According to Smart CEO, these are 5 Signs You Need a Cloud Accounting System

1. Too many manual processes
2. Inadequate reporting
3. Costly system maintenance
4. Integrating accounting with other business systems
5. Growth and change

What Vendor should I go with?

Top 3 on the Market – Xero, QuickBooks & Sage

• Xero considered the best on-line accounting system
• QuickBooks robust and positioned for small companies
• Sage solid control system, but weaker on reporting. 

Can’t Ignore – Zoho

• ZOHO Books part of a powerful suite of cloud applications.
• Understandable and simple pricing model.
• Strong functionality we would expect at this kind of application.
• Good for process integration – easily integrated with other ZOHO services

Up & Coming – ClearBooks

• Entry level – Positioned for small companies
• Price would be the only current motivator
• No outstanding features – Weak in the market
• However, young London Based PLC start-up
• Evidentially had unscheduled downtime

So how do I choose?

• Key Comparison Points & Selection Criteria
• Financial Stability of company
• Access to capital
• Fundamentals as standard
• Reporting Capabilities
• Project Management
• Integration with other Applications
• Security Standards
• Downtime – Five nines standard

How do I move this across my whole company’s infrastructure?

Well in the SaaS market they are called Apps and in the reports from Bain & Company and Gartner it’s called Infrastructure as a Service (IaaS)

It is safe to say that there are many alternatives and if you operate a Microsoft environment, you may be able to get a lot out of MSTeams, Sharepoint and the apps thsat integrate in that environment.

Looking at Zoho

A few key points to highlight:

• Cantered around CRM
• Born Integrated – Proprietary Apps
• Integration through Third Party Apps
• Complete Business Architecture Solution
• Apps available on Zoho App Marketplace  

Making it Happen:

1. There will be costs associated to each app
2. Time & effort is required for set-up
3. Time is required for on-going data quality management
4. On-going system management is improved due to Zoho “born integration”
5. Third Party Apps may be effected by Zoho System Updates

Looking at Xero

A few key points to highlight:

• Cantered around the Accounting Software
• Integration through Third Party Apps
• Decide on Business Priorities and Choose Specific Applications
• Apps available on Xero App Marketplace

Making it Happen:

1. There will be costs associated to each app
2. Time & effort is required for set-up
3. Time is required for on-going data quality management
4. Third Party Apps may be effected by Xero System Updates

A Final Though

This type of implementation typically works better when it is part of an overall plan & strategy.  As part of this process it is worth mapping out key processes within the business, thinking of the processes in a “lead to cash” sequence.  Finally, it is important that the team buys-in to the plan and will help make it successful.

The post Get the Most out of Cloud Software? appeared first on Pathway to Profit.

In computer networking, cloud computing is a phrase used to describe a variety of computing concepts that involve a large number of computers connected through a real-time communication network such as the Internet … cloud computing is a synonym for distributed computing over a network, and means the ability to run a program or application on many connected computers at the same time.

Is it all public?

Companies may have a mixture of Private/ Internal cloud environments; like an intranet as well as utilising more public/external environments. 

The public elements are typically referred to as “the cloud”.

Where is the Market Going?

Bain & Company and Gartner have moved beyond aggregate forecasts, and are beginning to forecast by cloud and SaaS adoption stage.

IaaS Continues as Fastest-Growing Market Segment

The public cloud services market is forecast to grow 18.5 percent and to total in excess of $200 billion worldwide, up from $111 billion in 2012. Infrastructure as a service (IaaS), including cloud compute, storage and print services, continued as the fastest-growing segment of the market, growing 43 percent to $12 billion and expected to grow 48 percent to $20 billion.

Do we always get the benefits?

SaaS is cheaper during its first two years of use, Gartner finds, but the total cost of ownership over five years would be lower for on-premises software. It also warned that while most users will assume that they will be paying on a ‘pay as you go’ basis, there are still likely to be contractual considerations.  In “the vast majority of cases,”, Gartner says that companies are pushed to sign predetermined contracts with fixed fees.

