How to build and thrive in a portfolio career

Posted by & filed under Career, Members.

Adding another string to your professional bow may be just what you need if you’re feeling jaded and demotivated.

For sure, there are days when you feel stuck in a groundhog day. You may even be thinking about chucking it all in and pursuing a career that is completely unrelated to accountancy. But rather than do something drastic (opening a cat rescue centre, anyone? training to become a shepherd?), perhaps what you need is a bit more variety in your working life.

Portfolio careers becoming popular

More and more people are now embarking on a portfolio career, choosing to split their time and skills between two or more roles.

“So, someone might be working in a marketing role but then they will also take on another skill or career choice, say as a fitness or lifestyle coach,” says Viki Holton, Research Fellow at Hult International Business School and co-author of forthcoming book Career Agility: Strategies for Success. “Often, the second role is where this person’s real passion lies.” 

Portfolio careers are increasingly popular among accountants, too.

“Accountancy is actually a great base for a portfolio career – you’ve got strong business foundations and acumen,” says Emma Maslin, author of an award-winning personal finance blog The Money Whisperer.

She says: “Although I started the blog as a hobby, it’s developed into a great income stream and my personal finance expertise has brought me lots of other opportunities including speaking, social media campaigns and freelance writing for brands in the personal finance industry.”

Maslin also offers money coaching and will soon be launching online courses. She has recently co-authored a book (she says she’s got “the writing bug”) and, if all this isn’t enough, she also manages buy-to-let property, both her own and for others.

Benefits

In a portfolio career, you never have to do one thing for so long that it becomes a grind.

“Portfolio working, if you get it right, offers a high degree of satisfaction simply because you get to manage your time so that you spend more of it doing enjoyable work,” says John Lees, careers expert and author of How to Get a Job You Love.

Maslin loves the variety. “I couldn’t imagine doing the same thing day in, day out. On weeks when I’m not feeling hugely inspired about what to write on my blog, I work on other things.”

She adds: “Another huge benefit is that my work isn’t location dependent, I can write or coach from anywhere on my phone and laptop. This means I can spend a lot of time away with my family during the school holidays.” 

The need to balance her own career and family responsibilities is what’s prompted Annette Powell to start a nail & beauty business alongside running her practice, Zenza. 

“My 14-year-old daughter Laura has an acquired brain injury and also suffers from fatigue – these issues create barriers for her future career prospects. As her mum I know where she excels and also her limitations, and I want to give her the best opportunity when she leaves school.”

Laura and Powell’s other daughter Katelyn both have an interest in nails and make up, which is where the idea for the business (called Powellette) came from. “I was particularly interested in nails as it’s a repetitive task and repetition is very important to Laura, it enables the subject to enter her long-term memory.”

Powell hopes that her daughters will run the business together one day. “At the moment, I plan to work within this new business part time over the next 18 months, to grow the client base to be able to offer Laura an apprenticeship.”

She adds: “The time I take out of Zenza gives me the opportunity to reflect on and improve things in my main business, I get this clarity when I’m not in the thick of it.”

Juggling it all

Granted, keeping several balls in the air at the same time can also be a challenge.

“It can be hard to maintain a healthy work/life balance and your stress levels can rocket too,” says Holton. 

Although Maslin says she finds her work less stressful now than when she was working in Big 4 corporate finance. “Property management only requires input when tenants change over or there are maintenance issues, and the rest doesn’t have to fit into 9-5.” In fact, she can work when it suit her best.

It’s easier if your first or main venture is well-established, too. “I have a excellent team around me at Zenza so it can operate when I’m not there,” says Powell.

But isn’t she worried what her bookkeeping clients might think when they discover she’s gone into “nail & beauty”?

“They may be surprised by it, although many know of my personal situation and will appreciate why I’m doing it. In fact, I’ve launched the business to a number of my business contacts and they all thought it’s a well-planned and very forward-thinking thing to do.” 

Going portfolio

Do consider downsides before you go portfolio, says Lees. “Talk to people who are already doing it and learn from their mistakes.”

Have you got what it takes to make it work?

Holton says: “Think carefully about your values and drivers: what are you looking for from the second role? Do you have sufficient knowledge of any rules and regulations that will apply to you? Do you have the support of your partner and the rest of the family? Also, be realistic in terms of what you can manage.”

Do you need to skill up? “I intend to take appointments at Powellette, so I’ve completed my nail manicure and gel nail courses through the Beauty Guild, and I’m about to complete ‘acrylic nails’,” says Powell. “It’s challenging as this takes completely different skills to my day job.”

Start low-key, too. “Spend time building interest and customers, without high financial investment. That might come later once you know you can really make it work,” says Holt.

She also suggests trying a new avenue first through volunteering work. “Dip your toe in the water before you make more of a commitment.”  

If you’d be interested in volunteering as a member you can find out more here (login required).

Maintaining your code of ethics as a bookkeeper

Posted by & filed under Bookkeepers, Pensions and payroll, Run your business.

The role of the bookkeeper is changing, thanks to advances in technology and business accounting software.

Where once a bookkeeper might be focussed purely on maintaining accounts, the evolving nature of the role means that they are now an integral part of a business, and can make the difference between the organisation thriving or failing to survive.

