The Financial Spring Clean

The weather is warming up and Spring is on the way, its great time for you to put some financial processes into action and start to look forward to the year ahead.

Your business plan/budget.

Keep this report in mind certainly every six months, ideally every quarter. Rolling the plan ahead and updating it with new ideas or processes you may have in place. I would also look at having a cashflow projection a year ahead, this will help you plug in cash reserves if there is a shortfall ahead of time. You will be better prepared for any challenges that await, if you see this all ahead of time.

Cash Is King

Keep your creditors and debtors up to date, I see far too many sets of accounts needing either tidying up, or money chasing from several months ago. This will keep you liquid if you are keeping the cash close to your chest. Make sure you have a fully usable process for keeping these up to date. Credit score new Customers if you are giving credit. Don’t be afraid to use outside help if some debts are getting hard to chase. By keeping this professional and not personal you are more likely to get a positive outcome.

Look at your processes

You can never spend enough time in tightening up your processes. Imagine you have moved your business from a couple of hundred thousand turnover to a million pound turnover business. If you havent addressed processes and improved efficiencies you will never cope with the increased demands. Delegate your time appropriately and keep training of your team at the heart of your business. As you grow you will be become more reliant on them, they are your future. Invest in them wisely and see the rewards, just like you would if you were buying equipment or software to run your business more efficiently.

Tracking your Sales

Are you tracking where your sales are coming from? How are businesses finding you? I always recommend you track at least the following

Where people are finding you

Long term customers/vs new business

Product/service segmentation

Average customer spend

Track every item of marketing spend you have, and make sure they are all working well.

Marketing Strategy

When was the last time you prepared a SWOT Analysis, Strengths, Weaknesses, Opportunities and Threats. Your competition will be focused on this subject, you need to be one step ahead of them at all times. Dedicate at least a third of your time to marketing focus. Afterall you cant grow without increasing your new business. Track all of the spending in this area and drop what clearly isn’t working. Don’t ponder, this needs direct action.

Cost of Sales and Overheads.

Keep a close eye on your margins. Always track the service jobs you do, or check margins on the products that you make. It’s a good idea to keep timesheets and compare theses costs to the job originally quoted. This will enable you to quote better, and work on improving your margins, and in turn your profitability.

Overheads, keep a track of these. Some of these costs may be fixed, but that doesn’t mean that you cant make amendments if you need to. By knowing ahead of time it is worthwhile knowing your breakeven point. The point at which your sales match your costs, and any surplus is profit.

I hope you find these easy to follow steps and look forward to hearing from you as you develop your businesses and grow.  By managing your business as you grow you will be better prepared and find it easier to cope as the demands on your time increase.

This blog is intended for information purposes only, you may have suggestions of your own.  it is not intended to be used to make all of your decisions but as a guide only.

A couple of weeks ago we highlighted main aspects of the previous chancellors mini-budget. A lot has happened in the house of parliament recently and the new chancellor, Jeremy Hunt reverses most of the mini-budget tax cuts.

Below you can find the updated version from Jeremy Hunts statement.

National Insurance

One of the few things that is staying, is the reversal of the National Insurance social care levy. From 6^th November 2022, the extra 1.25% will no longer be added to National Insurance contributions. This means a saving of £330 per year for nearly 28 million people.

Originally the extra 1.25% was introduced to fund the NHS, however, this will now be funded through general taxation.

Income Tax

The biggest reversal is in the rates of income tax. The ex-chancellor said that income tax will be down to 19% from April 2023, however, this will now not go ahead. It will remain at 20% for now.

The abolition of the 45% higher rate income tax has also been reversed. The 45% higher rate income tax band now means that the higher rate earners will pay income tax on earnings over £150,000

Corporation Tax

The reversal on corporation tax for companies means that the increase from 19% to 25% will go ahead after all. This will come into action from April 2023. Only businesses with profits of £250,000 or greater will be taxed at the full 25% rate - about 10% of companies in the UK.

Any companies with profits of £50,000 or lower, will pay at the 19% rate

Benefits

Rules around the benefit system will remain and unchanged. Benefits can be reduced if people don’t actively search for job commitments. Around 120,000 more people on universal credit to be encouraged to actively seek more work, the over 50’s to be given extra time to work with coaches to help them in the return to work.

What else has been cancelled?

Other measures that have been cancelled include:

·         VAT-free shopping for overseas visitors,

• A freeze on alcohol duty. Planned increases in the duty rates for beer, cider, wine and spirits will now go ahead
• Cuts to the tax paid on shareholders' dividends - the increase introduced in April will now stay in place

Energy

A typical household using both gas and electricity would pay no more than £2,500 annually for two years the government said. However, the energy price guarantee now only covers this winter. It will be in place until April next year. A review will look at what measures should be put in place after this date.

Stamp Duty

Stamp duty will remain in place. In England, no stamp duty is paid on first £250,000 and for first time buyers, this is increased to £425,000. To check out Wales’ stamp duty rates, please click here

These rules seem like they will stay in place now but, as always, we will keep you up to date with the latest