In its report Fact-Checking: The Five Most-Common SaaS Assumptions, Gartner also warned that SaaS is not necessarily faster to implement. While vendors quote 30 days as the normal implementation time, some software can still take up to seven months to set up.”

My Controller has also found that consideration must be given to acquisition and market consolidation.  For example, we have seen that an App (IaaS) Provider for a Stock Control system was acquired by QuickBooks and then over time the integration with Xero was withdrawn.  Thus, if you selected that App as your stock control system within a Xero environment; you had to change when integration was withdrawn.

It is also worth considering the size of the problem.  In other words, the cost of “renting” all of the software (Saas) & Apps (IaaS) required to run and manage your business can become costly.  Business owners should consider the “payback” on the investment and make sure that it is part of an integrated IT strategy that considers key processes from a “Lead to Cash” perspective in the business.

How do I know that I need a new Cloud Accounting System?

According to Smart CEO, these are 5 Signs You Need a Cloud Accounting System

1. Too many manual processes
2. Inadequate reporting
3. Costly system maintenance
4. Integrating accounting with other business systems
5. Growth and change

What Vendor should I go with?

Top 3 on the Market – Xero, QuickBooks & Sage

• Xero considered the best on-line accounting system
• QuickBooks robust and positioned for small companies
• Sage solid control system, but weaker on reporting. 

Can’t Ignore – Zoho

• ZOHO Books part of a powerful suite of cloud applications.
• Understandable and simple pricing model.
• Strong functionality we would expect at this kind of application.
• Good for process integration – easily integrated with other ZOHO services

Up & Coming – ClearBooks

• Entry level – Positioned for small companies
• Price would be the only current motivator
• No outstanding features – Weak in the market
• However, young London Based PLC start-up
• Evidentially had unscheduled downtime

So how do I choose?

• Key Comparison Points & Selection Criteria
• Financial Stability of company
• Access to capital
• Fundamentals as standard
• Reporting Capabilities
• Project Management
• Integration with other Applications
• Security Standards
• Downtime – Five nines standard

The post Should I put my head in the clouds? appeared first on Pathway to Profit.

Introduction

If you are running your business, you have a fundamental responsibility to yourself, if no one else, to make it work.  Let’s face it, unless you are limitlessly wealthy; you need to make money.  So that is one reason you are doing it.  There could be others, but for now let’s just focus on the fundamental primary purpose of all businesses…

That’s right…

To make money!

So from a purely tactical perspective, you have to “make a number”.  So the first step is figuring out what is your goal; what’s the target.  So lets get tactical.  But lets stsart sat the begoinning of the Profit Through Control Process. That is to say, lets start with Sales.

In sales there is an old adage … Calls + Demos = Sales

Think of it like you are training to get fit. How many leads sare you getting? Are you turning them into meetings? What is your tatget for meetings each week? For example, do you hsve a goal of meeting 3 to 5 new people per weekl? How are you doing against that target?

Now follow the Key Contyrol Steps we discussed before.

Step 1

Statring with sales; when you look at your business, think in a process orientation starting with the customer through your organisation to the point where you deliver your product and service to the customer and get paid.

Now map that out.  No need to get fancy, use post it pads or something and get a “rough cut” of your key steps.

Step 2

Now think about each step in the process.  Let me use a simple example process.

1. Lead Generation
2. Sales or Closing Deals
3. Invoicing or Billing or Collecting Cash
4. Purchasing or Buying Stuff
5. Doing Things or Building Things or Holding Stock
6. Delivering Things

Step 3

Now that you have your key steps outlined ask yourself two questions:

1. What in these steps could I do better to enable me to get more customers?
2. What “clogs up” my money and keeps my money from getting into my pocket?

So for the first question it could be more leads or a better conversion rate in sales or spending less on overheads.  But don’t boil the ocean here! pick one!

