But as things progress relationships do run their course. It may not be that the service your accountant offers has deteriorated, it’s just that a fresh pair of eyes and a new energy is required to give you a new perspective on your business.

At BMS we have found that new clients really appreciate the free health check that we give all our clients, not just when they join us but on a continuous basis.

We believe an accountants job is not just to provide bookkeeping and accountancy services, but rather to review results with our clients, give informed opinions on the business’ perfromance and to offer practical advice.

Changing Accountants need not be stressful. The fact that you have looked into what accountants are available in your area means the seed has been sown.

Review our website and if you think BMS Chartered Management Accountants can be of service to you, please contact us.
We look forward to your call.

Click on ‘Ireland’s unexpected economic recovery’ in our Blogroll.

From humble beginnings BMS has relocated to Navan town in Co Meath.

The new address and contact details will soon be updated on the website, however for the time being please note that the office address is as follows:

Business Management Solutions

Chartered Management Accountants

11 Brews Hill

Navan

Co Meath

I would like to thank all our customers for their continued support.

• Corporation Tax remains at 12.5%.
• Minimum wage to be reduced to €7.65.
• Reduce cost on business from government energy costs and encourage renewable energy
• Improved broadband access.
• Facilitate cost reductions for legal and medical services 
• Government to implement 15 day prompt payment policy for all government activities
• Reduce regulatory burden by 25% in 2011
• Local Government to reduce rates
• Reform of Social welfare rates to incentivise work
• Companies to be supported in Skills Development and Internship placements
• Overhaul of BES scheme
• Overhaul Bankruptcy legislation

Tax Changes

Personal Tax Changes -Income      

• Social Charge to replace PRSI, Health & Income Levies       
• Marginal tax rates to remain unchanged; effective top rate of 52% (PAYE) and 55% (self-employed)   
• Reduction in tax credits for PAYE employees of €600 (single person) between 2011-2014  
• Implied reduction of €6,000 in Standard Rate band to €30,400 (single person) between 2011-2014
•  65% of the Income Tax adjustments will come in 2011

Personal Tax Changes -Property Tax    

•  In  2012 interim ‘Site Value Tax’ of €100 per household        
•  From 2013 to be based on value; expected average just over €200 per household
• Commercial rates to also be based on site value

Restrictions on Reliefs

• Approved Share Option Schemes abolished
• Relief on Trade Union subscriptions, Rent relief, Age Credit, Age Exemption all abolished
• Artists Exemption to be capped at earnings of €40,000
• Ex-gratia termination payments above €200,000 to be taxed

BUSINESS TAXATION

• Corporation Tax rate of 12.5% to remain
• BES to be replaced by new ‘Business Investment Targeting Employment Scheme’
• Patent Royalties exemption to be abolished from 2011

CAPITAL TAXES        

• CGT: Current rate of 25%. Varied rates for different levels of gains from 2012
• CAT: Thresholds to be reduced from 2012
• Reliefs & Exemptions: CGT, CAT and Stamp Duty to be either abolished or ‘significantly reduced

PENSIONS     

• Tax-free pension lumpsum on retirement capped at €200,000 from 2011 
• Reduction in Pension Relief from 41% to:
  • 34% in 2012
  • 27% in 2013
  • 20%in 2014
• Earnings limit for contributions to be reduced from €150,000 to €115,000 in 2011
• Propose reduction in maximum value of fund
• PRSI & Health Levy relief on contributions abolished from 2011

INDIRECT TAXATION

• VAT Standard rate to be increased to 22% in 2013 and 23% in 2014        
• Review of the 0% rate 
• No change in 13.5% rate Other Taxes
• Carbon tax  to be doubled
• Review of Motor Tax rates

BMS offer a range of services that include the production of Management Accounts with robust reports designed to be informative and enable you the owner to make informed decisions.

Our Management Accounts pack is designed with you in mind. Identifying the Key Performance Indicators on profitability and performance on a regular basis is vital to ensure the decision you make have the right impact on your business.

Visit Management Accounting Services for more information

BMS offer a range of services that include the production of Management Accounts with robust reports designed to be informative and enable you the owner to make informed decisions.

Our Management Accounts pack is designed with you in mind. Identifying the Key Performance Indicators on profitability and performance on a regular basis is vital to ensure the decision you make have the right impact on your business.

Visit Management Accounting Services for more information.

Business Planning is critical for you business success. As such, BMS offer a business budgeting services designed to get your departments working together to achieve a common goal or set of targets.

Business Plans vary in their detail, but what is critical is that you as the owner are aware of the resources available to you and that you utilise them efficiently and effectively to ensure your business prospers.

Visit Strategic Business Planning or Budgeting Services for more information.

Cost Reduction/Improvement is at the top of all companies agendas. Ensuring value for money expenditure and that you have full control over expenditure is critical to your success.
Cost reduction programmes can be implemented almost immediately and with some positive affects.

