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Bookkeeping Tips for eCommerce Companies in UK

The shift from brick-and-mortar businesses to eCommerce has been the highlight of the business world over the last two decades. The United Kingdom has the most advanced eCommerce market in Europe with eCommerce revenue in 2019 amounting to 693 billion in GBP. It is also the third-largest market for online retail sales. More and more retailers or product manufacturers are looking for establishing an online presence for retail distribution and sales. While this trend is here to stay, let’s look at some of the bookkeeping tips for setting up a financially stable and viable eCommerce business.

Integration of Amazon/Shopify to Accounting Software.

Managing your Amazon FBA account or Shopify account using google sheets or MS Excel is a daunting task given the different items involved such as Chargebacks, Shipping fees, Promo Rebates, Sales Tax collected, and FBA inventory reimbursement. Listed below are a few of the accounting software tools tailored to be linked with sales channels to make accounting easy and efficient.

Xero: Xero has a great user interface along with a wide selection of add-ons. It can be easily integrated with A2X or Stitch labs for a customised Amazon Seller experience. In addition, it has a mobile app enabling access to it on the move.

A2X Accounting: The A2X app connects the systems to cloud accounting to automate bookkeeping for Amazon Marketplace transactions. When Amazon creates a new settlement file, A2X can generate the summary for the same along with being able to split multiple month settlements on a per-month basis for multiple years. It works great with Xero, QuickBooks, and Shopify.

NetSuite: For accounting software to integrate with Shopify, the use of apps like Zapier and A2X is required to set up the integration. Alternatively one may find an app connector in the Shopify app store. Another way to streamline your operations is to integrate NetSuite with your online Shopify store which offers a scalable solution that seamlessly handles financial data as well as sales channels.

Clarity on Accounting for Sales- One single Invoice per month by sales channel/ Geography.

One of the functions of good bookkeeping is to help with creating projections that predict future business activity. One such area that has a huge bearing on the eCommerce business is sales. A detailed understanding of sales will help to make decisions such as which products to push, when to increase the price of a product, and to understand the seasonal fluctuations per product. Using A2X helps automate eCommerce accounting since it connects your accounting software to your sales channels, helps you track sales basis different tracking categories viz. sales per month, per channel, or sales by country. Example; you are looking for accurate sales data from Amazon but the backend report provided by Amazon will not bifurcate the numbers by categories such as FBA fees, shipping fees, warehouse fees, and chargebacks and it might all get recorded as Sales which will be incorrect. A2X can avoid this problem by automatically updating your books from the backend of Amazon. Similarly, when you want to look at your VAT liability, you can set up the sales tracking category as EU and Non-EU.

Daily bank Reconciliation to identify failed payments.

Ecommerce business is usually characterised by huge volumes and speed of exchange. The fierce competition and marketing inventions have pushed eCommerce business owners to complement their product offers with a number of collateral services such as gift cards, trial periods, flexible payment options and reduced shipping costs. The complexity of completing a transaction multiplies in a digital environment. One single online order requires the action of at least four parties other than the customer and merchants themselves – their banks, the payment processor, and the parcel delivery company. In case of cancellations, refund requests, and glitches down the supply chain, the complexity level becomes 2x. This calls for a 3-way reconciliation between payment processors, banks, and the ERP systems, which is performed in 2 steps viz. processor to bank and processor to the internal system. This will not only reduce any fraud risk but also identify any unauthorised withdrawals or bank errors.

Analytics report- Geography, product, etc.

Using analytics to uncover customer insights is a game-changer for an eCommerce business. Yet, having a very large amount of data to mine is different from having a clear insight into customer preferences. The difference lies in the ability to get the most out of your data. You may choose from different analytics programs such as Google Analytics, Mixpanel, Adobe Analytics, and Statcounter to name a few. In addition to an Overview Dashboard, some valuable analytics reports include:

1.    Sales by Channel. The data in this report will help you identify which channel sources are successful or underperforming.

2.    Sales by billing country. This report helps you identify which countries contribute the most to your revenue so that you can determine where to invest in new markets.

3.    Sales by Product. This report helps you identify the bestselling products by season or time period.

These reports enable you to see margins on an item-by-item basis. When you total the cost of goods sold and link it to relevant suppliers, you can see how much money is being spent on each item and which items you need to focus on. Having this kind of data is a solid negotiating tool.

Portal for suppliers to extract invoices.

