Making sure your invoices are paid Posted 12/03/2018 by Charlotte Beugge & filed under Run your business. You’ve finished the job. Your client is pleased with your work. So you send in your invoice and wait for payment. And you carry on waiting. Late payments are an issue for more than half of Britain’s small and medium sized businesses according to the Zurich SME Risk Index, with the total owed more than £225 billion. So how do you chase late invoices? Can technology help? And how can you prevent tardy payments in the future? Get it right the first time Are your invoices actually doing you a dis-service? The information on your invoice could determine whether you are paid on time. Your company name should be on the masthead with your address. You must include your correct banking details (including the IBAN code if your client is overseas) or provide a link to your PayPal account or similar. Say if you don’t accept cheques or cash. You must also give your invoice a unique sequential number. If your business is a limited company then you must put your Companies House registered number and address on the invoice too. If you’re VAT registered there are more rules. Emily Coltman FCA, chief accountant at FreeAgent, an online accounting system for freelancers and small businesses said: “The guidance from HMRC is that if you are VAT registered there are key details which must be included on your invoice including your VAT registration number, the tax point (the time of supply) and a description of the goods or services supplied. You will also need to show the unit price or rate of VAT for each item on the invoice.” However good your invoice is, it’s going to be delayed or unpaid if you aren’t sending it to the right person. This may not be the individual who commissioned you. And don’t just send the invoice to the accounts department if possible. Get a name of the right person. Then you have a point of contact if there are problems getting paid. You absolutely must agree in advance with your customer your payment terms In your own interest? There’s another important thing to include on your invoice: your payment terms. You should include on your invoice how long you expect to wait before you’re paid. However, this shouldn’t come as a surprise to your client as you must discuss it when you agree to take on the work. Coltman adds: “You absolutely must agree in advance with your customer your payment terms, otherwise you are leaving yourself open to the risk of late payment. Putting on your invoice that you expect payment within a set number of days without agreeing this in advance is not conducive to a good relationship with your client.” And you also need to state clearly if you’re going to charge interest for late payments: again, you should have discussed this in advance of the invoice. Government guidance is that if you don’t agree a payment date with your client then the payment is deemed late 30 days after either the customer gets the invoice or when you deliver the goods or services if this is later. It also states that you can charge ‘statutory interest’ at 8% plus base rate (currently 0.75%) unless you’ve already agreed a rate of interest and put this on your invoice. Should you think about charging for late payment? Again, unless you have told your client in advance of the invoice that you’re accepting the business based on your terms and conditions which include charging interest for late payment, then it’s not necessarily a good idea as it can appear aggressive. And it may hinder your chances of picking up future work from that client. However, you may decide that a client you’ve had to chase again and again for payment may not be one you want to hang onto anyway. In future, if you’re concerned about a new client and whether it will pay your invoices, consider doing a credit check on them first. The chase So what happens if your invoice is still unpaid? You could phone up and ask for payment but some may find that hard. “I think difficultly talking about money is a very British thing” says Coltman. You could use a virtual assistant and ask them to chase payment for you. Or you could sign up to an online service such as FreeAgent, ClearBooks or Easy Invoicing. These do your invoicing – and start chasing them when they are due. Coltman says, “Our research shows that our users find being able to track and send invoices through our software really useful – and productive.” If you really can’t get payment, even after re-sending invoices and imposing penalties, then your last resort may be to bring in the lawyers or companies which will pursue the debt for you. Such actions really must be as a last resort: hopefully, if you get your invoicing systems up to scratch then it won’t come to this. And do remember when you’re chasing for money that it really could be an honest mistake: don’t assume the worst. Most people are honourable and pay up in the end.