Similarly for the second question it could be getting paid quicker.  The root cause of that problem could be getting your invoices out quicker or better credit control or different terms or better pricing.  Again only pick one!

Step 4

Limit yourself to 3 to 5 key areas to improve.  Measure them and be relentless at your pursuit of improvement!

When you’re done, circle back and do it again!                   

The post The Profit Equation appeared first on Pathway to Profit.

What is an in solvent Business?

In accounting, insolvency is the state of being unable to pay the debts, by a person or company (debtor), at maturity; those in a state of insolvency are said to be insolvent. There are two forms: cash-flow insolvency and balance-sheet insolvency.

Cash-flow or Trading insolvency is when a person or company has enough assets to pay what is owed, but does not have the appropriate form of payment. For example, a person may own a large house and a valuable car, but not have enough liquid assets to pay a debt when it falls due. Cash-flow insolvency can usually be resolved by negotiation. For example, the bill collector may wait until the car is sold and the debtor agrees to pay a penalty.

Balance-sheet insolvency is when a person or company does not have enough assets to pay all of their debts. The person or company might enter bankruptcy, but not necessarily. Once a loss is accepted by all parties, negotiation is often able to resolve the situation without bankruptcy. A company that is balance-sheet insolvent may still have enough cash to pay its next bill on time. However, most laws will not let the company pay that bill unless it will directly help all their creditors. For example, an insolvent farmer may be allowed to hire people to help harvest the crop, because not harvesting and selling the crop would be even worse for his creditors.

What Does It Mean to Perform Insolvent Trading?

Insolvent trading means trading while your company is suffering insolvency. Specifically, this refers to incurring new debt while your company is insolvent. As a director of a company, one of your main director duties is for your company not to engage in this practice. A director engages in insolvent trading if the following conditions occur:

• The person is a director while the company is insolvent.
• That when the debt is incurred the company is insolvent or would become insolvent.
• There are reasonable grounds for suspecting that the company is insolvent, or will become insolvent as a result of the debt.

If a director engages in insolvent trading then they become personally liable for the new debts that are incurred by the company. That means they are not protected by limited liability. Therefore, the director’s personal assets are used to pay the new debt obligations. This is particularly relevant if your company goes into liquidation or bankruptcy, after being insolvent.

What are my responsibilities as a Director?

It is always advisable to see an Insolvency Practitioner if you have any concerns, to ensure that you have specific advice on your specific situation.   These Guidance Notes are not designed to be all encompassing, but rather a general guide.

Given that the company is below the threshold, it is the Directors responsibility to assess “going-concern” questions. 

Specifically, THE DIRECTORS RESPONSIBILITIES OR QUESTIONS TO ASK ARE: –

When conducting their going concern assessment, the directors will have to evaluate which of three potential conclusions is appropriate to the circumstances of the company:

1. there are no material uncertainties that may cast significant doubt about the company’s ability to continue as a going concern
2. there are material uncertainties related to events or conditions that may cast significant doubt about the company’s ability to continue as a going concern but the going concern basis remains appropriate
3. the use of the going concern is not appropriate

The accounting standards require directors to make disclosures about the existence and the nature of material uncertainties that lead to significant doubts about going concern.

Final Though

If you are struggling or you have questions always seek help.  Speak to your accountant, solicitor and Insolvency Practitioner and people who are close to you.

The post Am I a Going Concern? appeared first on Pathway to Profit.

In the UK a lot of business owners have been looking to ways to efficiently extract cash from the business.

One thing many business owners have gravitated towards is buying an electric car through the company and then using it as a benefit in kind.

So no matter if you are looking for the most expensive electric car or the cheapest electric car for sale … if you want a Kia Electric car, a BMW Electric car, a Tesla Model 3 or a Tesla Model S; the question is the same…

Does it make sense for me to purchase my Electric car through my business?

At the point of writing this, it is a good way to extract cash from the business. This is because the government has put in place tax incentives to encourage people to buy electric cars in their bid to reduce emissions by 80% by 2050.