Accounts payable automation improves efficiencies thereby helping finance scale and adapt to their business changing needs. Using a suppliers’ portal reduces supplier payment frictions since these are web interfaces for collecting and displaying information pertinent to suppliers. This information includes but is not limited to payment histories, Tax ID’s and invoices. Using a suppliers’ portal reduces data entry errors as well as the dependencies on the accounts payable team. Where a supplier payment system is also a part of the supplier portal, it centralises the supplier management system along with allowing ease of reconciliation and reporting.

Pay invoices of suppliers ahead of time to gain discounts.

Reducing the cost of sales is a sure shot way to increase the profits from your eCommerce business and paying invoices ahead of time to gain a discount helps you achieve that. If your supplier doesn’t offer you any benefits for advance payments, you could work on striking a deal with your supplier’s competitors to get a better rate. While it is obvious that to avail of this benefit, you need to close your own cash flow gaps and increase your own working capital, any gaps in the cash flow can be fixed by using tools such as credit cards, bank loans, and capital advance for eCommerce or marketplace sellers.

By understanding these areas and how they impact your eCommerce business, you can make the best decision about managing the bookkeeping of your eCommerce business and find the bookkeeping software or service that’s right for your business.

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Why should landlords have an accountant?

Focus on managing property and increasing property portfolio.

There are many moving parts in running a successful rental business. A great bookkeeping and accounting system is a crucial element in managing a property portfolio. Having a robust accounting system will help you plan for tax implications in advance. Not only will an accountant be of help at the tax time, but they will also provide on-demand financial help which will safeguard your business against debt or fraud. Forecasting of future expenses will help you plan better and save time. This can help one focus on managing property and on expanding the business. Historical financial data will help you forecast various costs with greater accuracy thereby ensuring that you are not financially derailed, viz. what needs to be done when maintenance costs increase in winter months or when internal/external walls require repairs?

Ensure rentals are being received on a timely basis.

Rent receivable reports run by accountants show the amount of rent the landlord has earned but not yet received from the tenant. Whereas the prepaid rent report shows the rent that has been received in advance. These reports help to identify delinquent tenants in ahead of time. When the balance of the rent receivable ledger is nil, it means the landlord has received all the rent that was due to him from the tenant.

Take advantage of available tax benefits.

Even with the flurry of activities around getting the property ready for rent and choosing the right tenant, it is imperative for the landlord to stay on top of taxes viz. capital gains tax, stamp duty, corporation tax etc.

Taxation planning ought to be done beforehand rather than afterwards as it will ensure an encumbrance free cash flow. An accountant makes certain that the landlord enjoys a tax effective property ownership.  For example, as a landlord, you are entitled to GBP 1000 tax- free property allowance. However, this rule has some exceptions, and an accountant can help the landlord with the documentation required for the ‘full relief’. Also in various scenarios, where the landlord incurs expenses wholly and exclusively for property rental business, claims part expenses, incurs maintenance, and repairs costs, is required to calculate a profit or loss for more than one property or has tax implications on account of a jointly owned property, the documentation required and the tax liability in the different scenarios can be worked out by the accountant. Prior to 2017, mortgage interest could be offset against the self-assessment tax returns which have to be filed when letting out the property. However, the government began phasing out mortgage interest tax relief by 25 percent each year in 2017. This meant that 2019 was the last year that landlords could deduct the mortgage interest paid from their income. Presently landlords are given 20 percent tax credit for their property finance costs. Since tax rules change regularly, an accountant can best help the landlord navigate the rules and identify areas for maximum tax benefits. 

Ensure surplus money is adequately invested.

Owning a property is owning a long-term financial asset, the benefit of which can be enjoyed for years to come. A rental premise usually gives the landlord residual monthly cash flow, which if invested adequately gives the landlord not only a guaranteed passive income for many years but also an opportunity to build reserves. Hence hiring a good accounting professional to help one to develop financial discipline for such investments is advantageous. Some of the ways in which the landlords can invest the surplus funds are as follows:

a) Maintenance and Safety. With the change in every season, the landlord should look at which items need to be cleaned or replaced. Ensuring fire alarms/ emergency lighting are in good working condition and investing in the best quality for the same not only keep  the property safe but also ensures that the landlord doesn’t incur liabilities on account of faulty systems. Any white goods requiring repairs and replacement can be done through the residual cash. These small changes make the property attractive to the tenants.

b)   Prepayments. Applying the surplus cash flow to paying down the principal balance helps to knock off a few years of the loan. This can eventually give the landlord the flexibility to invest in more buy-to-let property on mortgage.

Ensure all expenses are correctly accounted.

