The Government’s Discussion Paper on simpler reporting for the smallest businesses appears once again to have missed the fundamental point: businesses rely on more information, not less, to extend credit, and without credit, the longed-for business recovery will not happen.

Philip King (pictured), Chief Executive of the Institute of Credit Management (ICM), says that the new Paper brings more confusion rather than clarity as to the Government’s position and thinking: “On the one hand, they talk about the current regimes as being ‘burdensome, costly, and adding little value’ and on the other that SMEs could make ‘an increased contribution to the economy if they had better financial information available to them’.

“The simple question that our members have been asking is this: does the government really understand the role of credit in business?

“If it did, then it would understand that information is critical to making informed decisions and to facilitate trade, and that the need for information does not disappear just because your company is ‘small’. Indeed we would argue that the opposite is true: the smaller you are, the more information you may have to provide to demonstrate your creditworthiness.”

Philip highlights other parts of the document to support his argument, especially in relation to stock: “The Paper proposes a simplified ‘Trading Statement’ that would remove the need to account for such items as stock. How would that help? The amount of stock a business holds, its value, and how regularly it is replenished is fundamental in gauging whether to grant credit and how much credit to extend.

“It is this sort of wording as well as grouping creditors under the bizarre phrase of ‘other trading counterparties’ that makes me fear the issue is still not fully understood.”

There are some parts of the Paper that the Institute welcomes, including the proposal to provide a simpler means of filing of accounts online, the need to standardize reporting formats, and making better use of existing software, but in general there is still much more work to be done: “From the outset the Paper suggests that there has been a huge clamour for change and that the calls for a review have become more strident.

“I’m not sure who has been calling for change,” Philip concludes, “but it has certainly not been our members, and our members are on the frontline of granting or refusing the credit that businesses rely upon more so than any other source of cashflow funding.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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The Institute of Chartered Secretaries & Administrators (ICSA) is predicting that board meetings at the UK’s largest companies will be completely paper-free by 2014, after the launch of a second generation Apple-approved application from ICSA Software, a specialist business software company owned by the Institute.

Blueprint BoardPad 2 was unveiled in June and is available now. With three quarters of FTSE 100 companies already ICSA Software customers, the new iPad application will be quickly adopted in UK boardrooms.

A number of FTSE 100, FTSE 250 and blue-chip companies already manage board meetings using a previous version of Blueprint BoardPad software, which was launched last year. Customers include Wolseley plc, Carillion plc and Co-operative Group PLC. With a more refined, intuitive interface, many more new features for directors and administrators alike, plus the additional security measures offered by version two, many other large organisations are sure to follow suit.

“There has been a move towards paperless board meetings in recent years, but Blueprint BoardPad 2 will rapidly speed up that change,” said ICSA Software Group CEO, Mike Evans.

“No other application can guarantee the same security of data and offer so many features that save time, reduce waste and cut the huge cost of board meetings for large companies. In the future, every large company will move to a system like this one but, currently, Blueprint BoardPad 2 is far and away the most advanced.”

The original Blueprint BoardPad, enabled organisations to do away with time-consuming, inefficient and expensive paper-based systems and change the way board meetings run. Board packs could be digitally compiled and sent to directors in a fraction of the time taken previously, drastically reducing the amount of paper used in the process.

Complete packs and even late changes to documents could be circulated without the need for expensive couriers or unnecessary print costs.

Directors could have access to a whole library of board documents and historic information via a single touchscreen device.

Blueprint BoardPad 2 has been approved by Apple for use on the iPad and offers significant advances on the original technology. In particular, Blueprint BoardPad 2 allows directors to access every aspect of every board meeting using just their fingertips, offers the most powerful annotation functionality available on the market and addresses any concerns some companies may have over the security of an IT-enabled system when dealing with commercially sensitive information. Crucially, all annotations of board packs can be deleted instantly to ensure that companies remain compliant with Discovery and Disclosure laws.

Security features include automatic and remote wiping of information after a set time, enforced online sign in after a designated period and automatic data segregation between company profiles. This is particularly useful when non-executive directors serve as board members for many different organisations.

Significantly, all of the functionality is contained in one application that can be run from an organisation’s own network, which can be a fundamental requirement for some major corporates. There is also an option to have the system hosted on ICSA Software’s network.