However, there are a number of caveats to look out for…

Now of the technical bit…To receive the benefit of 100% First Year Allowance you need a new car that is either electrically powered or has a CO2 emission below 50g/km. In addition to this, it must also comply with section 7 of the 2001 capital allowances act and be considered to be owned by the company.

Let’s face it… there are many ways to purchase a car and depending on the method, you choose you may or may not be able to claim capital allowances.

The key measure is the optics of ownership.

Let me say that again! The key measure is the “optics of ownership”! So, even if you do not legally own the vehicle, you can treat as such if the economic substance of the agreement suggests you do.

What I mean by this is … if you have an agreement that includes a lump payment at the end of the deal to acquire the vehicle … THE QUESTION is … is this above or below the expected future market value of when the agreement ends?

If the lump payment at the end of the deal is below the expected future market value then there is a better than even chance you will buy at the end of the agreement so treat as purchase.

If, however, the lump payment at the end of the deal is above the expected future market value then it is unlikely you will buy at the end of the agreement so treat as rental.

So in general, finance leases like HP agreements are treated as purchases whereas operating leases are treated as rental.

PCP agreements are a grey area where you need to look at the lump sum at the end and compare it to the expected future market value.

To make things more confusing, car dealerships will often put HP agreement at the top but then below in smaller text say ‘Personal Contact Purchase’ elsewhere in the agreement so look out for this.

Lets face it; this can be tough to navigate, as often car sales representatives will not know the exact rules and neither will you and you are unlikely to bring your accountant along with you to the showroom!

So find out the detail before you go to see the car dealer.

Remember, if you are buying an electric car through your business and are unsure if the agreement will comply, it is always best to seek advice before signing.

Any questions, I would love to connect!

The post Electric Dreams appeared first on Pathway to Profit.

That’s right…

To make money!

So from a purely tactical perspective, you have to “make a number”.  So the first step is figuring out what is your goal; what’s the target.  So lets get tactical. 

Step 1

When you look at your business, think in a process orientation starting with the customer through your organisation to the point where you deliver your product and service to the customer and get paid.

Now map that out.  No need to get fancy, use post it pads or something and get a “rough cut” of your key steps.

Step 2

Now think about each step in the process.  Let me use a simple example process.

1. Lead Generation
2. Sales or Closing Deals
3. Invoicing or Billing or Collecting Cash
4. Purchasing or Buying Stuff
5. Doing Things or Building Things or Holding Stock
6. Delivering Things

Step 3

Now that you have your key steps outlined ask yourself two questions:

1. What in these steps could I do better to enable me to get more customers?
2. What “clogs up” my money and keeps my money from getting into my pocket?

So for the first question it could be more leads or a better conversion rate in sales or spending less on overheads.  But don’t boil the ocean here! pick one!

Similarly for the second question it could be getting paid quicker.  The root cause of that problem could be getting your invoices out quicker or better credit control or different terms or better pricing.  Again only pick one!

Step 4

Limit yourself to 3 to 5 key areas to improve.  Measure them and be relentless at your pursuit of improvement!

When you’re done, circle back and do it again!

Keep going you can do this!

The post Your outta control man! appeared first on Pathway to Profit.

A bold budget or a fool’s notion?

The UK, and frankly the world, is in a state of flux following the numerous recent events including Brexit, the worldwide pandemic and war in Ukrane.  The net result in the UK is that energy costs are up, interest rates are the highest for years, inflation is at a high and currency is at a low.  Following the appointment of a new leader of the conservatives, a new Prime Minister was appointed.  Immediately we learned about the new team put in place to steer the country out of the challenges towards growth.  These appointments included a new Chancellor of the Exchequer.

