News & Blog

£100,000 Tax Free

5. January 2012

Now that I have your attention, it’s not quite so exciting but still very worthwhile. 

The current £100,000 tax-free Annual Investment Allowance is still available for a short time before effectively reverting back to just £25,000 in the new tax year

Unlike most tax schemes it does not matters which sector you are in and the allowance currently provides 100% tax relief on all qualifying capital investments, which includes tools and equipment, computers, office equipment and furniture, computerised machinery, commercial vans, computer software and integral features of a building, such as electrical systems- up to £100,000.

However, you do need to invest soon as the clock is ticking towards the new tax year and you therefore have less than four months to plan and complete any capital investments that are likely to exceed the £25,000 threshold if you want maximum tax relief.

Although some tax relief will still be available on investments over £25,000 from April 2012, it will be less generous and, as we have generally come to expect, more complex, so you should consider discussing matters with your professional advisers now and where appropriate look at bringing forward any capital investment plans.

See http://www.hmrc.gov.uk/helpsheets/hs252.pdf , contact your accountant or call Kinetic for further information

 

Special New Year Offer from Kinetic

2. January 2012

 

To celebrate the start of 2012 and the Olympic Year, Kinetic are making available a very special time limited offer.

During January we will provide a full free comprehensive Independent Funding Review to the first 5 clients of 2012- representing a potential saving of up to £1,000 per client.

This review will include an assessment of:

Ø  The businesses current and future funding needs

Ø  Lender concerns/perceptions

Ø  Credit rating

Ø  Suitability and pricing of present facilities

Ø  The identification of alternatives and suggestions for improving the "fundability" of a business. 

This promotion is also available to our introducers to offer to their own clients as an enhanced service. 

 

To take advantage of this special offer now please contact mark@kineticbusinessadvice.com quoting IFR2012 in the subject line. 

             All free reviews now gone- Please contact us if you would like to discuss further

 

The legal bit

An independent funding review (IFR) must take place before the 28th of February 2012 and is limited to a maximum of 8 hours at the business premises. Introducers are restricted to one free IFR per client portfolio. Timing of the review and report preparation is solely at the discretion of Kinetic Business Advice and is dependent on staffing levels and other commitments. Whilst every endeavour will be made to ensure that a mutually convenient date is agreed, Kinetic Business Advice reserves the right to offer alternative dates as required. A full copy of our terms and conditions is available on request.

 

 

A Balance Sheet Recession

13. December 2011

 An interesting video clip below re the Balance Sheet Recession theory of our current woes. Like a lot of "real world economics" it can verge on stating the obvious - but understanding what got us here may help sometime in getting us out of it.

 Nomura Research Institute's Richard Koo says that what the world is experiencing right now is fundamentally different to the traditional recession experienced before in the West and is a "balance sheet recession,"

However, this is what Japan recently experienced and Koo says we can learn a lot from that country's experiences.

Interestingly it does disabuse some rightwing theories that companies always seek to maximize profits and that everyone acting rationally leads to optimum results.

You may completely disagree with the points he makes and the reasons we are where we are, and we do have addtional inflationary pressures (though a small fall today) but some good points are made regardless

http://www.youtube.com/watch?v=HaNxAzLKegU&feature=player_detailpage

 

 

Tips for Improving Cashflow

8. December 2011

A science in itself, but here are some simple points for improving your cashflow.

·         Cashflow problems can often be self-inflicted. Companies which send out incorrect invoices often find that their customers end up returning an invoice and requesting a new one (often only when the previous invoice was due and here you go again for another month’s credit!). Make sure all your invoices are correct before they are sent out to ensure your customers have no excuse for not paying and this also means ensuring you have any agreed credit period on there- after all if you don’t tell them they have 28 days to pay is it their fault when they thought they could take 3 months? NB balancing these credit terms vs. cashflow needs is something many businesses struggle with. Be sure to tell your potential customers upfront about your credit terms - before you provide your product or service.

 

·         Make sure you have a robust process for chasing up your invoices; ensure the invoice was received, that the receiver is happy with it and the underlying transaction, send out reminders/statements and pick up the phone and get YOUR money when its due, after all you delivered on your promise to complete the sale/provide the service their turn to honour their promise to pay when they should- remember a sale is not really a sale until you have been paid.