Landlords need to ensure business and personal expenses are accounted for separately. It is best to have a separate credit card and bank account which are used only for rental property expenses. In case of multiple properties, particularly when one has more than 3-4 properties, it is best to have a separate bank account for each property you own. For a given property one can have rental receipts going into one account along with any taxes and repairs for that property being debited to one single bank account. The expenses that can be reported include but are not limited to advertising, auto and travel, cleaning and maintenance, commissions, insurance, legal and other fees, management fees, mortgage interest, repairs, taxes and utilities.

Usually, lenders are less tolerant of buy-to-let mortgage arrears and they are treated to a certain extent on par with commercial loans. Hence, missing out on Loan EMI’s can have some serious consequences.

Management Reporting.

A monthly property management report describes how the property is performing and what aspects of the property require focus. By and large the following reports should be covered in the monthly management report:

Balance Sheet: helps you track your current assets and liabilities and tells you how much money you have to work with.

Monthly Income and Expense statement tells you how much money you made during the reporting period and how much you spent, 

General ledger  transactions are the backbone for all the financial reports. A general ledger scrutiny will give you a bird’s eye view of your rental business

The accounts payable report tells you how much money you owe against the property. Tenant receivables: tells you how much you are due to receive from the tenants and 

The prepaid report tells you how much of your expense you have prepaid 

The monthly bank statements with reconciliation ensure that your bank accounts match with your ledger accounts penny by penny.

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Top 10 Accounting Mistakes to Avoid for Small Businesses

Being an entrepreneur can be a beautiful & fulfilling journey with you being your own boss and watching your business grow from strength to strength. However, it also comes with its fair share of challenges. You are the CEO, the marketing manager, and the event director all wrapped into one. There is the constant juggle of wearing many hats including in areas one might not necessarily have any experience whatsoever. One such area is Accounting! Let’s look at the top 10 mistakes that Small Businesses can avoid in this domain.

Doing it on your own. 

Imagine this! You are a patissier and you run a business of baking artisanal cakes, your value-added tasks are the tasks for which customers are ready to pay you. To run a successful baking business however, you will have to undertake some support tasks as well which could be marketing and of course maintaining financial and accounting records. As much as the support tasks might be necessary and important, they do take away some of your focus from your core business activities. However, with the support activities, one does have a choice to either work on them on one’s own or outsource them.

Not using Cloud Applications.

Accounting can be daunting for a business owner, but the advent of cloud computing has ensured that everyone can have organized, user-friendly, and secure accounting software at their fingertips. Using cloud accounting software provides reliable data with less room for human errors. A large amount of sensitive data can be stored that can be easily accessed by business owners thereby giving them the power to know the financial position of their business at any given point in time.

Creation of Multiple Chart of Accounts. 

A coherent COA is the foundation of the reporting that the business will be required to perform. From a record-keeping perspective, a Chart of Accounts is the most fundamental planning that is required of a business. Creating multiple Charts of accounts can be one of the most serious accounting mistakes a small business could make as the Chart of Accounts is the framework on which the reporting – whether for bookkeeping, GAAP, or tax – will be based.

Delay in Accounting.

Regular accounting helps you track the movement of money in and out of business which helps you make informed decisions leading to a thriving business.

Focusing on Revenue and not Cost.

Most small businesses want their revenue numbers to show a steady rise and who doesn’t. But in the rush to get great top-line numbers, many small business owners tend to overlook focus on cost. To put it simply, your Revenues – Cost = Profit. So, while the topline might look good, the bottom line which is the profitability of the business and which is more valuable for a healthy thriving business gets ignored. How does one achieve a balance between focusing on costs along with revenues? Ask yourself questions like: Is there a way you can save taxes? Is there a way to standardize the processes? Are you managing your inventory efficiently?

Not segregating personal expenses and business expenses. 

Small business owners oftentimes do not segregate their personal and business expenses given that they might be the sole proprietors of the business. This can lead to challenges when it is tax time. Underreporting/over-reporting of business expenses results in an unclear picture of the business income.

Not reviewing Profit and loss accounts on a monthly basis. 

A Profit and Loss account shows the health of your business in terms of what is your income and what is your expense. You can identify the costs needing analysis, and also whether your revenue is in line with your goals.

Just focusing on cash management.

Cash is undoubtedly one of the most crucial financial metrics. Hence the goal of good management should be to eliminate surprises pertaining to cash and ensuring that there is sufficient cash for the business to meet its daily cash needs. Also, while excess cash might seem great for the short term, for the long term it might indicate the business did not utilize it effectively to generate more profits and indicates the opportunities the business might have lost while being short-sighted in managing its cash.