“Whenever we do research, we find that the accountant or bookkeeper is the number one trusted person in a business,” says Damon Anderson, director of partner and product, UK & EMEA, at Xero, which provides small business accounting software.

His team works with thousands of accounting and bookkeeping partners to make sure they have everything they need to make the most of digital transformation. He says that trust, and the ethics of a bookkeeper, are regarded as fundamentally important in a business.

Technology is driving change

“The role of the bookkeeper, or accountant, is changing rapidly,” he says. “Technology enables bookkeepers to be more efficient and better at what they do.”

The management of accounts is not just looking in the rear view mirror anymore – how the business has performed in the previous financial year. Technology now gives bookkeepers the opportunity and the tools to start planning for the future.

“The role is evolving into more of an advisory service, pushed forward by the requirements involved in the roll-out of Making Tax Digital (MTD) by HMRC,” he says.

One of the ways an accountant or bookkeeper can make a difference to a business is by bringing the analytical skills that many business owners lack.

“Typically, business owners are entrepreneurial and creative and don’t set up a business because they want to deal with checks and balances on the books,” he says. “They are driven by a passion and a vision. The role of an accountant and bookkeeper is to give a counter balance. It can work out to be a match made in heaven.”

New technology enables financial specialists to add cash flow forecasts and look to help look to get access to capital in order to help the business grow.

“This is one of the most exciting industries to be in right now,” he says. “It is transforming so quickly.”

A trusted advisor

Steph Rickaby runs Sunflower Accounts Limited in Wiltshire. Sunflower Accounts is a firm of Chartered Certified Accountants based in Calne near Chippenham.

“The role of the accountant and bookkeeper is very much becoming one of a trusted advisor,” she says. “It is really important to have robust systems and processes in place around the bookkeeping function. Automation, for example using the likes of Xero and Receipt Bank, can help with accurately recording receipts and reconciling the bank. However there must always be a mechanism in place to regularly check the bank reconciliation i.e. the statement balance agrees to actual bank account to ensure that all transactions are included as well as checking for example the VAT element on the invoice through receipt bank is accurate.”

One of the key roles of a bookkeeper is to maintain accurate records and reduce the chance of fraud occurring.

“Systems are really important for preventing fraud: don’t reply on one method of authorisation when giving instructions to set up and pay a new supplier for example. We have seen the increase of fraud in this area, particularly where the bookkeeping function is outsourced.”

She says it is really important to pick up the telephone and question all new suppliers and large payments, however convincing or demanding the emails are from the fraudster pretending to be the director.

Create the right policies

“Ensure that there is a policy in place to question all new suppliers or large payments, but don’t use the same method as the request, i.e. if emailed the request, then maybe text or phone the person who made the request.”

When a business is growing, it is really important to manage not only costs and anticipated / expected sales through preparing a budget, but to forecast the anticipated profit and loss and be able to monitor this to ensure that the project and growth is on track.

Simon Renshaw, Senior Insolvency Practitioner, at Companydebt.com, says the bookkeeper can provide checks and balances and help companies to stay on the right side of legislation. Taking an ethical approach in these matters is very important.

“Since there is no licence required or entry exam needed to become the director of a limited company, many people find themselves woefully underinformed when it comes to the financial technicalities,” he says. “This isn’t necessarily a shortfall because when individuals are experts in their field, there’s no reason they should have to know about tax returns, VAT legislation, payroll and National Insurance in addition.”

This is where the services of a competent accountant or bookkeeper are invaluable. Not only do they handle that side of the business, they bring experience and expertise in cash-flow management, risk management, directorial responsibilities and cost-cutting.

The importance of integrity

Simon Renshaw says that as insolvency practitioners, his team regularly help directors who are facing serious creditor threats such as winding up petitions. In some cases, these have been completely ignored by directors, sometimes on the advice of an accountant or bookkeeper.

“These are classic examples of cases where a director’s poor choice of advisor ends up costing them their entire business.”

Pursuing the most tax efficient strategy is a key element of any successful businesses story, he says.

In most small businesses, without an inhouse financial expert, the accountant or bookkeeper fills a vital role.

“As well as driving growth, the right financial decisions (such as putting money aside for the inevitable rainy day) are essential habits.”

The consequences of not handling finances properly can be serious.

“As we see every day, the consequences are insolvency and worse. Where directors are not accurately informed, they may find themselves liable for wrongful or even fraudulent trading, facing civil or criminal charges. Signing personal guarantees may also result in the loss of a family house in addition to insolvency, which is really the worst kind of double whammy.”

How to handle complaints

Posted by & filed under Members, Run your business.

When the founders of price comparison site Foundem complained that Google were deliberately demoting their site in search listings, nobody listened.

Their problems began because of an algorithm that was supposed to remove spam – leaving Foundem invisible against the more familiar competitors that are now household names. After eight years of dogged complaints from a determined pair of entrepreneurs, Google was fined a staggering £2.1 billion in 2017 by the European Commissioner for Competition. This was “the largest anti-trust penalty ever handed to a single company,” according to Wired.

Prevent molehills from becoming mountains

Whilst this example is unusual, the lesson is clear – listening to your complainants and preventing molehills from becoming mountains is not only good for your reputation, but for your bank account too. So how should accountants best handle complaints? And what are the best ways to avoid problems arising at all?