 

·         Know your customers! Some of your customers will pay on time every time – others will always be late payers (why? Be careful!). The more information you have about the customer, the easier your payment collection process will be.

 

·         Don't always associate higher sales with better cashflow. If large portions of your sales are made on credit, then when sales increase, your accounts receivable increase (money due to you), not your cash. Meanwhile, inventory is depleted and must be replaced. And because receivables generally will not be collected at best until 30 days after sales, a substantial increase in sales can quickly deplete your cash reserves.

 

·         The key to managing cash shortfalls is to become aware of the problem as early and as accurately as possible. Financial services providers are wary of borrowers who have to have money today. They'd much prefer lending to you before you need it, preferably months before.

 

·         So PLAN. This isn’t just something you do because the Bank Manager has asked for it and this does not have to be a complex document, but if in doubt speak to your accountant/adviser for help and prepare your cashflow projections for next year, next quarter and, if you're on shaky ground, next week. An accurate cash flow projection can alert you to trouble well before it strikes.

 

·         Consider using an invoice finance provider. These can pay you today for invoices you may not otherwise be able to collect on for weeks or months. This will provide you with vital cash enabling you to grow as your sales increase and perhaps negotiate better payment terms and discounts with your suppliers as you now become one of the good payers that everyone wants to do business with.

 

 

 

Beware too much Christmas cheer

6. December 2011

Small firms should view the run-up to Christmas and indeed the first few weeks of the New Year as one of the most dangerous times of the year to experience cashflow problems.

If you haven’t done so already then at this time of year you should perhaps be considering invoice finance – effectively, a cash advance on all invoices raised - to enable you to meet the challenge of any potential cashflow problems that arise over the Christmas.

Among all those other traditions the Christmas period and the first weeks of January are often a critical time for small businesses – almost as many people at all levels in a company are away  as during the summer and even prompt payers can take this opportunity to ease their cashflow by failing to get payments out before any Xmas shutdown.

As such, businesses can experience real and dangerous problems with cashflow at this time.

 During the festive period many business owners resort at the last minute to potentially inflexible bank overdrafts (if the bank will agree one in time) to see them through or, for others, worse still the company credit card, both of which can exacerbate weak cashflow positions in the medium term.

 The inevitable hangover after Christmas could be a lot worse for many firms if they come back after the break to find that there isn’t sufficient cashflow in the business to keep them going until the New Year’s fresh orders start coming through.

I have seen this problem year after year so please do get your cash in order now  rather than hoping it will be alright or worrying about it after Xmas (and in any event you know you will still be worrying about it when the Queen is in full flow).

Xmas a time of great cheer but often the New Year is even cheerier for insolvency practitioners  as it can definitely be a contributing factor to the number of start-ups, micro-businesses and even established small firms that go under, so give yourself an early present and work that cash NOW

 

Smoke & Mirrors- More Lending/Less Lending?

2. December 2011

Is it me?

 Doom and gloom the Gov of the B of E running around like private Fraser in Dad’s Army here we go again no lending, and yet in the last 3 weeks I have press releases hitting my desk from RBS, Santander and Lloyds saying they have money and want to lend it (OK RBS seems more along the “we will stop ripping you off “vein). 

So who it telling the truth and are they really lending? I have copied some of the releases below for you to decide and there are some great Bank Mangers (and alternative providers) out there, but one thing I have found is that if you have a well prepared business plan, understand your business and how to drive growth and profitability then the lending is there (even though  for micro SME’s- the sole trader or less than 5 staff  - this is the hardest part of the market to gain finance for) and in a large number of cases it always has been. The issue can still be though that having been successful sometimes a business asks for and/or gets the wrong type of lending that actually hurts their business more than helps.

So I would always recommend you speak to an independent business adviser who has real experience of helping businesses source the right type of finance or even worse case do plenty of on line research to ensure you get what you need and want- not what you may be sold to hit government targets or internal bonus schemes.

 

 

Bank of England- “We are all doomed!”

Fears of a further credit crunch intensified last night after a stark warning that British banks are struggling to raise money for loans to households and businesses.

The Bank of England said the crisis in the eurozone and slowdown in the global economy have deprived UK lenders of access to vital funds.

And the economic turmoil is so great that the Bank's governor has admitted he doesn't know 'what's going to happen tomorrow', let alone over the long term.