Too much inventory.

While a business would always want to maintain an optimal level of inventory to avoid any future raw material shortages, it runs the risk of being too cautious and being stuck with excess inventory which eventually can lead to cash inflow issues. Excess inventory is also more susceptible to theft More than optimal inventory also means there might be slow-moving stock which is a source of working capital loss. The ideal way to manage inventory is being proactive and on top of the requirements which means accounting and recording of data must be up to date.

Being unaware of compliances.

Legal compliances are an integral part of any business. Businesses need to meet compliance requirements to be able to run the operations smoothly without levy of any penalties. Knowing the compliance requirements not only helps the businesses to be on the right side of the law but also brings in a lot of customer trust. Small businesses are no exception when it comes to meeting compliance requirements. The compliance requirements can range from Legal (entity-specific compliances for businesses depending on whether they are Sole Proprietorship, Private Ltd. Company, or Partnerships) to Human resources (Labor laws) to Tax (includes Income tax, National Insurance, Corporation Tax & VAT).

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8 Common Bookkeeping Mistakes Made by Startups

Bookkeeping is a crucial element of any business. Without it, you won’t know if your business is successful or not! Without regular and meticulous bookkeeping, businesses will not be able to determine their profits and losses and make the right moves to improve their business performance.

Even though most Start-up owners are aware of the importance of bookkeeping, many still ignore it and fail to manage their business.

Here are the eight common bookkeeping mistakes that Startups tend to make:

1. Hiring an inexperienced bookkeeper or no one at all

Bookkeeping can be a tedious and time-consuming task, especially for those who are just starting. The first and biggest mistake that most startups make is not hiring a qualified bookkeeper. If you are trying to handle your business books yourself, it is advisable to stop right now! Hire a professional who has significant experience in bookkeeping.

For example, suppose you (or your inexperienced bookkeeper) forget to enter a client’s invoices or the sale amount into the system, that will have an immediate impact on your bottom line. A professional bookkeeper will help you avoid errors and save time &and effort in following industry rules and regulations.

2. Multiple Accounting Sheets

Another common bookkeeping mistake made by Startups is creating multiple accounting sheets and charts. The primary purpose of creating accounting ledgers is to provide an easy reference for financial management. In this way, they can track the previous day’s transactions and forecast the revenue.

A bookkeeper should use a single Microsoft Excel spreadsheet to consolidate accounting charts. These should be maintained consistently. Inability to enter or update data daily will create several problems for the business.

3. Failed Compliances

This is perhaps the gravest mistake Startups, or small businesses can make. Failing to adhere to compliance requirements, such as submitting incorrect or incomplete receipts and invoices to the tax department, will have a negative impact on tax returns. Using outdated accounting software can be very time-consuming as the information may not be updated automatically, which may lead to delays in receiving your tax refunds.

Examples of failed bookkeeping include:

✓ Incorrectly accounting for the payroll and payment

✓ Wrong bank deposits

✓ Inability to cancel the merchant account or credit card

✓ Not doing VAT returns

✓ Incomplete or wrong reconciliation of accounts.

4. Delaying Accounting till the end of the deadline

HMRC has fixed deadlines for annual compliances. However, if your bookkeeper has delayed the accounting process, you might fail to meet tax filing deadlines resulting in hefty fines and penalties. You may also miss the window for setting up a payment plan if you need to or be penalised by not being allowed to set up a payment plan in the future due to delayed filing and payment in the present.

Having an experienced and reliable bookkeeper and the necessary software will help you avoid such drastic consequences. Corient can help you with reliable software and technology solutions at affordable prices.

5. Paying personal expenses through a company account

Personal expenses cannot be claimed through the business. Irrespective of the business structure, you have to complete an annual tax return for your business. HMRC will know how much money the business has made while deducting allowable business expenses to work out your tax liability and penalties, if applicable.

If you are spending on personal items through a company account, these entries are subject to tax penalties. Using a company account for personal finances would be treated as disguised compensation, subjected to payroll taxes and potential interest. This may lead to reduced investment and hence, lack of growth.

6. Paying company expenses through the personal account

Startup owners should also avoid paying company expenses through personal accounts. It is essential to draw a line between private and company expenditure and make all business payments through business accounts.

Paying bills on time is essential for the success of any small business. However, paying company expenses from the personal account will not solve the core problem and may adversely impact personal finances.

