Sage Blog

We all know how crucial credit can be. Yet in these uncertain economic times, guaranteeing access to lending is becoming more difficult than ever.

Despite being recognised as a vital survival tool for small and medium-sized businesses – and a necessary strategy for the UK’s long-term recovery – many are still struggling to secure the credit they need.

Steve Porter, Sage Accountants' Division

A more cautionary approach to approving funds has been seen across the board with suppliers, trade credit insurers, building societies and banks failing to meet their lending targets this year – all showing a reluctance to extend terms.

A mistrust of traditional business data as a way of measuring risk is recognised as one of the biggest barriers to securing credit and many banks and suppliers are demanding more up-to-date and monthly management accounts as part of any application.

One of our recent Sage Omnibus surveys found that half of accountants polled said they were now being asked to help prepare quarterly or monthly accounts, while another 53 per cent revealed clients were struggling to access credit.

Here at Sage we have been engaging with numerous industry bodies such as the Confederation of British Industry (CBI) – as well as other trade credit insurers and interested parties – to understand the impact on the market and explore ways that we could potentially assist both you and your clients.

Help is at hand

What can SMEs do to help themselves? If they are to secure continued lending, they must be pro-active about their credit profile – looking at ways to offer more real-time accounts and to improve their financial standing.

Accountants’ role is key, and there are credit and analysis tools at hand to help identify new ways to help businesses stay ahead – such as CreditPal (provided by Future Route).

These secure, internet-based facilities help users maintain detailed financial accounts and manage lending needs. For example, CreditPal complements Sage software – such as Sage 50 Accounts and Sage 200 – requiring no extra download or installation, and allows users to review internal finance and automatically generate standardised and validated monthly management accounts.

Accountants can offer such credit and analysis tools as a value-added service, generating data on a client’s behalf, or acting as an advisor to help SMEs access and set up the service in-house.

However these links are made, accountants are able to play an invaluable part in maintaining the steady credit flow all businesses need.

Steve Porter, Marketing Campaign Manager, Sage Accountants’ Division

Whether to maintain financing agreements, to look at growth opportunities, or more generally as a good housekeeping exercise, during the course of the year most business will undertake some form of business planning.

Stuart Lynn

They may use business planning software or business forecasting software to do this, or they may do it in a more manual way. Either way they’d probably look at things like assets, liabilities, opportunities, cash flow, revenue, costs and possibly carry out a “what are our Strengths, Weaknesses, Opportunities and Threats (SWOT) exercise.”

Why carry out business planning?

Business planning is very good practice and it’s essential for business continuity and growth. I’m always surprised how many businesses I come across that only do very basic planning or don’t do any planning at all.  However, for those who do, it’s very easy for a business to become too inward looking and I often wonder how many businesses are oblivious to external factors that could have a positive or negative impact on their business.

What to consider when business planning.

To produce a thorough plan, businesses need to consider Political, Economic, Social, Technological, Environmental and Legal (PESTEL) factors as well as their internal drivers.

Now, I know what you’re thinking… this all sounds a bit complicated and I don’t have time to do it. Well rest assured, it’s not complicated at all, and there are some very good resources to get you started such as this CBI report “The shape of business, the next 10 years”.

Let me give you an example of how you might look at a PESTEL for UK businesses today:

• You might look at the political landscape, how successful will the Conservative – Liberal Democrat coalition be and what policies might they put in place to help or hinder your business? What’s happening in Europe and how the stability, or not, of the Euro might affect your business and you might look forward to the June budget, one to watch very carefully, and hopefully some good news for businesses and consumers.
• You might look at the banking system and the continued difficulty that businesses have getting finance. Also if you run an export business you might be benefitting from the weakness of the pound against other currencies. Alternatively, if you run international subsidiaries you may be experiencing a negative impact of the weak pound.
• You might look at how the newer generation of business owners and consumers are more tech savvy, how they prefer to do business on the move and are looking for more collaborative tools and systems. You only have to look at the meteoric rise of social and business networking for evidence of this. I hasten to add that this isn’t really about the technology, which so many people get hung up on; it’s about solving real business problems and making life easier and more productive for UK businesses.
• You might look at how technology has developed over that last five years and think of where it might go in the next five years. Just look at the evolution of the mobile phone, an essential business tool today and you couldn’t imagine life without one, the emergence of small form devices such as the iPad and the general availability wireless networks and high speed internet bandwidth. [Don't forget that it's not too late to enter our competition to win an iPad - Cath]
• You might look from an environmental perspective at how energy costs are on the rise, significant for all businesses and those in logistics are always hit hard by the increasing cost of fuel. Will there be costs levied on UK business in relation to green policies, or will there be opportunities as the UK look at developing new types of energy? You might also look at topics such as Corporate and Social Responsibility, and Carbon Accounting. These have been normally associated with larger companies and are becoming more and more mainstream.
• You might also look at legislation as this is becoming increasingly complex and one of the biggest, if not the biggest, issue that businesses face today.

These are just a few examples and if you’re not doing so already, I would encourage you to consider these and many more like them that are specific to your own business. It’s not all doom and gloom as there are many opportunities if you can turn these factors into a positive advantage for your business. Give it a go; you never know what you might discover.

“Not just small business, all business”

Stuart Lynn, Head of R&D, Sage Mid Market Division www.twitter.com@_stuartlynn

We’re giving away 5 iPads. Yep, somehow we’re going to get hold of 5 iPads and we’re not keeping them for ourselves, although that would be nice, we’re going to give them away!

All we ask of you is that you tell us your top business tip in 40 words or less, and the top 100 will be entered into a draw to win 1 of 5 iPads (check out the t&cs).

Not only do you stand the chance of winning an iPad, we’re going to put the top 100 tips together into a guide so the whole world can benefit from your knowledge and you get a bit of promotion for your business. How cool is that?

The closing date is midnight 28 May 2010, so share your business tip with us today.

Update: Thanks to everyone who took part. The competition is closed and the five lucky winners are now enjoying their lovely new iPads.

For the rest of us the free 100 Top Tips guide is now available. I know, I know…it’s no iPad, but it’s actually a rather good business advice guide!

It’s Business Startup Show time again… and we’ll be there Thursday and Friday this week (20/21 May) doing more than we’ve ever done to get out and about to talk with small businesses about their needs and opportunities for the future.

Business opportunities and challenges

At previous shows, we’ve heard a lot about the opportunities and challenges that businesses face. Business planning and cash flow are always top of mind with young business.

We’ll be talking about these and other business challenges at the show. And we’ve got loads going on to help you get your business off the ground.

Free CRM and business planning workshops

We’re doing something slightly different this time around. First off, we’re running some dedicated workshops at the show – Business Planning and CRM – so you can come along and take part in an interactive session with some of our experts. And after all that walking around we’ll make sure you get a comfy seat!

Small business research

Secondly, if the thought of a seat appeals for half an hour or so then you can also take part in our small business research that we’re running whilst at the show. Register your interest in our small business research if you’d like to help shape the future of our software and services for small businesses – there’s even a free coffee and a little incentive on offer! It would be great to hear your views.

Business software for start-ups

We’ll also be there with a couple of traditional stands… but I promise you won’t get heckled from the aisles! If you want some more ideas about what you can find out then here’s a few:

• Sage Planning for Business – Free business planning software that helps you evaluate, plan and launch your new business
• Sage Invoicing – Free invoicing software that gets you up and running using software to manage your incoming revenue
• Sage Pay – looking to trade online? Find out how our online payments services can help
• New Sage Outsource Payroll services – find out whether in-house payroll software or outsourcing your payroll is your best option
• New Sage Mobile HR Advice – it can be difficult to stay on top of HR issues so see how our mobile HR advice tool can help you
• ACT! by Sage – get a demo of the world’s favourite contact management software and learn why CRM is vital for your business

Free business seminars

And if this isn’t enough, some of our experts will be taking part in free business seminars, such as:

Getting on the e-commerce bandwagon

Overcome mediocrity through exceptional customer service

Are you planning for success?