 

Santander “we like the Best and Fastest!”- Doesn’t everyone?

A new programme to support the best and fastest-growing businesses in the UK has been launched by Santander. 

Through its Breakthrough programme, Santander is making up to £200m of growth capital available to fast-growth companies looking to invest in their business. The scheme also aims to create local jobs.

The loans are available to businesses with an annual turnover of up to £10m which have a demonstrated history of high year-on-year growth in turnover, profit or employment, and have been designed to help address a recognised gap­ in the funding market for companies of this size.

The loans can be used to fund growth initiatives such as introducing new products, expanding overseas or recruiting new staff, and can be used as an alternative to equity investment.

The capital includes a £50m contribution from the government’s Regional Growth Fund to help leverage loans at the smaller end of the investment range and in more economically challenged areas.

  

Lloyds- “Let us give you Confidence!”

Lloyds Banking Group has announced a new unilateral commitment to lend at least £12bn to help Britain’s SMEs in 2012, as part of its continuing effort to help rekindle business confidence, stimulate demand for finance, and fuel economic growth.

The move represents an increase on the group’s current Merlin target, agreed with the government in February 2011. In addition, the group has pledged that the important measure of net lending – the difference between lending drawn and lending repaid – will remain positive. This comes during a time when the industry’s net lending levels are negative because businesses are in general repaying more than they are borrowing.

The new lending pledge is the cornerstone of Lloyds Banking Group’s SME Charter, which has been bolstered to help address the main challenges now facing the UK’s five million SMEs.

Through the new charter, the group is redoubling its efforts to help exporters, manufacturers, student enterprises and businesses in deprived areas. It sets out pledges to invest £20m in community finance projects, including businesses in the country’s poorest neighbourhoods, during the course of next year; and to boost the number of students involved in enterprise associations by 40%, from 50,000 to 70,000.

 

RBS- “We are lending more but cutting fees”- how does that work then?

Small business lending by the Royal Bank of Scotland (RBS) is to increase by 15 per cent, it has announced.

The bank said it will achieve this by lowering lending rates, ending early repayment penalties and cutting upfront fees. RBS is one of the five biggest banks involved in Project Merlin, which promises to lend businesses at least £190bn in 2011.

An Audi, Due DIlligence, Advisory, a Shipping lIne, credit cards and lunch!

29. November 2011

OK I know its not the Lion the Witch and the Wardrobe, but it does show what you can achieve in one Monday.

A long trip on the train to London, but what a day. I got a client into a new Audi A1, started due dilligence on the purchase of a large engineering company,  advised a corporate lawyer on starting a new invoice finance company, met up with a good contact who is presently heavily involved in a very large shipping business with multi million pound transactions  and presented a case for a funding line based on credit card receipts. 

............................Oh and had a very nice salf beef sandwich for lunch with plenty of pickles

 

 

 

 

The Trouble with Banks

25. November 2011

 

Now I don't believe this is a wholly true story as I seem to have seen it several times over a number of years, but it is amusing and taps into the public perception-rightly or wrongly of how Banks operate.

 

It is said to be a letter sent in to the New York Times- genuine or not it has a message (even if its in Americanise!).

 

 

Dear Sir:

I am writing to thank you for bouncing my check with which I endeavored to pay my

plumber last month.

By my calculations, three nanoseconds must have elapsed between his presenting the

check and the arrival in my account of the funds needed to honor it.

I refer, of course, to the automatic monthly deposit of my entire pension, an arrangement

which, I admit, has been in place for only eight years.

You are to be commended for seizing that brief window of opportunity, and also for

debiting my account $30 by way of penalty for the inconvenience caused to your bank.

My thankfulness springs from the manner in which this incident has caused me to rethink

my errant financial ways. I noticed that whereas I personally answer your telephone calls

and letters, --- when I try to contact you, I am confronted by the impersonal, overcharging,

pre-recorded, faceless entity which your bank has become.

From now on, I, like you, choose only to deal with a flesh-and-blood person.

My mortgage and loan repayments will therefore and hereafter no longer be automatic,

but will arrive at your bank, by check, addressed personally and confidentially to an

employee at your bank whom you must nominate.

Be aware that it is an OFFENSE under the Postal Act for any other person to open such

an envelope.