Managing dyslexia in the workplace Posted 11/30/2018 by Charlotte Beugge & filed under Career, Students. Albert Einstein and Leonardo da Vinci had more in common than their genius: both were dyslexic. It didn’t hold either of them back – nor should it for the estimated 10-15% of the UK population for whom dyslexia is just a part of their everyday life. Yet despite this, many still keep their dyslexia secret from their colleagues and employers instead relying on their own strategies to manage their work. But it doesn’t need to be like this. If you have dyslexia, then it makes sense to tell your employer because there are plenty of things that can be implemented to make your working day easier. Dyslexia: the advantages And what’s more, dyslexia can be a positive force in the workplace. Helen Boden, chief executive officer of charity the British Dyslexia Association (BDA) says: “There’s a lot of work at the moment on the value of neuro-diversity and dyslexia in the workplace in terms of giving organisations a competitive advantage. A recent study by Ernst & Young showed that harnessing such neuro-diversity can bring real benefits.” Because the different way dyslexics think about things means they can come up with other ways to solve problems. And Boden adds: “Quite a high proportion of dyslexics work within the accountancy and bookkeeping fields. Looking at things from a different angle can help with complex issues such as finding solutions to tax problems or ideas for investment opportunities. “These days, more employers are thinking creatively and they want to embrace the different qualities individuals can bring to their business. They don’t have a cookie-cutter approach to their workforce.” Working towards a solution What’s more, a growing number of employers are doing their best to support those with dyslexia at work. The BDA goes into companies and helps train employees as workplace needs assessors who can help those with dyslexia with their needs. A workplace needs assessor will work with the employee “to explore with them the impact and challenges that their dyslexia might be having on their work” says Boden. “They will look at the job description, the detail of the tasks associated with the job, the environment etc. Once this evaluation and discussion has been completed then recommendation for reasonable discussions will be made and a report written. We will also usually meet with their line manager during this process to ensure that everyone is on board with the process.” Solutions will very much depend on the individual, but some adjustments might include spellchecking or voice to text software or noise-cancelling headphones. Telling your employer Obviously, these solutions depend on employees with dyslexia telling their employers. Dyslexia is covered by the Equality Act, so the employer has a duty to make reasonable adjustments for those with dyslexia. But adjustments have to be reasonable – you can’t expect your role to be changed so much that it doesn’t resemble the original job description. However it’s easier – and cheaper – to retain employees than take on new ones, so employers will usually be happy to help as much as they can to accommodate the needs of those with dyslexia. But how do you tell your employer if you’re dyslexic? First of all, pick your time: it’s not a good idea to say you’ve got it after a problem has emerged at work. “We would always suggest that an individual disclosed their dyslexia or anything else at a time when things are going well rather than wait until there is a problem” says Boden. Some employees try to disguise their dyslexia by overcompensating. They get in before everyone else or stay late so they can work when it’s quiet and easier to concentrate. Sadly, there are still cases of people being discriminated against at work because they are dyslexic. If this happens, then you must tell your line manager. Speaking up For some with dyslexia, the thought of going for a promotion or speaking up at a meeting is terrifying. Preparing in advance will help calm the nerves. Employers can help in nurturing a culture where diversity is welcomed as a positive for the business. Boden adds: “The key for employers is to embrace and develop a culture that values diversity and be pro-active in support. In other words, don’t wait for someone to experience difficulties. Treat all employees as individuals with individual needs and it is likely that the workplace will be a happier and more productive environment.” Remember that you have something different to offer and that your way of approaching a problem is of value to your employer – and hence the bottom line and the fortunes of your co-workers. Knowing your value should help you speak up in important meetings – and go for that much-deserved promotion.
7 common CIMA myths revealed Posted 11/30/2018 by CIMA & filed under Career, Students. This content is brought to you by CIMA. Haven’t figured what to do after finishing your studies with AAT? It can be hard to work out which organisation suits you and your career goals the best. As an AAT student or member, you can take the next step in your career and start studying for the globally recognised CIMA qualification at any time. CIMA is the world’s largest professional body of management accountants. Studying with CIMA lets you delve deeper into the topics you covered with AAT, and gain new skills like financial analysis, project management, negotiation and leadership. Here we explain the facts behind seven common myths held about CIMA, and show why studying with CIMA could be the right choice for you. Myth #1: I want to work in small business, so CIMA isn’t for me CIMA graduates work and are in-demand for businesses of all shapes and sizes; from big banks to small family run businesses – so the chances are, in any industry you can think of, there will be CIMA-qualified staff. The CIMA professional qualification doesn’t just teach you to crunch numbers but lets you develop the skills that you need to impress employers in all industries worldwide. AAT graduate and CIMA member Ben works for Plymouth Argyle Football Club. Read Ben Rendle’s story. Myth #2: CIMA is too hard Although CIMA isn’t easy, it is certainly achievable, and AAT will set you up well to study for and pass your exams. You will be able to buy study resources such as revision cards, exam kits and the official CIMA study text. Read about how Rebecca balanced parenthood with her CIMA study to achieve joint first place (globally) in the August 2018 CIMA management case study exam. You can access a full overview of exam pass rates on the CIMA website. The pass rates are high, with an overall exam pass rate of between 70-95% for objective test sittings and certificate level exams in the 12 months to 30 September 2018. Myth #3: CIMA is too expensive You can choose from a range of study options, depending on your budget. If you have a more modest budget, choosing the option to self-study could work for you. Alternatively, CIMA has more than 70 training providers for you to choose from in the UK alone. Currently, all CIMA registered students receive 50% off AAT full membership fees while studying towards the Professional Qualification and according to CIMA’s 2018 salary insights, CIMA students see their salary increase at all stages of their study. Students who have passed the Operational level of the CIMA qualification receive on average £30,000 per annum, rising to £63,000 as a CGMA. Create your own personalised salary report to find out where a CIMA qualification can take you. Myth #4: I’ll have to finish AAT before starting CIMA You can start studying CIMA at any time and if you have completed the AAT Professional Diploma in Accounting, you are exempt from the CIMA Certificate in Business Accounting, allowing you to jump straight into the professional qualification. Myth #5: CIMA doesn’t have many networking opportunities Made up of members and students who help plan events throughout the UK, CIMA’s nine different regional areas bring a wide range of events, social activities and training closer to you. They offer you the opportunity to develop your skills with locally organised events, as well as providing networking opportunities with other like-minded peers. In the past, we’ve held events on everything from soft skills training to future-proofing your career in finance. Take a look at the opportunities to get involved near you. Myth #6: Management accounting is boring A career in management accounting is exciting as it will let you lead from the heart of the business, revealing insights and making the decisions that shape a business’s future. It’s about more than the numbers. CIMA CEO Andrew Harding believes that it will no longer be sufficient for finance professionals to only produce accounts. “As business partners, finance professionals need to act as commercially-minded problem solvers to handle ambiguity and speak the language of the business fluently.” Studying CIMA will let you build on the skills that you’ve acquired through your study with AAT. You’ll gain new skills like financial analysis, project management, negotiation and leadership. All of this will set you up for an exciting and varied career, regardless of whether you want to work in big business or a smaller organisation. Myth #7: CIMA students have no work/life balance Just like AAT, the beauty of studying CIMA is that you can take it at your own pace, with the option to study part-time or full-time. This makes it easier to manage your other commitments. You can also choose how you study – with a tuition provider, on your own at home, or using a combination of methods anywhere in the world. To find out more about taking your next steps after AAT, contact CIMA today.