However it’s only by analysing costs more closely that you see the real savings that can be made. At BMS we construct Cost Improvement Programmes for our clients designed to reduce costs without impacting on the quality of the product or service that you provide.

Visit Cost Improvement Programmes for more information.

BMS also offer Payroll & Bookkeeping Services to our clients. The outsourcing of non-critical functions can be a source of financial savings and lead to improved productivity in other parts of your business as you re-direct resources to more critical areas.

Let BMS manage all your Bookkeeping requirements with a Bookkeeping Service that will add real value to your company. Competitively priced our Bookkeeping Services will leave to do what you do best, run your business.

Equally at BMS we provide a Payroll Service for companies with up to 250 employees. You simply have to provide us with the weekly/monthly payroll details for your staff and let BMS do the rest.

Visit Bookkeeping Services or Payroll Services for more information.

Starting a business is one of the most challenging and rewarding things you will do. It’s vital to get it right and at BMS we can help. We have experience in Business Start Ups. We know the pitfalls of getting it wrong.

We can take the stress out of starting a business by giving you sound and practical advice on what type of business you should set up.

To find out more visit our Business Start Up section.

Cash Inflows can be monies received from customers to loans from your bank while Cash Outflows will be all the costs you have incurred to sell that product or service to your customer.  These can be raw materials for products, rent, wages, insurance etc.

Managing Cash Inflows

Customer Payments: One of the biggest risks to SME’s is the failure of customers to pay their account on time, if at all. Defaulting or delaying payment can impact upon your ability to secure new raw materials, meet bank repayments or to pay the wages of staff.

So how well do you know your customer base?

To safeguard against customers defaulting on payment it would be advisable to implement some or all of the following points;

• Check your customers’ credit worthiness.
• For new accounts, ask for references to check their track record on payments.
• Enforce your credit terms.
• Impose penalties for late payment.
• For new accounts insist on COD for the first two or three deliveries.
• Seek payments by Direct Debit.
• Take out credit insurance on your debtors.
• Be diligent; continuously review your aged debtors.
• Offer incentives for early payment of account.
• Phone your customers a week before payment is due to ensure there are no issues with payment.

Construct a robust Credit Control Policy to minimise the risk of customers defaulting on their payments.

Internal Efficiencies: It stands to reason that the more efficient your own internal processes the more likely it is that your customers will pay on time. We have all heard the excuses for non-payment, some of the more common ones are;

• ‘I have not received the invoices.’
• ‘The invoices arrived too late for processing in the month and as a result will be paid in the next cheque run.’
• ‘There is an error on the invoice.’

By eliminating your own internal inefficiencies you are eliminating the range of excuses for customers to delay payment.  Best practice in all your procedures will speed up cash inflows.

When your customer places a Sales Order you must ensure that all the information is correct. The customer will have used the most up to date information available, so if the information on price, delivery time etc are incorrect at the start you have got off on the wrong foot. The sales order process should be quick and easy to use.

Assuming the customer has cleared your credit vetting procedures, the next step is to fulfil the order. It is critical that you honour your commitment on delivery and quality. Clearly once you have met your obligations on delivery and quality it is so much easier to insist on prompt payment. If delays are unavoidable, keep your customer notified.

Invoice your customer immediately on delivery of the goods or at the very least within 24 hours. Ensure that the invoice has been checked for accuracy so that it matches the agreed price, that the description and quantity of goods delivered, matches not just the sales order but more importantly the delivery note should the actual goods delivered differ from the sales order.

The quality of your invoice is critical. Critical information it should contain is; your company details, customer name address, description of goods or services sold, quantity delivered, price, payment terms, invoice date, sales order/delivery note number.

And remember – Once the invoice has been raised, post it out immediately to the correct address!

Managing Cash Outflows

It is vital that you understand what cash outflows your company incurs. If you are cash rich, payments can be met as they fall and in line with agreed credit terms.  If your company however is restricted in whom it pays and when because of a worsening cash flow situation, how do you decide who to pay?

Paying a key supplier to ensure you continue to trade, on the surface seems a sound judgement call. But what of the suppliers who have gone without. Will they wait for the next payment run? Will they seek a judgement for non-payment? Will it frighten off future suppliers who hear of your difficulties in meeting payments?

It cannot be overstated how important it is for a company to develop the habit of generating cash forecasts. This will highlight expected receipts and outgoings and generate an anticipated cash position. The cash forecast should be for a three month period and updated weekly to ensure the most up to date information.

The starting point is to understand who you owe money to. Wages for your staff must be met weekly or monthly. Bank loans must be repaid. Materials must be paid for. VAT paid and so on.