For Aimeé Hargreaves, Director at Ultra Accountancy in Wakefield, good communication is the key to resolving problems. “Pick up the phone,” she says, “straightaway. Ask the client why they have complained.”

Understand the nature of the complaint, and you’ll be able more quickly to resolve it. “Establish why the problem happened – and identify who is at fault.” For example, if the client is complaining that they have received a filing penalty, you need to examine whether fault lies with the client or the accountant.

“If it does turn out to be your fault, be honest. Confirm it won’t happen again, and rectify trust – offer either to appeal on the client’s behalf or pay the fine.”

Acknowledge the problem

If the fault is yours, saying sorry promptly can be one of the most effective ways of de-escalating a problem. But it’s essential to get the tone of the apology right.

“Know what you’re apologising for and be really specific about it,” says a compliance officer at a leading law firm, speaking anonymously. “Frequently, a complainant simply wants someone to say sorry. Sincerely saying ‘I’m really sorry you have cause to complain,’ goes a huge way, because the complainant is cross, and calming them down is part of the apology.”

Take personal responsibility and apologise yourself; don’t delegate it to someone else if the complaint has come to you personally. Use plain language, and don’t dress things up in elaborate partial excuses. Have a procedure in place for dealing with complaints, and ensure all staff know what that procedure is. If some on the team need some help, consider finding some suitable training for them on handling complaints (and wider customer service).

Know when to apologise

The personal touch then becomes part of a wider strategy. “If you have a strong quality and risk management procedure, handling complaints well and knowing when and how to apologise will be a key part of that,” the compliance officer says. “In the past, professional services firms have been somewhat weak at understanding the value of an effective apology – or even in knowing how to do it properly. In recent years the culture has definitely changed for the better.”

Alan Jones is Founder and Chairman at Mustard Advisers, a business advisory service for SMEs.

“We have incorporated willingness to apologise into our culture,” he says, “and all advisers adhere to this. For instance, if a client hasn’t understood some advice that we have given, we regard it is as our fault.”

The art of communication, he says, is making sure that the message has been understood. “Sending an email does not mean that it has been read and understood, even if it has been opened. It’s our responsibility to make sure that the correct and timely actions are taken.”

If a client hasn’t fully appreciated an important message, “even if we have spoken face to face and followed up with a reminder, we take the hit on that and apologise.”

Be service-oriented

“Differentiate yourself,” Aimeé Hargreaves says. “Be available. There are lots of ways to be in touch now – the thing that makes a mistake escalate is silence.” Also, take every complaint seriously – even if you don’t believe, to begin with, that you are at fault – and gather all the facts.  

There are two elements to customer service here – anticipating what problems might be, and solving them before they arise; then creating a personal relationship with clients where they will feel they know you. After all, we are more likely to forgive a friend for making a mistake, than a stranger.

Let’s take the first point first. “It’s about minimising problems and preventing them happening in the first place,” Hargreaves says. “Things a client might complain about include: getting a big tax bill and realising they needed to set to work on it months ago; a tax investigation that has gone wrong; or finding out anecdotally that they could have got a tax relief that they didn’t know about.” All of these potential scenarios can be alleviated, if not prevented from happening altogether, by knowing the client better, Hargreaves argues. “Understand their needs and wants and then it will be the professional telling them things they need to know – not someone they might have met in the pub.”

As far as creating a personal relationship goes, this is where Google were vulnerable in our Foundem example. As a smaller company you have an advantage – and arguably, the smaller you are the better, because you are more likely to know your customer personally.

Leveraging trust

But how can you create that personal relationship? “As well as the obvious – being available at the other end of the phone when the client needs to speak to you, and calling them back quickly if you’re not – it’s about finding less common ways of building a relationship,” says Hargreaves. “Send a birthday card, or a get well card if you know the client’s ill. These are all touchpoints for making the customer feel good and showing that you care about them.”   

Be proactive. “Don’t just offer compliance – say to your client, ‘have you thought about X, and do you know about Y?’ Be genuinely interested in them, and ensure you are not just ticking boxes. What are they interested in, what exercises them? That kind of thing. Having an anticipatory mind set means you’re less likely to get complaints in the first place, and more likely to resolve them quickly if you do.”

Preparing for the new tax year – part 2

Posted by & filed under Bookkeepers, Pensions and payroll.

The first article in this series covered the statutory deduction rates for 2019-20 that apply to everyone who has an income in the UK. In this article more rates and updates are covered, all of which come into play in April 2019.

Rates

The following rates are reviewed annually, and many of them increase either in line with the retail price index, the consumer price index, or government policy.

The month of March is a good time to review all employee and worker dates of birth and diarise any rate increases due to them.

National minimum wage

The national minimum wage rate will increase 1 April. The new rates are

Be aware that for individuals whose age moves them from one rate to another and whose birthday falls on a day other than the first day of the month (and that is a lot of individuals) there may be two rates in the month to calculate, one rate for the days before the birthday, and one rate for after.

In the above situation it is worth reviewing the employment contract or Policy handbook for the correct procedure. If no written instructions, then check with the employer. Many employers will instruct the rate to be increased from the first of the month regardless of when the worker’s birthday falls.