Can I use my UK accountancy qualifications abroad? Posted 11/29/2018 by Marianne Curphey & filed under Job hunting, Students. If you would like to take your skills and experience and work as an accountant overseas, how easy it is to do? Are your qualifications transferable? We look at the options available to UK qualified accountants. “There is no doubt that individuals and organisations alike are increasingly taking a global approach to future plans,” says Adrian O’Connor, Founding Director, Global Accounting Network. “Rapid technological advancements mean that geographic borders are not the barrier they once were – the world is getting smaller. Meanwhile, future uncertainty caused by myriad external factors, not least Brexit, is encouraging a greater number of people to explore opportunities outside of the UK.” He says it is no wonder a growing number of professionals are looking to capitalise on favourable market conditions elsewhere, or simply hedge their bets against unpredictable local economies. Recent client demand, and subsequent recruitment activity, reflects this growing thirst for international growth, he says. “The organisations we work with are increasingly seeking finance professionals who have experience within a global operation, are familiar with specific international tax structures or who have a solid background in analysing risk associated with global expansion strategies. Unsurprisingly, we have also witnessed job roles, and associated remits, shift in recent years to fit within business structures which are conducive to international operations.” AAT International AAT’s qualifications are internationally recognised and are focused on meeting the needs of employers, government and students, both now and in the future. AAT makes sure to maintain professional standards, with great focus on supporting and encouraging professional accounting across the world. AAT recognise’s that the best solutions come from combining knowledge and expertise, so focus on building relationships with local organisations to develop finance skills on a global scale. With partner organisations in New Zealand, Botswana, Asia and many more, AAT are working to support local talent and economic development. Using your qualifications abroad While many professionals dream of expanding their skill-sets with jobs overseas, the prospect of getting qualified in a new territory can often be a barrier to making it happen, Mr O’Connor says. However, for accountants looking to experience life in a new country, getting the green light to practice internationally may be easier than you think. “While anyone moving outside of the EU for work will, of course, be subject to local visa restrictions, holding the relevant qualifications is the first step to falling within the parameters needed for a ‘specific offer of employment’ to be made – a prerequisite of many work visas.” However, this doesn’t necessarily mean that professionals who have relevant experience will have to go back to the drawing board in terms of education. In the US, for example, it is possible to become qualified as a Certified Public Accountant (CPA) with no further training. Becoming a Certified Public Accountant Global Accounting Network’s sister company, Hoxton Circle, is based in the US, and for clients across the pond a CPA licence can be a prerequisite for any accounting role. “The criteria for becoming a licenced CPA varies between states – so it is vital that you do some research to see how your existing qualifications stack up against state board office requirements,” Mr O’Connor says. “However, it is worth noting that most states have passed mobility laws in order to allow practice in their location by CPAs from other destinations. So once you have the licence, it’s pretty mobile.” While each state board sets its own requirements regarding education and experience, broadly speaking, all CPA candidates must hold a bachelor’s degree, at minimum, and have no fewer than 150 semester hours of formal education, must achieve a passing score on the Uniform CPA Exam and gain field experience under the supervision of a licensed CPA. In most states and jurisdictions, one year of supervised experience satisfies the requirement. Eligibility to sit for the Uniform CPA Exam is determined by individual state boards of accountancy. A decision is made after existing qualifications are submitted and evaluated by a local university admissions officer to get a comparison to US qualifications. “While some professionals will be able to sit the exam with no further training, others may need to complete additional courses before they qualify to sit,” he explains. “These courses can usually be completed in your country of origin before setting foot in the US.” International destinations For those with their sights set on destinations more exotic than the states, it is worth noting that while the CPA qualification is US based, it is internationally recognised. CPA exams can be taken in several other countries, including Japan, Lebanon, Kuwait, Bahrain, Brazil and the UAE, and the qualification is recognised in the District of Columbia, Guam, Puerto Rico, the Virgin Islands and the Northern Mariana Islands. Mr O’Connor says that for candidates who are ACA qualified, the ICAEW has partnerships with accountancy bodies around the world, so those planning to live and work in another country may be able to join a local institute automatically. Membership recognition agreements are currently in place with organisations including CAANZ in Australia and New Zealand, HKICPA in Hong Kong and SAICA in South Africa. Similarly, the creation of the Chartered Global Management Accountant (CGMA) designation in 2011, which is a joint venture between The American Institute of CPAs (AICPA) and the Chartered Institute of Management Accountants (CIMA), means that CIMA accreditation is now more globally recognised than ever before. While it can take some time to get your head around alternative processes and local legislation, core competencies such as interpersonal skills and technical ability travel well. And for those who are eager to climb the career ladder, international experience really can pay dividends. What are the pros and cons of relocation? Working internationally can undoubtedly lead to professionals boosting their earnings and career prospects. “We recently helped one individual get a 40% pay increase and move to a 15% tax jurisdiction in one fell swoop,” Mr O’Connor says. A good recruitment agency can have an important role to play