The software ensures directors are always working with the latest versions of company documents. When a user signs in, the software automatically detects new versions of documents that need to be downloaded and deletes old documents that are no longer required.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Countless numbers of smaller businesses could find themselves faced with a much simpler system of reporting their financial position if Government proposals get the go ahead.

A new discussion paper has been published by the Department for Business and the Financial Reporting Council (FRC).

The paper details plans that would make it easier for very small firms to give an account of their business activity, affecting as many as five million micro-businesses.

Businesses covered by the proposals would only have to submit a pared down trading statement instead of the current profit and loss account, along with a simplified statement of position and a streamlined annual return.

Amongst the paper’s other recommendations is the introduction of an integrated software package that would enable small businesses to prepare the financial information demanded of them by the Government. The idea is that this would give business owners and managers the space in which to gain a better understanding of the trends affecting the way their firm is performing and the scope in which to plan for the future.

Edward Davey, the minister for corporate governance, commented: “Reducing unnecessary regulatory burdens on the smallest businesses can give them the freedom to innovate and grow – which ultimately benefits the entire economy and is absolutely central to the Coalition’s vision for Britain. A new deregulation from EU rules targeted at micro businesses means we now have a chance to deliver these benefits.

“The financial reporting regime must also serve the users of the information published by companies – whether they are customers, banks or government agencies. So we look forward to receiving responses to our proposals from a broad range of interested parties in the coming months.”

A micro-business is defined as a firm with a turnover of less than £440,000, with net assets of less than £220,000 and employing fewer than 10 people. Government statistics suggests this definition matches some 60 per cent of companies registered at Companies House and 3.5 million unincorporated businesses.

The new paper, the Government has insisted, is not a statement of official policy. It has been drawn up to gather evidence before the Government decides whether to take forward any further action. Written responses to the proposals should be provided by 30 October 2011.

More details on the paper can be found at: http://www.bis.gov.uk/assets/biscore/business-law/docs/s/11-1100-simpler-reporting-for-smallest-businesses-discussion-paper

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Businesses and individuals are continuing to adopt a cautious approach to borrowing, the British Bankers’ Association (BBA) has said.

The collective debt on personal loans and overdrafts, at £52 billion, is at its lowest for a decade, the BBA reported.

Meanwhile, paying down debts among firms seems to be a higher priority than seeking new loans.

The new figures also indicated that savings and personal deposits with the main high street banks rose slightly in July.

That said, the rate of increase in savings was still muted. In the first seven months of the year, total savings have climbed by £8.6 billion, compared with the £16.3 billion increase during the corresponding period in 2010.

In the corporate sector, debt repayments more or less cancelled new borrowings among businesses.

David Dooks, the BBA’s statistics director, commented: “Overall companies’ appetite for finance remains low, reflecting business decisions in difficult trading conditions – new finance made available to one company is simply being offset by debt repayment from another.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Nearly one in four (38%) of the British public is trying (or will try) to spend less on their holiday this year. Of those saving money 59% are choosing to holiday at home instead of abroad, according to a recent poll by R3, the insolvency trade body.

While those who have decided to venture to foreign waters, 71% are choosing less expensive accommodation, 66% are choosing a cheaper travel option and 60% are spending less money on eating out and activities once on holiday.

Frances Coulson, R3 President, comments:

“It’s unsurprising that people are choosing to stay at home instead of holidaying abroad to cut down on their expenditure, given that we have seen consumers’ disposable income become squeezed as a result of inflationary pressures.

“Consumers who are cutting back are already having a significant impact on the economy, as the latest drop in retail sales revealed. The nation deciding to stay at home might provide the much needed boost to the UK economy, particularly in tourist areas and coastal towns where insolvency levels rocketed during the recession.”

R3’s research found nearly a third (30%) of Britains’ have chosen not to go on holiday at all, an increase from one in four (25%) people this time last year.

Frances Coulson said:

“People choosing not to have a holiday this year is likely to have grown out of necessity rather than choice. UK households will either simply not have the money to go on holiday as result of cuts to their disposable income or have decided to save their money in preparation for the difficult times ahead. R3’s latest personal debt snapshot revealed only a quarter (25%) of consumers believe their financial situation will improve over the next six months.

“The money saved from spending less or not having a holiday at all will provide individuals with a financial ‘buffer’ in case they fall on hard times.”