Automatic enrolment

The qualifying earnings bands for 2019-20 are from £6,136 to £50,000. The earnings trigger remains at £10,000. This means that more and more people are falling within the automatic enrolment ‘net’.

This is the last year in which there is an increase in contributions (as far as we know). In the last tax year the total contribution was 5%, this has now been increased to 8%, with the employer paying a minimum of 3%. If workers have not yet been made aware of the increase this would be a good time to ‘remind’ people.

Remember that the increase is from 6 April, which may be in the middle of a pay period. Do check with the employer whether to implement the increase at the beginning of a pay period prior to the 6 April or from 6 April. An employer can always implement a rate increase early, though an employer may never delay or ignore an increase

Don’t forget that any business taking on their first worker will need to set up automatic enrolment immediately. The trigger date is the worker’s first day of work.

Redundancy

The new maximum weekly amount for redundancy or unfair dismissal for Great Britain has been announced and is £525 per week. The Northern Ireland rate to use, is £547 per week.

Operating PAYE

Most, if not every, tax year there are changes to the RTI process, associated documentation and the submissions used to report the pay. This tax year is no different

Submission changes

To allow for the notification of the deductions and changes announced during the year, various submissions have been amended.

For the 2019-20 tax year the Full Payment Submission (FPS) will now accept the ‘C’ prefix for a Welsh taxpayer as well as the prefix ‘S’ for a Scottish taxpayer.

From April 2020 the Earlier Year Update (EYU) will be replaced by the FPS to change any year to date figures. For the tax year 2018-19 either submission can be used and for prior years the EYU must be used.

There will also be, for the first time, a field for the PostGraduate Loan deductions included on the FPS.

Itemised payslips

From 6 April 2019 the payslips for workers whose pay varies by the number of hours worked must state the number of hours that the pay relates to. This could be shown as either a total figure or several figures by rate of pay or type of work. The thinking behind this is that hourly paid workers would be able to work out whether they have been paid the minimum wage or not. However, this may not be as easy as first assumed. Some hourly paid workers are paid monthly and their pay is worked out on an annual balance. In these circumstances it may be prudent to show the formula used to calculate their pay. This may reassure the worker and minimise any queries that would otherwise be raised.

Things to consider

In this the second of three articles it can be seen that the changes so far are either expected, in that they are annual increases, or that they are small adjustments to already existing processes or norms. These changes may not be big, but they are important, so take time to review and update all rates, process and documentation to ensure full compliance with payroll law and regulations.

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5 expert tips for businesses looking to scale up

Posted by & filed under Members.

It’s almost inevitable that a successful business owner will face the decision of whether or not to scale up their business in order to seize potential growth opportunities.

How do you decide if scaling up is right for your business and avoid the pitfalls along the way? While there are many advantages to scaling up, there is also a great deal of research and planning involved.

Here we speak to Stephen Hand, Director Invoice Finance & ABL at Lloyds Bank to get some practical advice for small businesses looking to scale up. 

1. What risks do businesses need to be mindful of when scaling up?

Stephen: Ensuring the business does not run out of cash. Growing too quickly can put increased pressure on working capital, so it’s key that businesses ensure they plan and manage their working capital closely.

2. What financial warning signs should businesses look out for when scaling up, and how can they act, before it’s too late?

Stephen: Firstly keep an eye on margins, top line growth at the expense of bottom line profitability is often something that can happen. Look out for debtor days (the average number of days it takes a company to collect payment for the sale of goods or services rendered) increasing, as perhaps the focus goes onto growth rather than good disciplines.

For example, stock levels increasing and watching out for slower inventory turn.

3. Is there any way banks help you to mitigate these risks?

Stephen: Lloyds Bank can help you to better manage your working capital with a free working capital review using our innovative working capital tool. The tool can help visualise where in your working capital cycle you could be below par and helps you focus on key actions to keep the cash in your business flowing.

We are also able to provide Invoice Finance which allows businesses to free up capital and gain earlier access to payments from their customers. This means less pressure on their working capital as cash can be released at the time it is most crucial, allowing them to focus on running their business and executing on their scale up plan. Furthermore, Invoice Finance is generally cheaper than other lending solutions such as overdraft.    

4. Do you see any other common challenges facing small business owners in the current landscape?

Stephen: Lots, however, this has always been the case! But equally, there are still lots of opportunities for SMEs in the current landscape. Keep to the basics, have a plan, understand your strengths, weaknesses, opportunities & threats. Cash is king, so control it, be flexible and adapt. Recruit the best people you can afford and constantly strive for small improvements in every area of your business.

5. What about the opportunities? Are there any exciting trends or innovations that could positively impact small businesses?

Stephen: Digitalisation is the biggest opportunity, clearly it depends on sectors, how big or small the influence, but every business will be affected in some way. It is key to embracing the opportunity and look at ways to harness the new opportunity it can bring to business; from improving process efficiency to increasing customer engagement to mitigating risks such as fraud.

The key takeaway here is before looking to scale your business, ensure you’ve done your homework. Scaling a business can be extremely profitable but also challenging at the same time to ensure you’ve got a plan in place which minimises the risks and provides a smooth transition to becoming a larger organisation.

