on-line environment.

     

    What do I need to do ?

    You know us at Corp & Comm, we like to illustrate in nice easy steps how to implement any advice, action or guidance. So find below a useful guide summarising what action to take.

     

     

    12 Next Steps for your Credit Control Process

     

    1.Be Aware – Make sure your credit team are aware of the rules and regulations. Don’t give any debtor an opportunity to evade payment, by quoting legislation that is not understood.

     

    2.Be Compliant – Create a document to confirm what personal data you hold, where it came from and who you share it with. You may need to organise an information audit.

     

    3.Communicate properly – Review your current privacy notices and put a plan in place for making any necessary changes in time for GDPR implementation.

     

    4.Individuals’ rights – Check your procedures to ensure they cover an individual’s rights. How can you cope in a debt matter, should you receive a request to delete personal data ?

     

    5.Subject access requests – Update your procedures and plans to ensure you have the ability to provide the appropriate account information within the new timescales put forward.

     

    6.Processing personal data – Identify how in Law you are allowed to process the information you hold for collections purposes, document it and update your privacy notice to explain it.

     

    7. Ensure consent – Seek to review, record and manage consent of customer’s information. Refresh any existing consents to ensure they allow for effective collections contact.

     

    8.Children – In some industries, for example childcare and dentistry, you may need systems in place to verify individuals’ ages and to obtain parental or guardian consent for any data processing activity.

     

    9.Cover data breaches – You should make sure you have the right procedures in place to initially manage, then detect, report and investigate any personal data breach.

     

    10.Data protection impact assessments – Familiarise yourself with all codes of practice and work out how and when to implement them in your credit control process.

     

    11.Data protection officers – Someone within your credit control should take responsibility for data protection compliance. This is best to be someone who deals with the day to day process.

     

    12. International actions – If your organisation operates in more than one EU member state, have you thought as to what additional data protection guidelines you may need to follow.

     

     

    (More on 12 Next Steps can be found here on the ICO site)

     

    The final question has to be… Are you taking action for your Credit Control Process?

     

    Be ready, be informed and be prepared. Please feel free to contact us to discuss how to become compliant, we’re always there to offer advice and guidance.

  10. 5 Minute ‘Improve my CashFlow’ Challenge

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    Ask yourself these questions, then challenge yourself to take action to improve your Credit Control and CashFlow

     

     

    Time

    • Am I spending too much time on monitoring and chasing payment?

    YES / NO

    • Would my time be better spent on other business priorities, that would bring cash into the business?

    YES / NO

     

    Team

    • Are potential CashFlow problems due to a lack of Credit Control team/skills?

    YES / NO

    • Do I need more resources to ensure my cash is collected, if my growth plans come to fruition?

    YES / NO

     

    Money

    • Am I worrying about making the call, sending the email etc to ask for MY money. Will this effect my CashFlow?

    YES / NO

    • Am I worried  that I may offend and then loose a contract/client?

    YES / NO

     

    Results

    Hopefully those questions made you take 5 to consider how you can have a more successful Credit Control process and improve the company CashFlow.

     

    If you have lots of YES answers to the questions above then our advice would be to carry out a review of your Credit Control processes. Check out our Blogs>>> for guidance on implementing a successful Credit Control process

    Finally

    • Should I be looking at options to outsource my Credit Control to improve CashFlow?

    YES / NO

    If you answered yes, please get in touch it is often more cost effective than you think.

    Email: info@corpandcomm.com

    Tel: 01535 654 594