Feature
Accountancy Services
Playing the numbers game
- to face the challenges ahead
David Alexander (pictured), Senior Partner at Alexander Accountancy, shares his views on some practical considerations
Now more than ever before all businesses should produce regular financial information to make sure they stay in control. Having information available on a regular basis
and in a timely manner is fundamental to the proactive management of a business. This is when you are best placed to make informed decisions in a positive manner and hopefully help avoid having to take reactive measures after the event. We keep hearing about Brexit and the challenges
this will present, but we should not forget there are other and perhaps more immediate challenges that need to be dealt with.
How will you be affected by the minimum wage legislation? Although this has been with us for a number of years and is currently £7.50 per hour for over 25’s, successive Governments keep repeating aspirations to increase this to new heights with £10 per hour a figure that has been quoted. When employers consider their future wage costs it is not just about the lowest paid employees, they need to factor in the differentials rewarded to more skilled staff and those who take on more responsibility. If skilled and senior staff see their pay
differentials being eroded there is a risk that this could de-motivate them? Possibly removing the incentive for training or putting in the extra effort that some roles require. If you wish to keep the differentials as positive incentives, then this needs to be built in to your future costs?]
Have you planned for the additional costs of providing Workplace Pensions? This year will see the remaining employers that have not yet staged brought in to the auto enrolment pensions legislation. But it is important to remember inclusion is only the start, there are progressive increases planned in employer contributions, and therefore additional wage costs, for the next few years. Until 5 April 2018 employer’s contributions are set at one per cent of the employees qualifying salary. From 6 April 2018 this is expected to increase to two per cent and from 6 April 2019 a further increase to three per cent of the employees qualifying salary. Once again these are additional costs that should be included in the budgets and financial planning.
What are the practical considerations? The above examples of minimum wage, pay differentials and workplace pension costs highlight items that are effectively outside the employer’s control. However it is essential that they are taken in
to account to understand the effect they will have on profits and cash flow. Employers need to include the additional costs when working out future prices for goods and services, or constructing quotes and tenders.
Depending on Statutory
Accounts only gives you a snapshot of one moment in time and may not indicate trends or show the full picture. Identifying trends in advance with the use of budgets and up to date information allows for better control and forward planning. It means positive steps can be taken to correct negative trends before they take hold. The regular reviewing of data allows informed decisions to be made about what is and is not working in a business, and if changes need to be made. It allows for better cost control to be maintained and can be used to measure the return on investment. Thus indicating where funds should and should not be used. Having more information available allows for
better forward planning and can help maximise any benefits that can be obtained from the timing of expenditure and claiming reliefs. Having up to date and accurate information can
also reduce the cost of having annual work done including preparing the Statutory Accounts, Statistical Returns and Industry Reports.
Making Tax Digital can be an opportunity to help smaller businesses? Finally I would like to end on a positive note. Making Tax Digital may have been taken out of the Finance Bill as part of dissolving Parliament, but I am sure it is not an end to the subject. If, as expected, it is brought back in the new Parliament then most businesses will be set on a course to produce digital records on a regular basis. There are many accountants highlighting Making
Tax Digital as another burden on small businesses and picking apart the loopholes to make life easier for their clients, but perhaps that is missing an opportunity. If information is produced on a regular basis and clients advised of how they can benefit from it, surely that adds the most value. Making client’s lives better rather than easier, and giving them more tools for dealing with the challenges ahead.
42 CHAMBERLINK June 2017
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64