Empowering small businesses

For more information on how to scale up your business, you can visit Informi, a website that helps empower small businesses to make better decisions.

Informi is a free resource and provides a range of comprehensive, straight-talking guidance on all aspects of running a business from starting up, marketing and legal advice through to management guidance (for yourself and others), business administration and of course, scaling up. This includes sources of financing ranging from grants to bank loans to crowdfunding to Invoice Finance

If you want to know more about Invoice Finance or if you have a client that may benefit from Invoice Finance you can get in touch by emailing [email protected] or call 0800 077 8066 for a free, non – obligatory consultation.  Alternatively, you can find out more about managing your working capital here: lloydsbank.com/workingcapital

How should accountants be preparing their clients for MTD?

Posted by & filed under Making Tax Digital, Members, Run your business.

April will see the introduction of the government’s Making Tax Digital (MTD) initiative, in one of the biggest upheavals of the tax system for decades.

The move will see any VAT-registered business currently turning over more than £85,000 a year obliged to file quarterly VAT returns digitally, using compatible software, with the ultimate aim of bringing other elements such as income and corporation tax into the scope in future.

According to research by AAT, there remains much to be done ahead of the looming deadline. Just 44% of accountants currently feel they are prepared for the 1 April deadline, with 28% unsure and the same number admitting they are not prepared.

Some 41% have chosen software to digitalise VAT returns with 24% planning to rely on existing software. However, 16% say they have yet to decide which package they will use, with a further 9% saying they are close to deciding.

Ensuring use of compliant software

There are other steps accountants will need to take too, beyond ensuring their own software is compliant. “For agents making VAT submissions on behalf of clients, it’s necessary to first set up an agent services account with HMRC,” says Chris Downing, director of product management at Sage. “This account is required to access the new HMRC online services, including MTD. However, it’s important to remember that it takes five working days after the last non MTD VAT return per client to move onto the new platform. Timing here is key.”

Accountants also need to understand which elements of their customer base will be affected, says Phil Thornton, senior product manager, tax and accounting, at Wolters Kluwer UK. “Once the clients making the transition have been identified, it will then be a case of understanding how they submit VAT returns today,” he says. “In instances where the accountant submits on behalf of his or her client, will that continue? For clients who do their own submissions, what solutions do they use and will these be suitable for MTD?

Finally, accountants must understand which clients maintain manual records and currently submit VAT returns using HMRC’s online filing service. What does the transition to MTD look like for them?”

Weekly WebEx conferences

Then there’s the matter of preparing clients, and here there is much work to be done. According to Richard Asquith, VP of global indirect tax at Avalara, only around 30,000 of the 1.2 million businesses that will be expected to adopt MTD for VAT have currently registered with HMRC, and a large proportion of those that have done so have not yet testing their software or Excel filing solution.

“HMRC runs weekly WebEx conferences for agents and businesses on the process,” he says. “This is a fantastic source of information to help inform clients on progress towards MTD and what is needed. Accountants can then use this for mailings or WebEx conferences for their own clients.”

The reality is that many businesses have buried their heads in the sand and simply aren’t prepared, says Stuart Hurst, head of cloud accounting at the Manchester office of UHY Hacker Young. “It varies in terms of the systems currently in place in the business rather than the size of the organisation,” he says. “The clients that currently use spreadsheets will be the most affected by the transition as they may have to make more adjustments and are more likely to be putting it off.”

Step by step guidance

Accountants need to get in touch with clients now if they are to ensure they will be compliant by the time they next need to file a VAT return, says Steve Cox, chief evangelist at IRIS Software Group.

“In our mobile-first world, the use of apps has been a succinct way of communicating directly with clients,” he says. Accountants also need to check they have the right compliance and systems foundations to cope with bridging solutions, he adds, with IRIS’s own survey suggesting 39 per cent of firms have not changed their underlying technology and will be relying on bridging software.

Accountants should also be providing clients with simple step-by-step guidance on what they need to become compliant, including running training sessions on software. “During these sessions the clients will learn how to set up the software and see the benefits of becoming digital,” says Mandy Chubb, head of management accountancy at Goringe Accountants.

“This also provides a platform for any questions and concerns they may have. For those clients unable to attend, ensure the guidelines are available on an MTD-dedicated section of your website along with a detailed frequently asked questions page, and clearly state in your email sign-offs what digital tax changes are coming.”

Changing ways of working   

There are potential advantages for accountants that can successfully handle clients’ transition to MTD. “It offers a chance to get in touch with clients that you may not ordinarily speak to each day,” says Downing. “So take the opportunity to enhance your trusted advisor status. This is also a good time for accountants to run MTD-themed conferences, workshops, webinars and email/social media campaigns in order to attract new clients and to add value to existing ones.”

There could also be beneficial changes in the way firms operate, helping to smooth out workload across the year, suggests Hurst. “Things will move from interacting with your client once a year to having more touch points in the year and giving more real-time advice,” he predicts. “This should see work across the year increase, but a reduction in time spent preparing year-end accounts.”

Download AAT’s free MTD for VAT ebook.

Budgeting venture for managers with The Skills Network

Posted by & filed under AAT news, Members, Run your business.

