Nothing like a good blurt

As many of you will be aware I edit the news copy for Informanagement. As part of this brief I also contribute blog articles. Last week I wrote about the amount of advice we professionals tend to give-away. The post is reproduced below.

How much advice do you give away?

There is a difference between flagging up an issue that could be a problem and offering a solution.

Most professionals sell solutions and so offering advice without agreeing that you be paid for giving that advice seems to be counter intuitive, and yet most professionals seem to do this.

Why is that?

Would you willingly sanction a loss of earnings for your practice?

Perhaps advisers just surrender to age old desires to be liked or respected? It is likely that during a thirty year career, accountants let slip valuable advice, let’s say twice a week, forty-eight weeks a year. If we estimate the value of each slip at say £75, this would amount to a thirty year loss of income amounting to £216,000. If we factor in the possibility that staff are prone to the same largess, the lost revenue quickly becomes a sizeable retirement pot.

Take a step back

The key to closing this drain on fee income is partly to acknowledge that it happens and secondly to rethink exchanges with clients or prospects. There will always be a temptation to demonstrate that you are smarter than your competition and this is a sound way to impress prospects and retain your clients. So, if you are going to avoid blurting out the solution to problems in order to stand out from the crowd, how can you do this without giving advice away for free?

Give yourself time to consider

A possible strategy, apart from biting your tongue, may be convert the blurt into an acknowledgement that you may possibly have the answer required, but you need to check out a couple of issues, and you will get back to them the next day. When you subsequently respond, you could say that you can fix the presented problem, but you will need to invest “x” hours to do so and your fee would be £xx. Follow up quickly with a cost/benefit statement that will convince them your fee is worth paying.

The place to start is to consider how much advice you give away. By all means keep your clients informed, this is a brilliant way to stimulate interest in your services, but don’t be tempted to blurt out the solutions.

Food for thought.

And, if you are considering an alternative supplier for your practice news feed to clients or staff, take a look at Informanagement’s offerings on their website. Or contact Laurence Vogel, Laurence.Vogel@informanagement.co.uk.

 

Cash flow and insolvency

Last week I wrote a short blog post that was distributed to Landmark’s Online Copy subscribers; this service provides two draft blog/newsletter articles a week. The topic was insolvency and how small businesses can still find themselves technically insolvent if cash flow unexpectedly dries up, even if on paper their net asset position is positive.

The article is reproduced below. Feel free to use this. I recommend that you edit the copy slightly if you post to your website as this will avoid search engines treating the text as generic.

What exactly is insolvency?

The dictionary definition of insolvency is less than illuminating, it is:

The state of being insolvent…

Listed synonyms provide more detail:

bankruptcy · liquidation · failure · collapse · ruin · financial ruin · ruination · pennilessness · penury · impecuniousness · beggary · administration · receivership · folding · pauperdom

What these explanations do not provide is a definition of the state of insolvency. A simple definition could be the insolvency occurs when we are unable to meet our obligation to settle debts by the required due date.

In a business sense, a firm can be said to be insolvent its assets are less than its liabilities, but even this definition does not quite hit the spot.

Imagine that you use all your available cash reserves to purchase stock. To place this in a current context, you might consider this as a strategy to avoid supply line issues in the event of a no-deal Brexit.

You have no issue with doing this as you are owed a significant sum by your major customer that will restore your cash flow before bills and salaries are due at the end of the month.

But what happens if your customer is suffering cash flow issues and is unable to pay?

On paper, your business will be solvent. As long as your delayed payment from your customer does not become more serious, in time your cash flow will be restored, but how will you pay your bills at the end of the month?

Without private funds that you can introduce to see you through this impasse or the support of your bank, how will your staff and other creditors respond if you have to go cap in hand and explain there will be a delay in paying them?

Cash, liquidity, really is king, and lack of cash can actually place your business in the same position as an insolvent firm.

If you are concerned that you may be skating close to a cash flow crisis or a deeper insolvency, please call so that we can help you figure out your available options. For certain,  pretending that all will work out well in the end may not be the best strategy to apply.

Take a look at our Online Copy Service

If you would like to access more written material for your newsletters or website, take a look at the Landmark Online Copy service.

 

Who do you turn to?

In practice, we all have occasions when we need the support of other professionals to deal with a difficult client issue. We collect these support contacts and they provide a necessary backup when our own skill sets are challenged.

Would you be willing to share these contacts?

In an attempt to provide Landmark’s users with a fairly comprehensive directory of these contacts, I have created a Support Directory on the Landmark site.

Would you be willing to share your expert contacts and I will approach them to see if they would like to take a slot?

No-one is an island

We all need help from time to time, and for me personally, this was especially evident during my two extended periods as a sole practitioner.

Do you specialise?

Have you developed skills in specialist areas and would you be interested in helping other practitioners who need assistance in these areas? If yes, then perhaps we should discuss adding your firm to the support directory. Give me a call, or take a look at the Support Directory information page

How is MTD for VAT for you?

In the last couple of weeks I have registered the three businesses that I am responsible for, to HMRC’s MTD for VAT data links (via Xero that I use as my preferred accounts software).

I have to say that in the main it was a fairly straight forward process. Not sure I would go so far as to eulogise “what was all the fuss about”, but definitely, so far, so good.

What about the roll-out to include accounts data?

One item that I will be fishing for in HMRC’s pond is an indication when MTD will be expanded to include the upload of quarterly accounts data; presumably for income tax in the first instance and then corporation tax. The only date we have is no earlier than April 2020…

My guess is Brexit is going to scupper that deadline and it will be pushed forward to April 2021 at the earliest. Keep an eye open for early adopter requests from HMRC as this “beta” process now seems to be a feature of their development protocols.

Are you encouraging property landlords to digitise their record keeping?

One aspect of the next MTD roll-out will be the inclusion of buy-to-let and other landlords if their rental income exceeds £85,000.

My guess is many will be reluctant adopters of the digital need to record transactions. This has been my experience of talking with clients who would be affected.

In spite of the uncertainty, I am working on a standard chart of accounts that I can use in Xero for these clients, and there are significant advantages as I will use the software to collect capital payments (property acquisitions and improvements) as well as revenue transactions. Xero also has a useful “tracking” facility that I will use to provide clients with detailed results for each property; something that is not particularly easy when records are kept manually, or worse still, in a carrier bag.

What has been your experience?

I’m interested in canvassing the opinion of practitioners about their experience using the sign up process for clients.

If you are willing to share your experiences, good or bad, just add a comment to this blog post and I will make sure that the constructive comments are bundled (anonymously) and sent to HMRC for a reaction.

I have direct links to the department that has been responsible for developing the MTD API’s etc, and in the fullness of time I will post again with any interesting responses or developments.

 

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