in advising candidates on upcoming opportunities, but they will also act as a professional guide to help jobseekers navigate the financial, legal, cultural and practical challenges that working abroad can bring. An experienced recruitment consultant will be able to advise on how relevant your domestic knowledge is in the international market, where you are able to work and if any additional qualifications or languages are required. They will also be in a good position to offer candid insight around how a placement overseas will impact your overall career trajectory. While a short term contract may provide a real boost to your CV, it is possible, in some instances, that two years away can essentially mean that career development is put on hold until you re-enter the domestic market – something certainly worth considering. “Alongside this, there are also the emotional and social implications of uprooting both professionals and their families,” he says. “Having to contend with the local culture, climate and food may be trickier than expected, not to mention the logistics of managing an international move. Look carefully at what any proposed ex-pat relocation package provides. For example, accommodation, transport, flights back home, schooling for children, relocation allowances or health coverage.” What is the difference between setting up a business abroad, and going to work on a foreign assignment? While going to work on a foreign assignment is a relatively easy way to gain career-boosting experience, setting up or expanding a business abroad requires a greater level of commitment – and arguably greater rewards, Mr Connor says. “This is a strategy we have applied to our own growth plans and Global Accounting Network is expanding into the US next year,” he explains. “The decision was based on a similar market with a shared language and a business-friendly tax regime.” The specific skills people gain from studying with AAT underpin the accounting profession. They are integral to the success of an organisation, and at the heart of a strong finance team. For more information about AAT international, we have a team dedicated to AAT training providers overseas and creating partnership opportunities – [email protected]
How to make real friends at work Posted 11/28/2018 by Georgina Fuller & filed under Career, Students. Only 15% of people have a ‘best friend’ at work and seven in ten don’t consider their co-workers to be ‘real’ friends, according to a recent study by Olivet Nazarene University. Less than half of the 3000 surveyed by the American university said they felt comfortable talking to their colleagues about personal issues. Yet, considering many of us spend at least half our lives at work, surely cultivating genuine workplace friendships must be good for our overall wellbeing and sense of self? Absolutely, says Alison King, director of Bespoke HR. “Workplace friendships can build strong teams, which in turn boost morale, help employee engagement and increase productivity,” King says. So how can you make real friends at work? If you’re new to a job, find a ‘buddy’ or ask your employer to start a ‘buddying’ system “Employers can encourage this from the start in the onboarding process with initiatives like ‘buddying’ pairing a new starter with an existing employee, or taking the team out for lunch,” says King. Be friendly to everyone, not just your colleagues It’s often said that the way someone treats waiting staff is a clear indication of what they are really like. “Say hello to people in lifts, and talk to reception, who are normally a good source of gossip. Be positive in your comments (at least to start with!) and don’t isolate yourself,” says Simon Roderick, managing director of Fram Search recruitment. Join in and show you’re a team player “Take an interest and actively participate in outings and team building efforts,” says Roderick. “Be flexible and open to joining in, rather than just leaving on time. It is also hugely important to give credit and thanks to others, both when it comes to their work and their efforts with the team.” Don’t get entrenched in office politics “Beware of getting too embroiled into office politics, as negativity has a way of coming back to you,” says Roderick. “The key to negotiating office politics is to engage with a positive mindset, contribute towards creating a better atmosphere, and don’t let other people’s negativity affect you.” Start your own networking group if you’re self-employed After setting up her own business, Claire Gamble, managing director of Unhooked Communications, found she felt isolated and missed her former colleagues so she started her own networking and support group, The Northern Creative Collective, for freelancers and other small business owners. “As well as having access to a shared office, we also have regular workshops, training and mentoring. It’s been really beneficial for my business and me personally to get to know the other entrepreneurs and swap ideas, chat about what we’re working on and socialise,” she says. Get out of the office Sometimes, the office environment can be somewhat stifling so encouraging employees to get out of the office can help foster better friendships. “Give staff the chance to meet in an informal environment,” says King. “In our business we hold bi-monthly team meetings in a room at the local pub, and host an annual summer BBQ for our employees and their families. This gives everyone the opportunity to chat outside the office and really get to know each other – which in turn increases their commitment to the business.” Don’t add your colleagues on social media or overshare Susy Roberts, executive coach and founder of people development consultancy Hunter Roberts, says: “I would struggle to give an example of a situation where it’s a good idea to add colleagues on personal social media or share intimate details of your personal life.” There should be some boundaries between your personal and professional life, Roberts advises. “Adding all your colleagues on personal social media or including them in tales of your risqué weekend behaviour will simply make you seem unprofessional and damage your reputation.” Don’t try to hard Whilst it’s important to make an effort, show enthusiasm and join in, it’s also important to take a bit of time to assess things before trying to become everyone’s BFF. “In practical terms, our experience is that it is important to watch and listen, and pick up on the team dynamics, rather than forcing yourself into situations,” says Roderick.