In February, AAT launched a new joint venture with distance learning provider The Skills Network (TSN) to introduce a brand new online budgeting course, AAT Essentials: Budgeting. Designed to support managers to better manage budgets and cash flows.

But, why? Shouldn’t managers inherently be able to budget effectively and efficiently?

Unfortunately, as AAT and TSN have recognised, most non-financial managers never receive the training they need to perform key financial tasks, such as budgeting, prior to taking on such responsibilities!

We discuss just how important it is for managers to get departmental budgeting ‘right’, and how, as employers, we can better aid them in doing so.

Managers and budgeting: Expectations and importance

Budgeting is at the core of every organisation – we know this! Without keeping check of the financial realities of our business, we fall short in achieving our strategic vision.

Effective budgeting is therefore necessary for managing activities, controlling expenditures, allocating funds, and really setting a precedent for consistent performance across the entire business.

As such, controlling a departmental budget is very much at the heart of every manager’s role, and the ability to effectively manage a departmental budget is not just increasingly valued by employers, it is expected – and falling short is rarely acceptable.

To put it simply: budgeting isn’t just a tick-box exercise to satisfy the demands of top-tier management.

It’s a manager’s responsibility to ensure that they are on top of their budget, and not rely on someone else to tell them when they are
over budget.

They must ensure that their resources are correctly aligned (not wasted), costs are understood, and volumes are appropriately predicted, with the correct amount of staff (at the right cost-per-employee) to achieve their departmental goals, which must be aligned to the wider strategy of the organisation.

A manager must get to the stage where they understand each line of their budget and the value of monitoring it, and must also be pro-active enough to identify and address problems in good time!

Where managers often go wrong

Without effective budgeting, poor decisions are made, performance falls short, and resources are wasted.

But where do managers often go wrong?

  • Creating a budget without discussing it with, or involving, others
  • Being overoptimistic by setting unrealistic sales projections that are not based on past sales or current market conditions
  • Underestimating costs, or not considering cost increases
  • Applying simple percentage changes to the previous year’s budget without any reasonable justification
  • Creating a budget, then simply ignoring it
  • Rushing the process – collecting too little information, or not taking the time to monitor budgets correctly
  • Being privy to silly games of other managers – e.g. being close to year-end and under budget, so beginning to quickly spend unnecessarily to ensure that the budget is not cut next year.

We must better support managers in developing the financial skills and knowledge needed to take correct ownership of their department’s resources.

But, how?

How to better support managers with budgeting

The key to budgeting is being strategic. Departmental budgeting should always be directly tied to the objectives and strategy of the wider business. Often, managers are unclear on the bigger picture and how their departmental budget fits within the context of the wider business.

We need to help managers understand the strategy, and ensure that they know the answer to the question: what goals am I trying to achieve with my departmental budget? Managers can then begin to determine the resources required to achieve those goals, assessing how to utilise them more effectively, and, if they need more resources, developing a proper business case to request additional funds.

We should be prompting managers to ask questions such as: “Am I clear about my outgoings?”, “Am I clear about what’s incoming?”, “Have I accurately forecasted to meet objectives?”, and “Are there any factors that might have serious implications for my budget?”

Once managers have asked the key questions, they can begin to manage the intricacies of gathering information, monitoring expenses, allocating resources, setting up warning signs and tracking team performance. They can then ensure that they can be pro-active in making corrections should they be on track to fall short of financial targets.

Above all, we need to equip managers with the confidence and competence to effectively understand costing, estimation and budgeting.

The new AAT Essentials: Budgeting online short course aims to support managers to learn how to budget effectively, allowing them to study in their own time, either at home or at work, without needing to attend work-based training, attend a college or take time out of their work schedule.

Find out more about the AAT Essentials: Budgeting course.

Student Stories: What it was like to take a socially distanced exam

Posted by & filed under Ready Set Go (Advanced).

Socially distanced exams are our “new normal”, certainly for now but what is it actually like to take a socially distanced exam?

We asked some of the AAT students who have already done it to tell us about their experiences and advice. 

James sat his Management Accounting Costing Level 3 on 30th June in Milton Keynes.

How did you feel about going to the centre to take your exam? What worries did you have? James: My main concern was that I hadn’t been to that centre before and it was an hours drive so that added to the pressure a bit. I just made sure I left plenty of time and I arrived 20 minutes early.

What measures were put in place and did these remove all of your worries?James: When I got there, they explained the procedures. It gave me confidence as they were taking it very seriously. I had my temperature taken when I arrived and before we could enter the building we had to hand sanitise. You had to wear a mask at all times in the building. In the exam room, the computers were spread out and had dividers.

How safe did you feel from entering the centre to leaving the centre after your exam? James: I had no worries about my health. You had to book a time slot so everyone’s arrival was spread out.

Were you comfortable with the distancing between candidates during your exam? James: Yes. When I was sitting my exam I was the only one in that particular room. Then halfway through, two other people came in to sit on the other side of the room.

Would you come back and take another exam under these conditions and would you recommend it to others?James: I’ve got another exam in two weeks and I would recommend it. You’re wearing a mask but there are really no other changes to sitting a normal exam. All the procedures they put in place made me feel safe so there’s no reason I wouldn’t recommend it to others.