R3’s holiday poll also revealed of those having a holiday this year, 1.8 million people (5%) will be borrowing to pay for it. They will on average borrow £1,581, an increase from £1,130 last year. This will take on average nine months to repay compared to an average of seven months last year. Of those going on holiday, the younger you are, the more likely you are to borrow money to pay for your holiday, with one in ten (10%) 16- 24 year olds borrowing money to pay for a holiday.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Following today’s publication of the Treasury Select Committee’s report on the future of cheques, Steve Davies, UK retail banking leader, PwC, said:

“There’s clearly a small segment of customers who continue to rely on cheques but use is in long-term decline. Cheques are expensive to process and new technology has afforded alternative payment options that are cheaper, faster and more secure for all parties in a payment transaction. Banks have to balance the continuing need to provide cheque services to a small proportion of customers with the cost, which is currently absorbed by all bank customers. The ongoing costs of providing options between traditional and new features could challenge the free banking model in place for the majority of UK bank customers.”

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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The industry-dominated Payments Council should no longer have the unfettered power to decide the future of cheques, or other payment methods that directly affect millions of people, the Treasury Select Committee says in a report published on 24 August 2011.

The Committee welcomes the belated decision of the Council to retain cheques, but warns the Payments Council to ensure that the banks do not attempt to abandon cheques by stealth, nor deter customers from using cheques.

The Report recommends that:

• the Treasury should make provision in the forthcoming Financial Services Bill to bring the Payments Council formally within the system of financial regulation;
• the Payments Council must obtain a commitment from the banks to give the Council advance sight of any material related to the future availability of cheques that the banks send to their customers;
• all banks should be required to write to their customers stating that cheques will continue to be in use for the foreseeable future;
• the Payments Council should examine the reintroduction of the cheque guarantee card;
• changes be made to the composition of the Board of the Payments Council in order significantly to strengthen the voice of consumers. As an immediate first step, any two of the four independent members, rather than all of them as at present, should have the right of veto over a decision of the Council.

The Chairman of the Committee, Andrew Tyrie, said:

“Cheques have been saved, for the moment, but we need to remain vigilant. The incentives for the industry to get rid of cheques has not gone away. Neither have we. That is why we are making far–reaching recommendations about the future of the Payments Council as well as to secure the future of cheques.

The Payments Council is an industry-dominated body with no effective public accountability. It should not have unfettered power to take decisions on matters, such as the future of cheques, or other issues, that are of vital importance to millions of people.

This is why we have recommended that the Council be brought within the formal regulatory system.

As an immediate first step the Board of the Payments Council should have greater consumer representation.

The decision of the Payments Council in December 2009 to set a target date of 2018 for the abolition of cheques was taken without an assessment of the costs and benefits and without providing any indication of what alternatives to cheques would be put in place.

Banks have also given many customers the impression that the abolition of cheques was a foregone conclusion. This type of behaviour is unacceptable and cannot be allowed to continue.

The Payments Council’s decision caused great and unnecessary concern among bank customers. And during the course of the Treasury Committee’s inquiry it became clear that the Council’s plans did not have the confidence or support of the public, Parliament or the Government.

The attempt to abolish cheques has reflected the same lack of transparency in retail banking, that we highlighted in our report on Competition and Choice in the sector earlier this year.

It is increasingly accepted that improving consumer choice will require more competition in the sector. The new Financial Conduct Authority should be given a primary duty to promote competition. The Committee is also calling for this. Unfortunately, the Government is resisting it.”

The Report also calls on the Payments Council to examine reintroducing the cheque guarantee card system that was withdrawn earlier this year.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.

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Economists and commentators are divided on whether we’re seeing a natural ‘mid-cycle’ slowdown in the economy (perhaps exacerbated by such factors as the Japanese tsunami) or whether we face a return to recession.

Certainly the risk of policy error is increased when walking the tightrope of growth and recession – one bad move might tip the UK the wrong way.  No wonder the Bank of England’s Monetary Policy Committee were unanimous in their decision to keep interest rates on hold in their August meeting.  Avoiding recession takes precedence over any lingering fears of inflation, and the two previous dissenters who thought rates should rise reversed their decision.