Start by forecasting who needs to be paid and when. Use your creditor’s ledger to map out payment dates for suppliers. Ask yourself, how up to date is your creditor’s ledger. You could be living in a fool’s paradise if you omit significant payments to suppliers because the creditor’s ledger is not up to date. So be sure to take into account outstanding purchase orders that have not yet been matched to supplier invoices.

Prioritise payments ensuring that all critical payments are dealt with first. This may be obvious, but ensure there are funds to meet your wage bills for example.

Against these costs, map into your cash forecast expected receipts from customers. Using your opening bank balance you can now very simply generate an expected weekly bank position.

The forecast will visualise your current and future cash position and it may be possible to merely slow down supplier payments for a few days if the need arises as you know there are cash receipts due in presently.

However the risk here is that you may establish a reputation for late payment and that creditors will impose stricter and shorter credit terms if you persist with late payments.

If your existing cash flow difficulty is more longterm, what can you do?

Firstly as mentioned, have a detailed cash flow forecast available to highlight the current gap in funds and therefore the funds you require to close this gap.

Secondly, develop a business plan to show the viability of your business. Your bank will want this detailed plan to satisfy there own risk assessors that your business is worth investing in.

Thirdly, be open and transparent in your dealings with lenders, without giving away your competitive advantage.

You can then;

• Approach your Bank for support.
  • Increase you overdraft limit.
  • Secure a short term loan.
  • Apply for invoice discounting.
• Speak to your principal suppliers and agree a payment plan.
• Speak to the Revenue Commissioners if meeting your tax liabilities for VAT or PAYE is a problem.
• Seek extended credit terms from suppliers.
• Speed up cash inflows by offering incentives for customers to pay early.
• Reduce and eliminate unnecessary costs.
• Inject additional personal cash.

And of course what you should not do.

Do not bury your head in the sand and ignore the warning signals. As payment reminders come across your desk, deal with them personally. Communication is vital. It is in no ones interest for you to default on payment.

Raymond Gibbons is a leading SME business advisor and former Financial Controller. He has experience in Manufacturing, Retail and Services based industry sectors. His focus is on delivering growth and profitability to his clients.

If you would like more information on the above topic or any matter relating to your business, contact info@businessmanagementsolutions.ie.

As business people we are all aware that it is cash that is the real life blood of any business. That old saying, ‘revenue is vanity, profit is sanity, but cash is king’ has never been more pertinent. Access to easy credit lines appears to be a thing of the past, for the immediate future anyway that is. While all too many companies have also seen a severe drop in revenues which has not been matched in a reduction of overheads.

As a result, SME’s in particular are having great difficulty in managing ever tightening cash flows, be it from customers lagging on payments or a lack of lending facility from the cautious banking sector.

The importance of managing cash flow therefore has never been more critical. However many of the issues of poor cash flow management stem from companies operating for too many years when there was a constant stream of easy cash available and they took their eye off those internal systems and procedures which act as a barometer for good cash flow management.

Cash Flow Management

Cash flow management is effectively about managing the cash coming into your business and the cash going out. It is about getting the balance right to ensure you receive cash owed to you before you have to pay for your overheads. The danger is very evident.

All too often cash inflows seem to be slower at coming in than the speed with which you are paying out cash. This shortage or cash flow gap is generally fine provided you are trading profitably and receiving in more cash from customers than you are paying out to suppliers over a period of time i.e. after receiving payment from customers and paying out your suppliers there is a balance of cash remaining to be re-invested in the company.

However this is not always the case and cash flow needs to be monitored and projected forward to highlight potential cash shortfalls. By careful monitoring of your cash position, corrective action can be taken in advance to ensure you are able to manage difficult times more easily.

Cash flow therefore can be described as a cycle. The cash you use in your business to acquire resources to sell products or services to your customers is then collected by way of customer payments. These payments are used to pay outstanding bills you have and also to re-invest in more resources to sell additional products or services.

Working Capital

Working capital is the amount of cash tied up in the business’ trading assets. Calculated as (Stock + Debtors-Creditors), a negative working capital might indicate a business’ inability to pay its short-term debt.

What is more relevant is the connection between the three items above. Cash tied up in Stock and Debtors is a cost to the business. Effectively managing your stock means tying up less cash in expensive materials. Over stocking ties up cash needlessly and should be avoided.

Debtors on the other hand can seldom be avoided. Most firms offer credit terms to customers to secure their custom. Debtors are therefore the cash tied up in unpaid invoices from customers. By reducing Debtor days (speeding up payment from customers), you can cut down on this cost and bring in much needed cash to your business.

Creditors are the opposite of Debtors. This is cash you owe to your suppliers. By lagging on these payments you may extend your own credit terms and slow down your outgoings. But be warned, obtaining a reputation as a bad payer could do untold damage to your business.

If you would like more information on the above topic or any matter relating to your business, contact info@businessmanagementsolutions.ie.