A “mini-budget” was then put in place, which received mixed reviews to say the least.                                                                                                                                   

The headline message from the Chancellor was…

“The Growth Plan 2022 makes growth the government’s central economic mission, setting a target of reaching a 2.5% trend rate. Sustainable growth will lead to higher wages, greater opportunities and provide sustainable funding for public services. The United Kingdom currently faces a period of high inflation. The government has already taken significant steps to address high energy bills, the biggest challenge, by announcing the Energy Price Guarantee.

To drive higher growth, the government will help expand the supply side of the economy. The Growth Plan sets out action to unlock private investment across the whole of the UK, cut red tape to make it quicker to deliver the UK’s critical infrastructure, make work pay, and support people to get onto the property ladder.

Taken together, reforming the supply side of the economy, cutting and simplifying tax, and maintaining fiscal discipline will drive efficiency, enhance UK competitiveness, and help to boost growth sustainably in the long term.

Facing pressure, the government reversed a key policy element within a very short period of time.  Namely, they decided not to eliminate the 45% tax that high earners were due to receive from April 2023.”

Below we explore some of the key elements that led to this reversal.

In addition, we explore what is happening in other countries.

IMF

Who they are: –

The International Monetary Fund (IMF) is a major financial agency of the United Nations, and an international financial institution, headquartered in Washington, D.C., consisting of 190 countries. Its stated mission is “working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.

What they say: –

The International Monetary Fund (IMF) has criticised the UK government’s mini-budget, saying the plans for tax cuts and spending will increase inequality and counteract the Bank of England’s monetary policy.

Here is what they said: –

“Given elevated inflation pressures in many countries, including the UK, we do not recommend large and untargeted fiscal packages at this juncture, as it is important that fiscal policy does not work at cross purposes to monetary policy,”  THEY WENT ON TO SAY … “The nature of the UK measures will likely increase inequality.”

A few key points from the news: – 

• 40% of mortgage deals or offers withdrawn – Between Friday and today (29^th September) a total of 1,621 residential mortgage products have been withdrawn leaving 2,340 on sale today.
• Radio host slams Liz Truss for ‘same scripted answers’ as she sticks to economic plan and blames global pressures for economic crisis. – James Hanson on BBC Radio Bristol said Ms Truss was giving “the same scripted answers” – in what was her seventh local radio interview since 8am.
• Ed Conway – Data and economics editor at Sky – presents latest interest rate forecasts – with peak at 6.1%
• Mark Kleinman: My contacts tell me Number 10 doesn’t think there is a crisis 
• BUT Investment Analysts appear to be to positive.

The Chancellor’s Plan

According to the Financial Times –

Chancellor Kwasi Kwarteng’s Growth Plan sounds ambitious but it needs to reassure both markets and ordinary Britons that their economic security is in safe hands, investment analysts have said.

Speaking as the chancellor unveiled a package of more than 30 measures to tackle high energy bills, drive down inflation and cut taxes to drive growth, while maintaining responsible public finances, commentators have welcomed the boldness but warned it might not be enough.

In his mini-Budget today (September 23), Kwarteng said igniting growth by lowering taxes and cutting regulation was this government’s central mission.

He said the plan would encourage business investment, drive growth, create jobs, improve living standards for everyone and promote confidence in the UK economy.

What about other countries?

US Mortgage Rates Surge for 6th Week – Source Trading Economics

The average rate on a 30-year fixed mortgage climbed to 6.7% this week, the highest since July 2007, up from 6.29% last week and 3.01% a year ago, according to a survey of lenders by mortgage giant Freddie Mac. The 15-year fixed-rate mortgage averaged 5.96%, up from 5.44% last week and 2.28% a year ago. The average rate on a five-year Treasury-indexed hybrid adjustable-rate mortgage, or ARM, was 5.30%, up from 4.97% last week and 2.48% last year. “Our survey indicates that the range of weekly rate quotes for the 30-year fixed-rate mortgage has more than doubled over the last year. This means that for the typical mortgage amount, a borrower who locked-in at the higher end of the range would pay several hundred dollars more than a borrower who locked-in at the lower end of the range.” said Sam Khater, Freddie Mac’s Chief Economist