7. Not collecting money on time

Delayed collection is detrimental to the financial health of any business, especially for startups. Delays in collection may result in severe cash flow problems or even bad debts.

Make sure you are not losing money because of faulty calculations and invoices. If accounting records are processed incorrectly, due dates are frequently miscalculated, and money is being collected late, it is time to hire a professional bookkeeper.

8. Not reviewing books regularly

Startup owners often fail to do a periodic review of the accounting records and books. Small businesses certainly do not have enough financial load to keep track every day or week. However, completely ignoring the financial books will cost you more than expected.

Many small businesses are successful because they put in a lot of time and effort into ensuring that their books are accurate and up-to-date at all times. If you have no idea how to achieve this, you can get in touch with Corient to get all the help you need to manage your books proactively.

Each of these common bookkeeping errors can cost small business owners a lot of money in the long run. Startups are already under a tremendous financial strain, and making a single mistake can cost them more than they bargained for. Therefore, it is essential to avoid these common errors to move towards success.

Six Ways For Entrepreneurs To Manage Their Books

Six Ways For Entrepreneurs To Manage Their Books

Every successful entrepreneur will tell you that a very significant part of their success depends on the ability to manage their books effectively. But, the primary challenge for an entrepreneur lies in learning how to manage their books and bookkeeping records with minimal effort.

Bookkeeping can be a very tedious and time-consuming task for an entrepreneur. This is because bookkeeping is not just about being organized but, more importantly, about being effective.

We explore in this article the six best ways for entrepreneurs to manage their books and bookkeeping records effectively.

1. Get The Perfect Accounting Software

There is no one “perfect” accounting package or software. A full-function accounting software, which meets your current needs and will expand to meet your future ones, though, is a hidden asset. It allows you to easily handle the accounts help you manage your business proactively.

With the variety of accounting software in the market, however, there are certain questions you need to ask before choosing the one best suited for your business:

●  Is it compatible with your other systems?

●  Can the software import and edit existing documents?

●  What features does it have?

●  What is your budget & plan, and what is the price & availability of the software?

Once you have the answers to the above, your choice of accounting software becomes easier.

2. Equip Your System With Additional Software

The next thing that an entrepreneur should do for managing their books properly is to use the right business management software package. Although this may seem like a daunting task and heavy on the pocket it is quite easy and many packages are affordable. A complete business management package will take up all the manual work of your accounting, financial transactions tracking, and back-office tasks. This software package when integrated with the accounting software will bring significant automation to the system. It will allow you to focus on the core business activities instead of worrying about the books and accounts.

3. Integrate Bank Feeds

Bank feeds directly import transactions from your bank or financial institution into your software spreadsheet. This process eliminates the need to import transactions manually. Bank feeds bring the advantage of easy and straightforward automatic data entry, avoiding any manual errors in the process. With integrated bank feeds, you will be able to manage your books and your bookkeeping very effectively in a very short period. 

4. Set up invoice schedule 

The demands on a solopreneur or an entrepreneur’s time might lead to loopholes in billing their customers. This will affect their cash flow due to delays in receiving client payments and there will be a knock-on effect on the business. Setting up an automatic invoice generating software to raise and send clients’ invoices in line with their billing cycle will prevent this to a large extent. You can also use the software to follow a standard monthly billing cycle for clients. 

5. Follow Bookkeeping Rules 

Many entrepreneurs may not know how to set up their companies’ accounting systems properly. Ensuring that bookkeeping rules are followed will minimise chaos in managing the books. These rules allow one to track essentials and make it much easier for the entrepreneur to evaluate business progress using up-to-date books.

6. Diarize bookkeeping 

Another strategy for managing the books is to create a weekly bookkeeping calendar. This diary should not only list the clients and updates, but also important financial and compliance dates. You might even need to diarize the availability of your bookkeeper! There are several business bookkeeping software packages available that can make the process of managing your books a breeze.

If you are looking for the best Bookkeeping Software for your business, Corient can help you! Corient enables you to keep your accounts up to  to date helping you manage and grow your business



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Why Having A Bookkeeper Is Important In The Current Environment

Bookkeeping is an essential aspect of business. Accounting records are needed for calculating a company’s obligations and its receivables, to look at its history and plan for the future. A  bookkeeper’s role is to help you organise and manage your books and maintain proper and accurate financial records.

In the current economic climate, resulting in no small measure from the series of lockdowns in the UK, a bookkeeper is more important than ever, to help your business navigate the myriad rules and changes, manage compliance, assets, liabilities, and taxes without errors or miscalculation. The bookkeeper’s role is thus vital to the overall functioning of any business. 