How to negotiate a pay rise Posted 11/27/2018 by Jessica Bown & filed under Career, Negotiation. Few people would turn down the chance to earn more money for doing the same job. But you can’t expect your company to offer you a bigger pay packet for no reason. So what is the best way to secure a salary increase? We asked employers in a range of different industries to explain what factors they take into account when deciding whether or not to award a pay rise. These tips are based on what they shared. Ask – otherwise you definitely won’t get It reportedly took Rolling Stone Ronnie Wood 17 years to ask his famous band mates for a pay rise. When he finally did get round to it, they agreed immediately, saying: “We thought you’d never ask”. The moral of this story is pretty obvious: if you think you deserve to be paid more, ask for a rise. “You don’t ask, you don’t get,” said PR company director Nick Gartner. “Approaching your manager about a pay rise will often go down well if you can justify why you should get one.” Ways to do this include demonstrating how you have progressed professionally since your salary was last reviewed and explaining how you could bring greater value to the business in the future. Pick your moment While there is nothing wrong with making a case for a salary increase, it’s important to get your timing right. There’s little point asking for a rise if you know your company is going through a difficult patch financially, for example. In that situation, offering to take on more responsibility could prove a better approach initially. Tech start-up owner Hugh Mason said: “We did not have much room to offer higher salaries in the early days, but once there was more money coming in I was happy to reward those who had taken the initiative to take on more responsibility and help others on the team where necessary.” Catering company owner Joseph Mackenzie agrees. “Increased productivity and output would probably be the main reason I would agree to award a pay rise,” he said. Do your research Knowing your worth is vital when it comes to salary negotiations. So research how much people in similar roles elsewhere are earning, and don’t be afraid to flag up any discrepancies – in a respectful way of course. “We are happy for employees to come to us if they do not feel they are being paid a commercially competitive rate,” Mason said. You should also capitalise on any situation where your particular skills are needed by asking for a pay review. Finance company director Richard Martin said: “Having essential knowledge or experience of a specific project is one of the best ways to get a pay increase.” Make a good case You are unlikely to successfully negotiate a pay rise if you cannot come up some convincing reasons why you deserve one. So before asking for a meeting with your boss, sit down and write down a list of all the reasons you believe your employer should consider increasing your salary. You might, for example, have started working longer hours, or taken a course that has improved your skill set. Heather Davis, a ski school manager, said: “I would be most likely to award a pay rise to someone who can demonstrate the value they are bringing to the business, especially if he or she is already working above their pay grade.” Claim all available perks It can be tricky asking for a higher salary. But perks such as commission and company cars can make a huge difference to your take home pay. And the good news is: employers are often happy to hand out extra perks, even if a pay rise is not on the table. So check out what perks are available and work out which ones are worth the most to you. Human resources manager Amanda Peters said: “Sometimes company policy means you are unable to offer someone a pay rise, even if you don’t want to lose them. “In this instance, one solution is to consider whether they can access other benefits such as shares or bonuses that will improve their package without actually increasing their salary.” Look for a new job If your attempts to negotiate a higher salary fall on deaf ears, one sure fire way of increasing your income is to find a new job that is better paid. So don’t be afraid to start looking for a better option if you feel undervalued in your current role. Being offered another job can also be a good way to convince your current boss you’re worth more. “Knowing a good worker is likely to leave will encourage most employers to offer a higher salary,” Martin said. Just remember, however, that empty threats can backfire. In other words, you must be prepared to leave and take on the new role if you try this approach to salary negotiation – just in case it fails!