Please find attached an Application Contact which I require your chosen employee to

complete.

I am sorry it runs to eight pages, but in order that I know as much about him or her as

your bank knows about me, there is no alternative.

Please note that all copies of his or her medical history must be countersigned by a

Notary Public, and the mandatory details of his/her financial situation (income, debts,

assets and liabilities) must be accompanied by documented proof.

In due course, at MY convenience, I will issue your employee with a PIN number which

he/she must quote in dealings with me.

I regret that it cannot be shorter than 28 digits but, again, I have modeled it on the number

of button presses required of me to access my account balance on your phone bank

service.

As they say, imitation is the sincerest form of flattery.

Let me level the playing field even further.

When you call me, press buttons as follows:

IMMEDIATELY AFTER DIALING, PRESS THE STAR (*) BUTTON FOR ENGLISH

10

#1. To make an appointment to see me

#2. To query a missing payment.

#3. To transfer the call to my living room in case I am there.

#4 To transfer the call to my bedroom in case I am sleeping.

#5. To transfer the call to my toilet in case I am attending to nature.

#6. To transfer the call to my mobile phone if I am not at home.

#7. To leave a message on my computer, a password to access my computer is required.

Password will be communicated to you at a later date to that Authorized Contact

mentioned earlier.

#8. To return to the main menu and to listen to options 1 through 7.

#9. To make a general complaint or inquiry.

The contact will then be put on hold, pending the attention of my automated answering

service.

#10. This is a second reminder to press* for English.

While this may, on occasion, involve a lengthy wait, uplifting music will play for the

duration of the call.

Regrettably, but again following your example, I must also levy an establishment fee to

cover the setting up of this new arrangement.

All is not well in the State of Euroland

24. November 2011

I know it is in the news constantly and we may all be getting a bit fed up with it but every economic seminar I have been to recently is talking about it- The Euro

Here is some distilled knowledge (or is that guess work) from my attendance-with thanks to the economists at RBS and Unlimited Potential (www.unlimitedpotential.co.uk) for their clear thoughts and words.

Angela Merkel is fond of saying that if the Euro fails then Europe fails. However if the Euro succeeds Europe is likely to fail anyway because the Euro was seemingly introduced on the back of two falsehoods.

The first was that monetary union could exist without political union.

 

The second was that Euro and Non-Euro countries could sustainably co-exist. This was based on the view that the EU is a club of clubs, all members share the single market, but otherwise coexist within a flexible framework of labour laws, immigration, financial regulation and bilateral agreements.

 

In the last week of October 2011 European Leaders agreed to leverage the European Financial Stability Facility ( EFSF) boosting its lending potential from 300Bn Euros to 1.1trillion Euros. This is the first big step on the path of divergence between Euro and non-Euro members.

 

It is the beginning of joint liability for Sovereign debt guarantees, thus paving the way for the creation of a Eurobond.

 

The problem is you need to have joint political and economic will. Take for instance the UK- if you accept that the South East is the main economic driver then there has to be a tacit agreement that the wealth created in the South has to support other areas of the country when they are unable to do so- for no other benefit than they should.

 

So how do you tell Germany that its positive position has to flow to Greece etc so everyone “shares the love”

 

If you look at Europe as a whole then the positive balance (Germany, Luxembourg etc) does almost exactly equal the negative- so if Eurloand was one country aligned politically and financially there would not be a recession!

 

So If a Eurobond is created the European Central Bank will require each Euro member to solve their underlying structural problems. They will be required to harmonise their financial sector, to co-ordinate their labour market rules and become more competitive.

 

Eurozone level taxation will have to be introduced to ensure income is redistributed from North to South. Brussels will send economic policemen to oversee errant countries.

 

But all these measures are diametrically opposed to the founding principles of the single market.

 

A monetary union in trouble has very different needs than a club interested in free trade. The Euro members will (under the influence of France) decide that it was free trade which caused the imbalances in the first place ( Germany and France are convinced it is financial institutions based in London who are major contributors to the problem).

 

The Eurozone will have to create a common financial platform to ensure macroeconomic stability and the Eurobonds sell at a good price.

 

Non-members have no need for such structures and would resist strongly a regime run by and in the interests of the Eurozone.

 

SO where do we go from here…………………………