US Stocks Sell-Off Resumes

The Dow lost more than 500 points on Thursday, while the S&P 500 and Nasdaq lost 2.4% and 3.1%, respectively, amid persistent worries about tightening financial conditions and slowing economic growth. A hotter-than-expected inflation reading, with core PCE prices for the second quarter above expectations, raised concerns of inflation becoming even more entrenched. At the same time, better-than-expected jobless claims numbers painted a picture of an economy that can likely withstand more central bank tightening. Hawkish rhetoric adopted by several Fed policymakers about the central bank’s battle against inflation has stoked further angst in markets. For the quarter, the Dow and S&P 500 are on track for their third consecutive quarterly loss for the first time since 2015 and 2009, respectively. Bucking the overall positive trend, the Nasdaq is poised to break a two-quarter losing streak.

Stocks in Spain Hit 22-Month Low

The IBEX 35 index amplified losses and plunged over 2% to a 22-month low of 7,272 on Thursday afternoon, amid concerns about the economic outlook, global monetary policy tightening and escalating geopolitical tensions. A stronger-than-expected reading for Germany’s inflation in September raised fears of more aggressive tightening from the ECB. On the domestic data front, flash estimates showed Spain’s consumer price inflation eased more than expected to 9% year-on-year in September 2022, moving further away from a 38-year high of 10.8% hit in July. A separate report suggested Spanish business morale improved slightly in September. Within the Spanish selective, almost all sectors were trading in the red, led by tourism-related stocks and retailers. Banks were also under pressure.            

Stocks in Ireland Hit 23-month Low

ISEQ decreased to a 23-month low of 6172

Canadian Shares Approach 18-Month Low

The S&P/TSX Composite Index fell 1% to 18,450 on Thursday, partially erasing last session’s sharp rebound and approaching the 18-month lows hit this week as worries of aggressive tightening by major central banks continued to pressure growth expectations and demand for Canadian heavy-weighing commodity-backed stocks. Gold miners were among the losers in the session after surging yesterday, lowering Toronto’s resource index as bullion prices retreated. Muted crude oil prices also pressured energy producers and distributors to drop over 1% on average. Among single stocks, the Royal Bank of Canada fell 0.5% despite Barclays’ upgrade of the stock to “overweight”. On the data front, advance estimates showed that the Canadian economy stalled in August, although July data was revised to show a slight expansion instead of contraction.

What about Consumer Confidence?

https://www.conference-board.org/topics/consumer-confidence/press/CCI-July-2022

“Consumer confidence fell for a third consecutive month in July,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “The decrease was driven primarily by a decline in the Present Situation Index—a sign growth has slowed at the start of Q3. The Expectations Index held relatively steady, but remained well below a reading of 80, suggesting recession risks persist. Concerns about inflation—rising gas and food prices, in particular—continued to weigh on consumers.”

Here is what The Conference Board Says

• Consumers were mixed about the short-term business conditions outlook in July.
  • 14.0% of consumers expect business conditions will improve, down from 14.6%.
  • Conversely, 27.2% expect business conditions to worsen, down from 29.7%.
• Consumers were also mixed about the short-term labor market outlook.
  • 15.7% of consumers expect more jobs to be available, down marginally from 15.9%.
  • Conversely, 21.4% anticipate fewer jobs, down from 22.2%.
• Consumers were more pessimistic about their short-term financial prospects.
  • 14.7% of consumers expect their incomes to increase, down from 16.1%.
  • 15.7% expect their incomes will decrease, up from 15.3%.

A Final Thought

As a business owner, market conditions change.  Perhaps the best approach is to focus your energy on those elements that you can control.  The world needs our leaders to be right.  We need the world to get back on track.  But all we can do is focus on those elements that are in our control. 

Keep going!  You can do this!!

The post The Mini Budget … appeared first on Pathway to Profit.