We discuss here some crucial issues for you to consider as you make this decision.

1. Focus on your Core Business

Bookkeepers ensure that financial records are correct and up-to-date. This allows you to focus on your business’s core activities. A bookkeeper can help you grow your business faster by providing reports that analyse business and growth trends, especially in today’s COVID19 affected economy. Cash and accounts forecasts made by your bookkeeper, studied with market movements, help you plan for the future.

2. Profitability Analysis

Bookkeepers track your income and expenditure and inform you about where you should or can cut costs and where you must increase your revenue to ensure you have sufficient funds available for your business. Complete access to the financial records of your business allows the bookkeeper to monitor profits or losses at all stages. As the economy recovers slowly, after several waves of coronavirus, the regular updates you receive from your bookkeeper about your assets and liabilities enable smart changes in real-time. Hiring a bookkeeper brings you a great return on your investment.

3. Finance management

The company’s efficiency depends highly on the precision of bookkeeping. Business owners may fail to observe how they’re spending their money, but a bookkeeper’s job is to point out where it is going and whether or not it will generate profit. An efficient bookkeeping service provides correct and accurate data in real-time helping SMEs to grow and flourish. Corient can help you manage your finances better and eliminate unnecessary expenses.

4. Manage compliances

Your bookkeeper ensures that the business’s financial records are kept in order, accurate and updated as per the government’s rules and regulations. They alert you to changes in the regulations and update the records accordingly. They ensure that all tax compliances are timely, filing returns and reminding you to pay the liabilities.

5. Grants and schemes from HMRC

SMEs have constantly been on the lookout over the past year for financial support in a halting economy. Various grants, loans and Government schemes are keeping many businesses afloat. Your bookkeeper would have helped you with the eligibility criteria, the documentation and the numbers to apply for the relevant grants, loans and/or schemes. They would have, and continue to, help you manage monthly compliance and eventual repayment where necessary. They calculate future cash flows to suggest the loan repayment best suited to your business.

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Main Concerns Of UK CFOs For SMEs

We are once again in national lockdown until mid-February (which may stretch to the end of March) to fight against the fast-spreading new coronavirus variant.

The prolonged shutdown and severity of restrictions have resulted in severe challenges for SMEs. Small businesses are the backbone of the UK’s economic system; heavy blows have bowed this down despite the Government’s strategies to help it stay upright and businesses viable.

In this article, we will discuss the five major concerns of Chief Financial Officers (CFOs) for SMEs during the pandemic crisis.

Let’s get started…

1. Issues around work from home

Unlike MNCs and large businesses, most small businesses have started to return to the office. But, once again, the Government’s firm stay at home protocol has created a cloud of confusion for employers, forcing employees to work from home. Both employers and employees want to get back to a shared physical workspace, at the same time, many employees now prefer working from home, and employers are enthused by the increased productivity – confusion!

Corient has successfully adapted to WFH culture since March 2020. We have set systems in place to keep our employees engaged in the cloud workspace. We have kept up our training, complaints, and grievances, and employee awards ecosystems to keep our staff happy and productive, and to transition new employees into our work culture. Our investment in technology has paid off in excellent communications, support, and smooth workflow.

2. Reduced revenues

Businesses will lose millions of pounds in revenue due to the shutdown of hospitality and non-essential shops. The disruption in business in tourism, pubs and restaurants is expected to adversely impact survival, more so in this lockdown phase than in March 2020. According to Deloitte’s CFO, business revenues will face a 22% fall compared to pre-COVID estimates. Some significant structural changes will be expected from all SMEs to survive this major downfall.

3. Innovation at stakes

Innovation is a result of close collaboration of ideas and great teamwork. However, with major IT employees moving back to their hometowns from March 2020, companies faced repeated internet and network connectivity challenges. This crushed the companies’ spirit of innovation with their dispersed workforce and shattered work environment. However, even in WFH culture, Corient observed a significant boost in employees’ productivity. Corient’s team mitigated the gap in creative performance via regular video conferencing among all team members. This initiative has boosted the creative spark and diversity of thought to bring innovative ideas for the business.

4. Sceptical stakeholders

With rapidly changing Government rules and regulations in the COVID scenario, stakeholders have a reduced say in business crafting. This circumstance has put SMEs under pressure and services on hold to customers, employees, suppliers and investors at large. Planning and traditional methods of execution of plans have almost vanished during the pandemic.