So will we see another recession? And what does it mean for investors? Recession is often defined as two or more consecutive quarters of economic contraction.  The Bank’s Governor, Mervyn King, only puts the chances at one in ten for the UK.  Yet judging by recent stock market action, investors have already decided it is more likely, especially for the US.  In today’s interlinked global economy, even the relatively healthy and less indebted emerging economies are likely to be adversely affected, meaning there are few safe havens.

Fortunately there are also reasons to be optimistic.

Companies are generally in good shape, with less debt than in the previous downturn and more cash to shield them from tough times. Secondly, valuations before the recent falls were not stretched, with the price-to-earnings ratio of the FTSE 100 around 11 (i.e. companies were valued at an average of 11 years’ worth of their annual earnings).  This is now below 9 and the market currently yields around 3.5% (variable and not guaranteed) – nearly one and a half times the 10-year gilt yield.  Generally riskier assets tend to be cheaper presently and comparative safety (in the form of gilts) is expensive. Although remember the value of all investments can fall as well as rise, so you could get back less than you invest.

Finally, business confidence, whilst cautious, hasn’t collapsed.  Companies have been increasing their dividends, a sign earnings are healthy and businesses are confident enough to increase payouts to shareholders rather than retain cash.  Merger and acquisition activity is also taking place, notably illustrated last week by Hewlett-Packard’s bid for Autonomy at a 70% premium to the market price as well as SABMiller’s interest in Fosters and Google’s bid for Motorola Mobility.

Markets have been in panic mode, fixated on the issues of sovereign debt.  When investors assume the worst and ask questions later any sense of valuation goes out of the window.  Yet long-term opportunities are created in times of deep stock market gloom. Recent deals like HP/Autonomy show us some companies are prepared to pay more than the stock market price to add the right business to their group. Although the market could move lower in the short term this could help underpin valuations in the long run.

Whilst Mervyn King only puts the chances at one in ten for the UK to enter another recession, businesses in the UK are already looking to the future in terms of managing their current debts and are certainly trading more cautiously than in the run up to the previous recession.  It is therefore prudent to protect your organisation in a number of ways, including being completely at ease with the correct Credit Management Policies, ensuring that you have sufficient procedures in place to collect bad debt and of course monitor prospective clients through Business Reports & Enquires.

CBC would be delighted to assist prospective clients guard themselves against a potential recession through our comprehensive Client Advice Centre. Please   contact us on +44 (0) 151 515 3014 or email us for more details on how we could help.

Please note: Information in this blog post is content property of Hargreaves Lansdown and the full original article can be found by clicking here.

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he chief executive of the Business Growth Fund has lent his support to encouraging alternatives to bank funding for businesses.

The BGF was launched in May and is intended to provide Government-backed investments of between £2 million and £10 million in businesses with an annual turnover of between £10 million and £100 million, although that target has now been set at firms turning over between £5 million and £50 million.

It is being run with the support of five major high street banks: HSBC, Barclays, Lloyds, RBS and Standard Chartered.

Quoted in the Daily Telegraph, Stephen Welton, the BGF’s CEO, put the case for an SME bond market as a way of reducing the traditional dependency of many smaller UK firms on bank loans.

Mr Welton said: “Over the last decade or two, the availability of bank debt has masked an unhealthy way of growing companies.

“We want to get the debate away from ‘what’s the highest amount of debt we can get into the business for the lowest cost’ to ‘what is the right way to finance my business for the longer term?’”

Mr Welton suggested that there is too great a reliance on overdrafts because they are cheap.

He added: “It’s like a mortgage. You can borrow now on a tracker that costs next to nothing but the reality is when interest rates go up they’ll do so fairly dramatically – sometimes you’re better off taking longer term fixed rate money. For small businesses that option isn’t there, either because long term fixed rate money isn’t available or because by instinct they go for the cheapest money, not realising they’ll trigger covenants if they underperform.”

A bond market for smaller companies, on the other hand, would be a far better way to finance the debt side of small businesses, Mr Welton argued, leaving firms to free to use overdrafts for their real purpose of handling short-term fluctuations in working capital.

If you would like discuss how our Debt Collectors can assist your business, please visit the Debt Collectors section on our website,  contact us on +44 (0) 151 515 3014 or email us.

Please note: Information in this blog post is content property of Business Credit Management UK (www.creditman.co.uk) and the full original article can be found by clicking here.