Is there anything you feel could be improved for future candidates? James: I would advise that you do a practice exam wearing a mask for the whole time. It sounds silly but I haven’t been out much or worn a mask for more than 20-minutes so I didn’t want the first long period of wearing it to be during the exam. You don’t want to be getting used to it then. Finding yourself not concentrating on the exam but fiddling around with it and focusing on it being uncomfortable.

Samara is doing the Level 3 AAT Assistant Accountant Apprenticeship

How did you feel about going to the centre to take your exam? What worries did you have? Samara: I was very anxious before coming into the exam centre for my Advanced Bookkeeping exam. I was nervous not knowing what the situation would be.

What measures were put in place and did these remove all of your worries? Samara: Upon arriving at the centre I was met at the entrance by Simon who made me feel very welcome and he took me to the reception. I was then met by another lovely lady who took my temperature on my forehead and checked my ID at the 2-metre distance before being taken into the exam room. They take you through one person at a time and you are asked to sanitise your hands before entering the corridor down to the exam room.

Were you comfortable with the distancing between candidates during your exam? Samara: Once in the exam room, it is very well set up. There is only a maximum of four students in the room at a time and you have plastic dividers in between each desk. I actually found the dividers to be really good and helped with lessening distractions that could happen in the exam room. I found I was able to concentrate better.

Is there anything you feel could be improved for future candidates? Samara: Overall I found my visit to the exam centre was very welcoming, friendly and had an understanding atmosphere. Thank you, Ruth and everyone at Accountancy Learning.

Paulina started her journey with AAT during lockdown and is currently studying Level 2.

Paulina booked her first exam, Bookkeeping Transactions, for the first day they were back on 29th June and then sat her second exam, Bookkeeping Controls, on 13th July at The Accounting Tutorship in Welwyn Garden City.

How did you feel about going to the centre to take your exam? What worries did you have? Paulina: I felt pretty confident before entering my exam centre because I had received some information, rules and guidance at the time of booking. It gave me a basic understanding of what to expect when I arrived and the rules that everyone was supposed to follow. I was surprised how organised my exam centre was.

What measures were put in place and did these remove all of your worries? Paulina: There was social distancing (from the very beginning in reception, through my exam, to leaving the centre at the end). And everyone had to wear a face mask. Computer equipment was cleaned after each student and every other seat was empty.

How safe did you feel from entering the centre to leaving the centre after your exam? Paulina: I felt really pleased with the way it was approached. Each student had a seat already prepared in reception, all rules were clearly explained and the classroom was professionally prepared for the exam. The team ensured that I felt safe and looked after. I had no concerns.

Were you comfortable with the distancing between candidates during your exam? Paulina: My exam centre is rather small, but in order to enable students to take their exams, they scheduled lots of extra times. As a result, during my exam, there was only one other student and the centre manager keeping an eye on us. I was really happy with only three people in a classroom as I had a lot of personal space around me. This made me feel calm and safe.

Would you come back and take another exam under these conditions and would you recommend it to others? Paulina: Absolutely, my exam centre has exceeded my expectations and after the first and second exams, I have already booked two more – one in July and one in August. I am very grateful that I am able to finish a whole Level so quickly without being worried that I am in any sort of danger. I know that not all students have this opportunity right now. I would truly recommend sitting exams at my exam centre.

Is there anything you feel could be improved for future candidates? Paulina: The only advice I would give other students is to speak to your exam centre and ask for clear procedures. Try to point out what is important to you and your safety during an exam. Getting some knowledge will save you any added and unnecessary stress after arriving for your exam.

Further reading:

Chancellor: VAT MTD is go, but no further mandation until 2021

Posted by & filed under AAT news, Making Tax Digital, Members.

While not referenced within Chancellor Philip Hammond’s Spring Statement this week, in his written response he made a strong reference to the Government’s commitment to Making Tax Digital for VAT (MTDfV).

No further mandation before 2021

Hammond’s written response referenced an earlier promise not to extend the mandation of MTD to any new taxes or businesses until the MTDfV system has been shown to work well, and not before 2021 at the earliest. 

Given the immediate focus will be on supporting businesses to transition to the new service, this can only be described as a common-sense move,  and one to provide some certainty.

Latest from HMRC

The publication of the Chancellor’s Spring Statement was followed immediately by a statement from Theresa Middleton (HMRC Director, Making Tax Digital Programme):

“Our VAT pilot service is progressing well, with over 46,000 businesses in the pilot and over 200 MTD compatible software products available, including some free products, and over 140 existing subscription products being updated at no cost at all.”

Middleton’s comments also referenced that HMRC:

“…continues to listen to feedback from business, and recognises the importance of supporting businesses through the transition to MTD.”

Future direction of travel needs to be clearer

It is great that what I have been saying privately to HMRC, that further mandation in 2020 was not doable, has now been publicly acknowledged. 

I would urge Government and HMRC to be clear about the future direction of travel for MTD to help the software industry to know what they need to do and by when. 

The danger of an absence of clear commitment will leave a vacuum and as we all know, where a vacuum exists, the arising gap will be filled with conjecture. 

What is MTDfV?