Despite uncertainty due to COVID, we at Corient have kept our internal and external stakeholders engaged and happy. This clarity with stakeholders is maintained with regular interaction through calls, video conferences, emails and reports, which also helps keep their decision-making process going.

5. Employment challenges for new graduates

With the COVID lockdowns continuing to tighten hiring budgets, more and more companies worldwide are placing a freeze on hiring, cancelling internships and pushing back joining dates. Rising uncertainty has forced many businesses to hold off hiring for this year regardless of the business needs. According to a study conducted by the National Association of Colleges and Employers (NACE), 70% of companies consider revoking employment and internship offers for now. New graduates of 2020 will face considerable hurdles before landing a job.

The final words…

UK business can only grow if SMEs use financial resources smartly. Businesses need to make financial decisions using professional financial advice to support them in the long run.

Other critical aspects of the survival of SMEs are access to credit and financial management of the business. CFOs of all major companies will agree that SMEs need to implement operational and strategic changes in the system to act as a long term solution to rebuild and renew the UK’s economy.

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UK SME Resilience during Covid-19

The coronavirus (COVID-19) outbreak has caused a global natural emergency, impacting the global economy. Every sector in the economy has been affected including trade, investment, IT, Tourism,
finance, etc.

Small businesses are major pillars of the UK economy. Business owners reported decreased turnover (66%), customer demand (58%), workforce (56%), and cash flow (60%) as the most important negative consequences of the pandemic.

There are more than 5 million small and medium-sized enterprises (SMEs) in the UK that have been severely impacted despite several government measures. According to the Business Emergency Resilience Group (BERG), small and medium businesses employ 16.1 million people in the UK, which is 60 percent of the UK population.

How are SMEs doing in COVID19?

Based on the research conducted by Aldermore, SMEs in the UK have lost 30% of their monthly business revenue during the pandemic. Both supply and demand side firms have been affected. Companies operated with a reduced workforce, shortages of raw material and intermediate goods.
The reduced spending resulted in a dramatic fall in market demand. As per the Aldermore research, two in five SMEs in UK, (i.e. 51%) adjusted their business strategy with cost-saving initiatives in the very first phase of lockdown.

SME Resilience strategies helping the economy bounce back

To everyone’s surprise, with each passing month, SMEs appeared to have recovered more strongly than expected. Companies demonstrated significant resilience strategies with different modern solutions to cope with changing horizons. The study by Hitachi Capital Invoice Finance states 79 percent of business owners shifted to the work from home (WFH) model.

Businesses are striving consistently to keep employee engagement rate high even using the work from home system. Several communication channels such as Skype, Zoom, Google meet, and Microsoft Teams are widely used by large, medium and small firms.

According to the Economic Recovery Survey, one-third of SMEs operating in work from home modules are planning to continue remote working even after the pandemic. On an average, revenue for SMEs crashed 6.6% during the last six months. Cost-cutting measures like work from home will reduce unnecessary expenditure in infrastructure rent, maintenance, food and electricity bills.

This new working pattern has brought great flexibility in working for employees and the company as well. The available digital technology is capable of providing a responsive work environment for employees. Small firms are proving to be more agile and adaptive to the changing circumstances by investing in technology to retain productivity and high standards, even with a smaller workforce.

Corient’s support for SMEs

Corient launched an initiative for small businesses impacted by Covid-19, offering a reliable technology for an end-to-end solution for its accounting clients. It is outsourcing the accounting and bookkeeping services for finance and accounting companies to continue delivering even in these tough times.

We reduce manual work by replacing it with accurate and quick automation alternatives for Accountants and Accounting companies. This digital transformation will enable firms to recover revenues by supplying services without human intervention and without enhanced salary costs. This will provide a responsive solution with faster results to its clients.

Even though severely impacted by coronavirus, many positive steps are being taken by businesses to become more resilient. SME business owners have regained confidence in the economy.

They have a positive outlook and intend to survive the pandemic and grow during the next few months.

How we see the future

Regardless of the current challenges, most SMEs are using every opportunity to deliver services to their clients using smart and efficient technology. UK SMEs have exhibited strong resilience during the pandemic, building strong ties to help each other move forward together.