VAT for SMEs Posted 11/26/2018 by Julie Hodgskin & filed under Financial accounting and reporting. There are four main VAT schemes available to small and medium enterprises. They are: standard accounting scheme cash accounting scheme flat rate scheme (including limited cost business) annual accounting scheme Here is a brief look at each of the schemes, how they work, and when it may be beneficial to use them. Standard accounting scheme This is the default way of accounting for VAT. The VAT is accounted for at the point at which the invoice is raised, regardless of whether the monies are received or paid. Irrecoverable (bad) debts can only be recovered six months after the date the money is due, that is, if an invoice is ‘net 30 days’, then, in effect, seven months after the invoice date. Standard accounting could, and did, cause cashflow problems for many SMEs. Because of this it is often advisable to recommend one of the ‘more cashflow friendly’ schemes as below. Cash accounting scheme This scheme allows the VAT to be accounted for at the point of payment or receipt. This not only reduces cashflow problems in that HMRC does not receive money until the SME does, it also means that there is no need to account for any irrecoverable debts. The money is not received, therefore the VAT is not declared. A business can remain on this scheme until turnover exceeds £1,350,000. After this the business must use the standard accounting scheme from the beginning of the next tax period. Further information can be found on the gov.uk website. Flat rate scheme The flat rate scheme is designed to make record keeping for small business easy. It is for businesses that are VAT registered Turnover of £150,000 (excluding VAT). Turnover to include all standard, reduced, zero-rate and exempt supplies, but not capital items. A set percentage is applied dependant on industry sector Business can remain in the scheme whilst turnover (as above) is less than £230,000. How it works Invoices still need to be issued at the applicable rate for the goods, that is, standard, reduced or zero rate, and the VAT should still be shown separately. Copies of all invoices are still to be kept but the benefit is that accounting records can be reduced. It is not suitable if the business receives repayments, has a lot of zero-rated and exempt sales or buys a large amount of standard rated items. First year discount If a business registers for the flat rate scheme at the same time as registering for VAT then it could be eligible for a first year discount. If however the business decides to join the flat rate scheme say eight months after registering for VAT then the business will only get the discount for four months. The benefit of researching the different VAT schemes prior to registration is plain to see. Limited cost business This applies a set percentage of 16.5% for businesses that meet the following criteria, regardless of industry sector. Goods bought is less than 2% of the VAT inclusive turnover Goods no more than £1,000 per annum fi the 2% is exceeded (£250 per quarter) Every quarter check that the business still falls within the limited cost business rules by going online and using HMRC calculator. To calculate the VAT due or repaid A set percentage, determined by HMRC, is applied to the VAT inclusive total turnover. The total is the amount of VAT due to HMRC or to be refunded by HMRC. There are set percentages for each industry sector . An example would be if a business had a quarterly turnover of £12,000 + VAT at 20% = £2,400, and the percentage as detailed on GOV.UK is 16.5%, then the VAT due would be £2,376. The flat rate scheme can be used with either cash accounting scheme or with the standard accounting scheme. Annual accounting scheme This scheme is eligible for SMEs with expected or actual turnover of less than £1,350,000 (excluding exempt supplies) per annum. There is only one VAT return to submit in a year, but advance payments must be either nine monthly payments of 10% (of estimated turnover or based on previous VAT returns) plus a tenth balancing payment due within two months of the twelve month period (as below) three quarterly payments of 25% followed by a final balancing payment again due within two months of the twelve month period, as demonstrated below. The final balancing payment allows all records to be updated and maximum amount of monies received, before payment has to be made to HMRC. Conclusion The above is but a brief outline of four of the more useful schemes that could benefit the SME. Further research will need to be done to see which, if any, suits the particular business, but it is hoped that the above may go some way to reducing the amount of work needed to be done. There’s not long to go before finance professionals and businesses must change their processes for the introduction of Making Tax Digital for VAT (MTDfV). AAT have created a special ebook and software review, which is now available to download. Download the guide
What makes a great accountant? Posted 11/23/2018 by Jessica Bown & filed under Career. A friendly welcome, quick response times, specialist knowledge… Clients want different things from their accountants, but there are some mainstays that all accountancy firms should strive for if they want to provide a high level of service. Here, finance professionals and business owners tell us what qualities they believe elevate a good accountant to greatness. Specialist knowledge Some accountants specialise in providing tax advice to large corporations. Others work primarily with smaller businesses and start-ups, or concentrate on a certain field such as construction. From a client perspective, it seems that doing one thing well is preferable to trying to do too much. Entrepreneur Sarah Neal said: “Choosing the right accountant is crucial for any small business. I learned that lesson when I took on a large accounting firm that didn’t have expertise in dealing with small businesses. “They made such a mess of my accounts that HMRC came knocking at my door.” Jeanette Delaney, who manages the accounts for a bar and restaurant group based in the French Alps, agrees that specialist knowledge is invaluable if you want to offer superlative accountancy services. “Accountancy is such a wide-ranging field, you can’t be a specialist in everything,” she said. “If a friend asked my advice about looking for an accountant I would therefore tell them to choose one with other clients in the same or a similar field.” A wide range of services While specialising in one area can be a winning formula, it’s also important to do your best to meet all your clients’ needs. Robert Sully, a senior financial adviser at Shorts Chartered Accountants in Chesterfield, Derbyshire, believes great accountants do this by offering a range of services. “At Shorts, we have Tax Managers who deal with Self Assessment, a Payroll department for clients who prefer not to manage their employees’ salaries, and a Wealth Management department for those looking for personal financial advice,” he said. “We also have a team of people with specialist knowledge relating to doctors and dentists, as well as a Corporate Finance