Watch out for more updates from the show in coming days. I’ll be there both days so please come and say hello.

Geoff Phillips – one of the men in the orange t-shirts! (there will be few!)

One of our services here at Sage is to help customers navigate HR issues and make sure that they are advised on changes to the law.  Many of our HR Advice customers appreciate our plain English approach and clear advice on HR legislation. The introduction of “fit notes” is one of the many areas where we have been working hard to make sure our customers have the information they need.

Georgie Cragg-James is a Senior HR Adviser for Sage HR Services

The change from traditional sick notes to new fit notes came in amid a whirlwind of controversy and confusion. Now that the dust has settled and fit notes have been trialled for real, we’ve put together what we hope will prove to be a useful guide to using them.

What is a fit note?

Technically called a statement of fitness for work, a fit note is provided by a doctor to an employee who has been off work for longer than seven days. The fit note will advise you, as an employer, whether your employee is fit enough to return to work.

What does a fit note do?

In the fit note, your employee’s doctor will select one of two options; that the employee is either:

• Unfit for work; or
• may be fit for work, taking account of the following advice.

If the doctor has written that your employee may be fit for work, they will then offer advice about the circumstances in which they could return to work, for example:

• A phased return to work.
• Altered hours.
• Amended duties.
• Workplace adaptations, such as them working on the ground floor only.

Do I have to take the doctor’s advice?

You don’t have to follow the advice given in the fit note if you think it’s impracticable. After discussing the advice with the employee, it’s your decision whether to allow the employee back to work. You’ll know more about any health and safety issues in your workplace than the doctor.

If you can’t provide what the doctor has suggested, tell this to your employee and treat them as being unfit for work. The employee doesn’t need to go back to their doctor for a new fit note.

However, if your employee’s illness could be described as a “disability”, you need to understand what “reasonable adjustments” you can make to allow them to come back to work.

To get a picture of how this process works, take a look at these real-life case studies:

Case study A

Julia is 31 years old and works as an administration assistant in a small company. She has been off work for six weeks with severe back pain for the third time in a year.

In her fit note, her GP advises that she ‘may be fit for work taking account of the following advice’.

The advice is that Julia:

• May need time off to attend physiotherapy after a referral.
• Should avoid static postures by taking more frequent breaks and be able to sit/stand when she needs to.
• Should have a workstation review.
• Should consider a referral for occupational health advice.

In the fit note, the doctor also ticked ‘a phased return to work’, ‘amended duties’ and ‘workplace adaptations’.

The doctor noted that this will be the case for eight weeks and he will need to assess Julia’s fitness for work at the end of this period.

Julia and her manager discuss the advice on the fit note and how her health condition affects her ability to do her usual job. They agree that Julia should observe a phased return to work with more frequent breaks during her shifts. Her manager has also organised for a workstation review and an occupational health assessment to identify any action that may help prevent future episodes.

Julia immediately returns to work under these conditions and is back to her normal hours after four weeks.

Case study B

Eric is 47 and works in a retail store on the service desk, but also stocks shelves and works on the till. He has chronic anxiety and has been off work for three weeks.

He would like to return, but has concerns about coping with customer complaints that make up some of his role.

In his fit note, Eric’s GP advises that he ‘may be fit for work taking account of the following advice’.

The advice is that Eric:

• Should avoid customer facing duties.
• Should observe a phased return to work.

The GP additionally advises that Eric’s employer should consider creating a support network at work.

The doctor noted that this will be the case for three weeks and he will need to assess Eric’s fitness for work at the end of this period.

Eric and his employer discuss the advice on the fit note and agree that Eric should return to work on a phased return to a non-customer facing role, before gradually returning to the services desk for shorter then longer periods.

Additionally, Eric’s employer arranges for an experienced member of the team to become a ‘buddy’ to support him and advise on techniques to deal with handling difficult customer issues.

Eric returns to work immediately and returns to normal duties after three weeks.

Georgie Cragg-James, Sage HR Advice Service

As well as translating the law into plain English, Sage HR Advice Service advises you of forthcoming changes to the law and gives you all the tools you need to remain compliant.

