August 24th, 2010
Another knock-on effect of drastic government spending cuts hitting businesses hard. The most affected are companies that goods or services to the public sector. Research has revealed that 168 companies in the health and social services, education and defence sectors went into liquidation during the first half of 2010. This is an increase of 47% for the same time last year when the same happened to 114 companies. Corporate insolvencies however have decreased by 5%.
These companies have been forced into insolvency due to approval of contracts being delayed and government spending plans being undecided as well as other reasons. Businesses that are in the most danger of insolvency are care homes, recruitment agencies, outsourcing, construction and marketing services. Many companies are finding it extremely difficult to find ways of cutting costs after increasing their fixed costs in recent years.
Anthony Cork, director at Wilkins Kennedy said: ‘The public sector has seen tremendous growth over the past 15 years and the private sector ecosystem that surrounds it has expanded along with it. Supplying to the public sector has been seen as safe and steady; unfortunately that is no longer the case.’
Unfortunately the situation is likely to worsen after the public spending review in October.
Tags: Insolvency
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August 19th, 2010
Accounting is a vital part of any business and it is in a company owner’s best interests to ensure that financial procedures are carried out efficiently. This can be a time consuming process that takes up valuable time that could be spent on developing the company’s mission. Smaller businesses often cannot afford to employ a full time accountant. For these reasons many businesses choose to outsource their accountancy matters to professional companies such as Crawfords.
Accountancy companies can deal with all areas of business finance, dealing with the maintenance of financial records, VAT return submissions, payroll, management information production, budgeting, forecasting and variance analysis.
Using an outside accounting company gives businesses access to qualified and experienced professionals, allows payment flexibility and accurate financial reporting. It is generally a cheaper option than employing a full-time accountant and is usually a much faster and more efficient alternative. Accountancy firms will have access to the most sophisticated software and technology unlike many companies.
Tags: Accounting, VAT
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August 13th, 2010
Commercial fraud occurs on a regular basis and is often only detected after thousands or even millions of pounds have gone missing. One of the main reasons for this happening is that the person or people who own the business don’t have any knowledge or experience finance and accounting.
The repercussions of a business being hit by commercial fraud can be that customers lose their confidence in the company and potential investors are put off. This can be very detrimental to the business and the prospect of this can even result in companies not reporting incidents of commercial fraud.
One of the best ways to prevent commercial fraud is to employ an accountant from an outside firm. Ensure that references are obtained and actually checked. Don’t just rely on qualifications. Also but regular checks in place including inventory control, monthly bank account checks, financial statement checks and payroll register reviews.
By keeping a close eye on the financial and accounting side of your business, you can prevent commercial fraud happening to your company.
Tags: Commercial Fraud
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August 9th, 2010
After the closure of a school which affected 600 children, a new company was established to look continue their education. Staff who had also been employed as part of the original school tried to claim redundancy pay. They asserted that they were entitled to this money from the Redundancy Payments Service.
The case was taken to court and the judge ruled that because the teachers’ jobs were simply transferred from one company to another their original jobs were therefore ‘preserved’ making them ineligible for any redundancy pay and not entitled to any notice period.
However, one employee did receive money from the Redundancy Payments Service as there was reason to believe that she may put forward a claim to the Employment Tribunal.
Alex Kachani – partner at Crawfords – explained that “this case illustrates a change in the law regarding employees’ rights. Where directors of failed companies have previously failed to claim from the Redundancy Payments Service, it seems those that were on the payroll might now succeed.”
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August 2nd, 2010
Most businesses have been greatly affected by the recession that hit the UK in 2009. The recruitment industry is one such line of business. With high redundancy rates and many companies unwilling to pay recruitment agency fees, many employment companies have struggled.
A good example of how not to try and overcome these tough times is reflected in the case of C Limited; a recruitment agency who find employment for labourers. A VAT inspection highlighted numerous discrepancies which were then investigated by the HRMC and discovered that £360,794 of VAT and £410,254 of PAYE/NIC had been withheld with £2 million was being paid out to other factions. After being taken to court, the company director was consequently banned from owning or managing a company for 8 years and was also jailed for 15 months.
“Keeping proper accounting records isn’t an optional extra when running a business, but a strict requirement under the Companies Act 1985,” warned Alex Kachani, Crawfords Accountants.
Tags: Accounting
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July 27th, 2010
Ernst & Young’s ITEM Club have predicted that the Bank of England will not begin to raise interest rates from the current rate of 0.5% until the year 2014 in order to offset the Government’s recent austerity cuts. The Bank of England’s £200bn quantitative easing programme may have to be restarted.
The conjecture by ITEM contradicts that of the Government’s forecasters who have predicted that interest rates will begin to increase next year. Pressure has intensified on the early rise of interest rates by the data released by the Office of National Statistics which asserts that in the 3 months leading up to June, the economy grew by 1.1%.
ITEM’s prediction will definitely prove to be beneficial for long-term growth as the economy will augment by 2.9% and consumer spending by 2.3%. If interest rates increase prematurely next year the economy will only grow by 2% and consumer spending will only go up by 1.8%.
VAT increases will ensure that inflation will remain above target until the end of 2011 and it is speculated that house prices will cease to rise.
Tags: VAT
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May 21st, 2010
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