The major change to the way that VAT-registered businesses with VAT-taxable turnover of £85,000 or more will keep their VAT records. These will entirely be recorded digitally, and businesses will need to submit their VAT returns using MTD compatible software for VAT periods starting on or after 1 April 2019.

How to choose the right name for your business

Posted by & filed under Run your business.

Should you go with something traditional or do you dare to be a little bit different?

Coming up with a name for your new venture is perhaps the first big decision you have to make. It will represent you and your services, so it’s vital that you get it right.

Your gut feeling may be telling you that you need to pick a name that sticks in people’s minds. After all, there are so many XYZ Accountants out there already, right?

There is, however, a fine line between catchy and pretentious or even tacky.

So how can you be memorable, but also professional, modern and approachable? And what else should you consider?

Target audience

The name should appeal to you, but first and foremost, it should resonate well with your prospects and clients.

“Remember the first rule of marketing: you are NOT the client,” says Tim Prizeman, director at public relations agency Kelso Consulting, who has been advising accountancy firms for 25 years. “Test several potential names on people you know who fit your client profile. A small sample won’t be representative so don’t slavishly follow the feedback, but do use it for guidance.”

That said, it’s perfectly ok to put forward a name that you, as the business owner, personally connect to.

“In many ways it’s firstly an emotive decision based on a feeling that a name is inspiring,” says Neil Svensen, co-founder and CEO at branding agency Rufus Leonard. “Many of the names we all know and love started life based on the fact that the name just felt right, often accompanied by a compelling story about its origins.”

There’s certainly a compelling story behind the origins of Zenza, the name Annette Powell MAAT chose for her practice.

Powell says: “We holiday in the same part of Spain each year, it’s quaint, cultural and picturesque. One evening a few years ago we went to the end of the pier in the main town of Dénia, walked through a steel door and climbed a rather industrial-looking staircase only to discover this hidden, open-air bar called Zensa. Not only was it beautiful and serene with panoramic views of the harbour, the customer service was also the best we’ve ever experienced in Spain. So our Zenza is also like this hidden gem, with the same high standards for all of our clients.”

Zenza’s tagline – “Take a seat, relax and let Zenza take care of all your Bookkeeping, Credit Control and Payroll concerns” – also captures the essence of Powell’s brand.

Powell also recalls how she ignored her father saying “Zenza” would be at the back of the phone book. “For me, it’s something distinctive which makes us stand out from the crowd. Also, we’ve created something different with our practice – we are not the average bookkeepers, we offer a wrap around service to help clients grow their business – and the name adds to that.”

Unleash your creativity

But how creative can you be with the name, considering the traditional ‘image’ of the profession?

Svensen says it’s entirely up to you. “As long as the name reflects the business itself and there is a story around it, there’s no rule that says accountancy practices must have very sensible names. But it’s imperative that you consider how it will be used, how it sounds when it’s spoken, and how you can build on it or incorporate it in your marketing messages. A name is rarely, if ever, experienced in isolation.”

Rachel Balchin combined catchy with sensible when she decided on “Bulldog Accounting”. She’s got two bulldogs – Esme and Rocky – who she sometimes takes along to client meetings, “with varying degrees of chaos”.

She says: “I debated using a combination of initials, or my name, but that’s what everyone else seems to do and ‘Balchin Accounting’ just doesn’t have the same ring to it. In the end, I wanted to be open about something I love and went with my gut. It’s worked really well, the name makes me memorable and more human. I’ve had people contact me only because they liked the name, or were curious about me. It’s also fair to say that, generally, my clients are looking for someone a bit less formal, a bit more fun.”

Balchin admits she didn’t really consider the connotations of the word ‘bulldog’ itself. “That said, there are some great traits embodied by the breed: tenacity, integrity, loyalty, strength and calm – all very valuable when you’re in charge of someone’s finances.”

The name makes marketing easy, too. “I pretty much just post pictures of bulldogs and I’m totally on brand.”

What to avoid

Naming a business after yourself conveys a promise of a personal, familial service, but it may also create an expectation that clients will deal with you and you alone.

Powell adds: “I knew that I wanted to grow the business and that I didn’t want it to be just me – I feel that not including my name in the business name makes it easier to scale. Also, it would make it less easy to market when I decide to retire.”

Prizeman says to also avoid names that are all initials. “Big firms like PwC and EY have vast marketing budgets, you don’t. Initials are harder for people to read and remember, so go for something that will make you that much easier to remember and recommend.”

He recommends that you don’t use ‘Solutions’ in your business name, either. “It’s a weak word that is tagged onto the name of businesses in all sorts of sectors, yet says nothing about what the business does nor is it in any way memorable.”

Other considerations

If you’re setting up as a private limited company, you need to check name availability at Companies House – the name cannot be the same as another registered company’s name and/or an existing trade mark. The rules are different for sole traders and business partnerships.

You should also check the availability of domain names.

Pete Jovetic, head of SEO at digital marketing agency Impression, says: “For example, if the .co.uk top-level domain is free, but the .com isn’t, how will this impact your potential clients trying to reach you when they incorrectly input your address into Google? If both are free, then great – register and safeguard as many domain names as possible.”

Finally, check Twitter and Facebook to see if your desired social handles are available.

For great business tips and information on starting a small business, Informi offers business advice and support, made easy.