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Managing your business

General

• How not to succeed in business
• How to stay competitive
• Is your business as healthy as it appears to be?
• Protect your goodwill

Operations and processes

• Get results through outsourcing
• Benchmarking: not just a large company concern

Money, finance and cashflow

• A change for recognising business profits
• Can you cut your interest payments?
• Improve your debt collections
• How to protect your business when your customers go under
• Finding the money to develop your business
• How would the euro affect your business?

Growing your business

• The right kind of growth
• The dangers of overtrading
• Small can be beautiful

Dealing with fraud

• Identify and prevent fraud in your business
• The most common fraud risk factors
• Encouraging employees to report fraud
• What to do when you suspect employee fraud

Work in progress

Since the announcement of a change in the rules for recognition of profits in business accounts, there has been much speculation that this might be a major problem for small and medium-sized businesses.

The proposal

The Government has proposed a change in the rules on the timing of recognition of income. The Accounting Standards bodies have been concerned that some companies have been 'massaging' their results by anticipating profits not yet earned. They have announced a change to the rules, requiring that profits are not to be recognised until such time as the business is entitled to payment for the goods or services concerned.

What implications does it have?

It must be remembered that this change was originally meant to target companies recognising profits earlier than they should, so that their financial statements gave a better than fair picture of their turnover, and also of their profitability. The new rules mean that such companies can no longer include in their accounts any income to which they are not yet entitled, but they also stop businesses delaying recognition, for example by leaving completed work in Work-in-Progress (WIP) at the end of the year, to defer the tax.

Is this a problem for me?

It could be a problem for your business, and we would welcome the opportunity to discuss the issues with you. For the majority of businesses, the 1999 changes mean that WIP is included in the results at the year end, so that although you might not have billed your client or customer - and consequently at the year end you had not collected the cash - you still included the income in your profit for accounting and tax purposes. This change is likely to bring a closer check by HM Revenue & Customs on the treatment of work in progress in accounts, to ensure that the profit declared for tax includes all sums to which you were entitled or due at the year end, and that nothing has been deferred.

How can I avoid a problem?

Usually it is wise to keep your billing up-to-date. This means that your accounts will fully recognise the value of work completed in the year, and your cash flow may also receive a boost. But every business is unique, and you should contact us for more advice specific to your needs.

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