As always, there will be new challenges to face but SMEs in the UK should be able to sail through with a comprehensive and focused business strategy and quick adaptability. For more features offered by Corient, stay tuned……

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Top 10 Factors to consider before selecting an outsourcing partner

Outsourcing remains a big support strategy when you are growing or facing a downturn. Outsourcing of Manufacturing, Information Technology, Services including Finance and Accounting Services are client’s every year, a couple of main reasons for outsourcing over and above cost savings are 2 S- Scale and Specialization. Whatever, the business cycle you may be in, it’s always better to look Outsourcing as an option for achieving Cost Reduction or Scale or Specialisation. When you are looking for Outsourcing as an option, here are some of the factors you should consider before selecting Outsourcing Partner:

• Trustworthy:

Outsourcing is a long-term relationship and Trust and Communication are 2main ingredients for any successful relationship. Few of the ways to establish trust are as follows:

• Company Age: How many years the company has been business. The longer they are in business, trust factor will be high and they will honour the commitments they make

Types of Clients: What is the existing set of clients. Does the company have diverse set of clients in terms of numbers and experience?

References: Does the company provides references of its existing clients proactively

• Communication:

Assess the communication structure of the outsourcing company. Does the company proactively reach out about improvement initiatives, cost reduction ideas, internal controls, mistakes made etc. The communication structure/ Governance Structure can play an important role for making outsourcing company a Strategic Partner in your business

• Management Team Experience:

Great Leaders don’t just tell you what you do, they also guide you through. This is true for any Organisation you are going to work with. Assess whether the Management Team has the right mix of people with diverse backgrounds. If you are going to outsource Accounting work, check if the Management Team has Chartered Accountants and has rich experience working with large accounting firms such as Big4, etc. If you plan to outsource Management Accounting, check whether the Management Team has MBA’s who can guide you through to Managing Business

• Culture of the Company:

As Peter Drucker points out, ‘Culture Eats Strategy for Breakfast. Get Culture Right first, Success will follow’. Outsourcing is a long-term relationship and not just a short term bandage for your pains. It’s important to assess if your Outsourcing Partner has the right culture that fits into your company’s culture. There are several types of cultures including Customer Oriented, Innovation Driven, Respect Individual, etc. Some of the companies have only had profit Oriented Culture.

• Talent Pool:

One of the anonymous quote that reminds me is ‘I am not Afraid of Storms for I am Learning How to Sail My Ship’. So is true with any Knowledge based Industry. Before you outsource, check what kind of Talent Pool is available with the company. Does the outsourcing partner have internal education programs to create a strong talent pool? Assess whether the team has Chartered Accountants, Accounting Graduates and there are right internal and external training programs. If there is a right kind of talent pool available or training systems, you know you are in Safe Hands.

• Certifications:

Assess if the Outsourcing Company has right certifications such as Xero Champion, Quickbooks Certified, Sage Membership, etc. If the partner is certified, this will certainly help in ensuring your processes are managed efficiently.

• Data Security:

Data Security is of Paramount importance and many of the companies do not have right data security policy check. Check if the outsourcing company has right Data Security Policy including Data Security Certifications such as ISO 27001, etc.

• Technology Expertise:

Never in history, Technology would have played so significant role in our daily lives and day by day human kind is getting controlled by technology. While it’s important to have right talent and certification for managing your accounting processes but at the same time it’s important to have outsourcing partner who can develop applications, technology to make the processes seamless and efficient. Assess if your outsourcing partner has right kind of Technology Team to support any application development to make processes efficient

• Geographical Location: 

It’s important that your outsourcing service provider is based in right location. Check if they have near shore, on shore presence so that they are available at shout if any problems were to arise

• Flexibility:

Determine if your outsourcing partner is rigid or flexible in their approach. Usually, outsourcing contracts are in place for a number of years. Over time a situation may arise that necessitates renegotiation of the contract. The partner must be flexible enough to understand its client’s concerns and act accordingly.

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Why should you outsource your payroll

With Making Tax Digital knocking the door, additional compliances and ever increasing demand for Value Added Services by clients, Accountants are being stretched in every direction.

Further, Payroll though straight forward process is not managed in most efficient way due to last minute information and changes by clients. One of the best solution is to outsource your payroll.

Here are 5 Top Benefits when you outsource your payroll function:

Focus- You are able to focus on your practice rather than getting carried away in transactional work

Costs- You are able to reduce the costs of payroll operations thus making it more profitable

Value Added Services- Your staff which does multitasking of Book Keeping, Year End as well Payroll can focus on their core area and provide value-added services to your clients

Hiring and Training- You need not hire any additional staff or train them if you get additional payroll business.

Turnaround Time- With outsourcing, all services are delivered in agreed timelines so you do not need to worry about any delays in payroll processing