department for clients who want to sell their businesses. “The aim is to offer a complete solution for the small to medium-sized businesses we work with.” Clearly, not all firms can have departments specialising in a range of different areas. However, offering at least some personal tax services will allow you to provide clients with a more global analysis of their situation. “I would always choose an accountant who can help me with my personal affairs as well as my business,” said environmental consultancy owner Catherine Conway. A pro-active approach Generally speaking, an accountant’s main role is to help clients ensure their tax affairs are in order. However, going above and beyond that by offering advice on how to pay less tax is one way firms can stand out from the crowd. “As a small business owner I have a lot on my plate,” Neal said. “So being more tax efficient isn’t on my mind every day. “That’s why I appreciate my accountant taking the time to ask questions and use my answers to work out the best way forward for me.” Conway too likes her accountant suggesting ways she can pay less tax without overstepping the mark. “The most useful service my accountant provides is undoubtedly telling me what needs submitting and when,” she said. “That said, it is also great to have someone to offer you advice to ensure you are not overpaying tax unnecessarily.” Availability One of the most common complaints made about accountants is that they are difficult to pin down at short notice. So availability is key if you want the service you provide to be exceptional. After all, specialist knowledge and pro-active advice is of little use if you are not available when your clients need you. “You have to be available for your clients,” Delaney said. “Failing to return a call within a reasonable timeframe, for example, is sure to frustrate them. “Having regular contact is also important to ensure they keep on top of any regulatory changes.” Staying in regular contact with your clients is also the best way to maintain a happy relationship with them. Neal said: “As a business owner, I expect my accountant to communicate with me regularly and show interest in what my company does. “I do my own accounting entries and reconciliation using the software Xero, but I find it so important that when I have a question about an entry, my accountant is readily available to help.” Friendly service Trust is essential when it comes to choosing an accountant, so offering friendly service is another way to make sure your clients both stick with you, and recommend you to others. “Some clients prefer a purely professional relationship, but the vast majority like to receive a friendly welcome,” Sully said. “Many of our clients have been with us for 20 or 30 years and I believe it’s the close client relationship that keeps them loyal. “They like being able to pick up the phone and speak to someone they know and trust.” And the good news for smaller accountancy firms is that this is one area where they really come into their own. “Big firms don’t always offer personal service,” Delaney said. “So smaller firms can play to their strengths by specialising in a friendly approach.”
Thinking outside the (money) box: universal basic income Posted 11/23/2018 by Mark Blayney Stuart & filed under News, Students. Is a universal basic income (UBI) a viable concept, or would it be economic disaster? Could it encourage entrepreneurship, or would it lead to benefit dependency? Some trial schemes around the world are leading to interesting conclusions. In Hamilton, Ontario in Canada, a group of 4,000 people are currently receiving the equivalent of £1,080 a month in a basic income pilot designed to assess whether providing some guaranteed financial support, regardless of circumstance, would be more effective than existing social security services. And Finland is coming to the end of a smaller experiment where a sample of 2,000 unemployed people are given the equivalent of £475 a month. Other schemes have been undertaken across the globe including Macau, Nigeria and Spain. UBI in the UK? But would UBI work here? One of the arguments against it is that would be a disincentive to work; might it lead to a benefits-reliant society? “I think the huge majority of people want to work,’” says Emma Waddingham, Director of Emma Waddingham Consulting, a legal services consultancy. “They want to contribute to society and they want the integration and satisfaction that work gives you.” Waddingham argues that there are benefits of UBI beyond the financial. “It’s about wellbeing. Let’s say you have voluntary work or low-paid charity work. UBI means you can carry on those roles, you can contribute to society and you don’t have to leave that role for something which might be higher paid, but which would be less satisfying for you as an individual and less beneficial for society as a whole.” Providing a financial safety net UBI could also help kickstart the economy by encouraging more start-ups. “Being an entrepreneur is financially perilous,” Waddingham says. “You would be more inclined to make that leap if you knew there was a financial safety net.” “In my view the most attractive principle of UBI is the potential simplicity of the system,” says Emma del Torto, Director at HR firm Effective. “Each project is slightly different in the way it is being managed and measured and the ideological intent behind the projects differ also.” For del Torto, “some of the positive outcomes would be potential reduction of in-work poverty; less reliance on food banks; reduction in inequality; and improved health and wellbeing.” Is it affordable or financially irresponsible? There is support from left of centre parties in the UK for some form of UBI, with shadow chancellor John McConnell recently suggesting it might appear in the next Labour manifesto, and possible schemes being flagged up in Liverpool and Glasgow. The principal arguments against are on cost. UBI is “financially irresponsible,” says the FT. The Spectator argues that it is unaffordable: “assuming an effective programme would ensure that each individual over the age of 16 had a minimum income at the income poverty line (approximately £16,320), it would cost £850 billion. This is more than 105 per cent of the UK’s current government spending. Set at £20,000, it would cost more than £1 trillion.” Offering people basic standards of living But del Torto argues that it’s misleading to describe UBI as a new cost. And UBI does not have to be set as high as the Spectator suggests. It would be an alternative to the benefits system, “the purpose of which is to provide a basic standard of living to people to be able to feed, house and care for themselves and their dependents. In practice, the current system is overly complicated, incredibly bureaucratic and open to abuse. It’s also extremely costly to administer and huge resources are spent annually on enforcement.” Del Torto asks us to consider the recent criticisms about universal credit “and other benefits, including the complexity and uncertainty over sums to be received and when they are to be received, creating a short-term reliance on costly pay day