It’s Payroll Year End and it seems to come round faster every year.  This is my 7th year end now working in the Sage Technical Support team supporting our SageCover customers, and apart from Internet submissions not a lot else has changed.  I thought it might be nice to let you hear about Payroll Year End from my point of view.

Andrew Redhead, Sage Payroll Support Team

For those of you that don’t know, Payroll Year End is an annual event where everyone who processes payroll has to send their P35 and P14 reports to the HMRC to show what they have deducted from all employees over the previous year.  All reports have to be received by the 19th of May or they will kindly send you a fine for every day it is late.

Days at Payroll Year End are much like any other except they start earlier, end later and are very busy.  Due to the longer opening hours we have people in the office from 8 in the morning till 7 at night to answer calls.  It’s very intensive, and I need a high level of concentration to make sure we support our customers to the high standards they expect and deserve.

Calls from our customers can range from an installation of the new version to make sure they are all ready for the new year or a problem with a P35 not balancing and needing to find out why.  We will also receive calls about the more standard issues for payroll like statutory maternity pay and holidays.

Throughout the day there are various things Sage do to make it go as smoothly as possible.  If we work half lunches we get a free sandwich delivered to our desk.  There is chocolate passed around to keep our energy up and the coffee machine is free for part of the day.  They may sound like little things but they all add up to make the day go smoother.

With a job based on the phone though the biggest thing that effects your day is the customers you speak to.  It’s a stressful time of year for our Sage Payroll customers and you’d expect some of them to be frustrated and annoyed, they are however not.  They are very nice to speak to and although they may mention how busy we are they seem to understand why we are so busy.  Depending on the type of call there may be time to talk about things outside of payroll.  This is always a nice change of pace and can make the day go much quicker.  On other calls there is no time for conversation so it’s just a case of entering the notes then onto the next customer.

At the end of the day it’s a case of finishing the call you are currently on before you go home.  It might be time to go home, but it’s not a matter of passing the call to colleague to finish it or ringing the customer back the next day; what matters is taking the time to help the customer no matter how long it takes.  Once you’re done and it’s off home to relax and enjoy the evening before getting up to do it all again.

For our customers I’d say don’t worry if things aren’t going smoothly for you. The important thing about Payroll Year End is to just not let it get on top of you.  Yes you’re busy, yes it can get stressful, but if you do have a problem there is someone like me at the end of the phone to help you.

Useful links:

• Visit our Payroll Year End website for updates and information
• You can find P60s, Payroll Year End training and Payroll software at the Sage Store

Andrew Redhead, Payroll Software Support Team

The tax situation for small and medium sized enterprises (SMEs) has increasingly become a focus for debate in this election (For small businesses the choice on tax is not straightforward). Putting the spotlight on this issue is good news for small businesses, as research amongst our own customer base suggests that many find the complexity of the tax system frustrating. The overwhelming majority (72%) of UK SMEs we surveyed, also indicated that the complexity of HMRC rules is a barrier to start-ups.

We surveyed 2,000 of our SME customers in March 2010, from our 800,000 strong UK customer base. Insights from the Sage Omnibus, enables Sage to highlight the challenges facing UK firms and provides a barometer for British business.

The survey discovered that seventy-seven per cent of businesses felt that the current tax system is preventing them from taking advantage of tax benefits and breaks. Furthermore, sixty per cent of SMEs polled did not know what breaks they may be eligible for.

Our research shows that there is a lot of confusion amongst the UK business community about the current tax system. At times of economic uncertainty, knowing what tax benefits and breaks your firm is entitled to can make the difference between success and failure. My advice to all businesses would be to seek professional advice from an accountant to inform them of any breaks that they may be entitled to.

Interestingly, more small businesses would choose to make the current tax system simpler (34.5%) over freezing VAT at its current rate of 17.5% (25.9%), highlighting the extent of their frustration. When asked what single change they would like the government to implement, SMEs indicated that they would also like to see the planned 50p income tax for top earners (5.8%)scrapped.

Jayne Archbold, Managing Director of the Accountants’ Division