loans. This in turn creates a potential long-term individual debt spiral.” In response to suggestions of benefits reliance, del Torto points to a study in Iran “that monitored the impact of government-introduced national UBI on the labour supply and reported no empirical evidence of causal link between UBI and labour supply. The study strongly refuted the assumption that ‘cash transfers make poor people lazy’.” Communicating this will be a key point of any UBI strategy. Alternative thinking UBI would also enable businesses to recruit more effectively. “Under current benefit rules, unemployed people have to demonstrate they are actively looking for work by making job applications,” del Torto says. “This results in thousands of applications where the applicants don’t really want, or are unsuitable for, the role.” Employers are then faced with “the significant administrative burden of going through these. Often, smaller businesses simply don’t have the resources to undertake this process; and it leaves many feeling negative about the recruitment process.” UBI would solve this at a stroke. And yet, addressing the cost issue is likely to be central to any push towards making UBI happen. One of the basic principles is that it would be given to all – regardless of an individual’s income or capital assets. Perhaps a better approach to gain traction, would be to make it means-tested – focus directly on eliminating poverty, help get people into work and increase wellbeing for everyone as a result. In the Canada test scheme, the participants are taken from low-income families, those in precarious work or those with long-term health issues. The Finland example selects the unemployed. On closer inspection, these “UBI experiments” are not, in fact, universal at all. Political asides It would seem that which side of the UBI fence you stand on depends on your political colour. There’s a further complication for the UK in that it has a large and dense population, whereas the countries trying out UBI tend to have smaller and more thinly-spread populations. They also, as Emma Waddingham points out, “tend to have different tax structures already in place, where you have high-tax, high-benefit systems, that we do not have in the UK.” But it’s important to puncture the myth that UBI is “free money”. Redistribution leads to less inequality which stimulates more effective economies. A large proportion of the “free money” goes straight back into the economy when it is spent on goods and services. There’s also evidence from previous trials (such as in the 1970s in Canada again) that a basic income substantially reduces hospital visits and need for medication, and reduces reliance on mental health services. The knock-on benefits gradually erode the seemingly high cost of introduction, on several reckonings. All these factors are good for the economy as well as for wider wellbeing.
How to provide constructive feedback in the workplace Posted 11/22/2018 by Neil Johnson & filed under Career. “Feedback is one of the fundamental things that an organisation can and should do to be healthy,” says Eleanor Nickerson, head of HR for Boost Drinks in Leeds and an HR consultant. “Yet in my opinion it’s never truly effective unless it’s a systemic/cultural way of life, rather than just being driven by an employee or two.” “Feedback is a really tricky one,” And she’s not wrong – it’s tricky to give and difficult to ask for. But just because you want feedback doesn’t mean that you’re going to get it, or get good feedback. The people you approach for feedback might not be skilled at giving it, which can result in inaccurate or useless input. Don’t fish for compliments It can be human nature to naturally gravitate towards people that you have good experiences interacting with. But this may not give you the truthful and objective feedback you seek. “You can ask anyone that you want for feedback, as long as it’s relevant,” says Nickerson. “Ask bosses from different departments, clients too. I am a big fan of 360◦ feedback, however I have seen a lot of companies get confused with this. It’s simply an approach for collecting feedback – it’s not in itself a review without being analysed, interpreted and put into some kind of action.” It’s important to find your own objectivity and to support the person giving you feedback, as much as you want them to support you. “I get people to identify ROLES from which it would be good to view the performance of their ROLE from,” says Nickerson. “I get them to look to the critical interactions necessary for them to do their role well.” Come prepared It’s key to identify what exactly it would be helpful for you to know. So make a list of specific questions that will give the most specific answers, but avoid a ‘yes or no’ answer situation. “In organisations where I’ve tried to help people solicit useful feedback, I’ve created a one-page handout that they can circulate that helps an employee to prepare others to give them useful feedback,” says Nickerson. “It explains why, what’s helpful and what’s not, and so on.” Feedback is one of the fundamental things that an organisation can and should do to be healthy Improve on the negatives, not the unchageable When putting together your list of questions, don’t be afraid to illicit negative responses – feedback should be honest and constructive, after all, we all have room for improvement. For example, ‘please tell me what I do well [in the area of] and what I can do to improve?’. You could ask for two positives and two things to improve, then the person is set up as much as possible to give you something useful. In order to get really accurate feedback, hone in on specific skills and attitudes separately, but beware that we often seek feedback on things that are very hard to change. “This is an area that can be a bit of a can of worms,” says Nickerson. “People can get really down about it, so I think it’s always better to have someone skilled by your side to help you see a clear way out.” With this in mind, Nickerson coaches people seeking feedback not to defend. “Ask questions to understand, but don’t defend. The moment you start to defend you lose that person as a critic, and we all need others to hold that mirror up on our own performance.” Life changing… if done well Giving and receiving effective feedback, when done well, is life changing, both for individuals and for organisations, believes Nickerson. “If you train the whole organisation about the theory of feedback and then facilitate it into the culture, it becomes not only easy and natural, but people seek it out. It’s a skill to practice that people can take out into their personal lives.” People have legitimate experiences of one another that translate into their perceptions of each other. “So your perception of me exists regardless of whether I ask you for it or not,” says Nickerson. “The trick here is that people’s feedback on you may be useful or not, and you can choose what to change or not. That’s key to all this. Basically, it doesn’t mean that someone is ‘right’. Change based upon other’s experience of you becomes a choice – do you want that to be someone’s experience of you or not?”