Financial Accountant May/June 2023

SVB’s woes highlighted the potential knock-on effect of one business’s collapse upon others. So, how can you understand and mitigate supplier risk?

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ANDREW CONWAY

Long road to net zero

There’s been a lot of talk in recent news about the global transition from fossil fuels to renewable energies, and the need for sustainability reporting to help reach net zero. However, it’s fair to say that there has been more talk than action on this issue because most of the work needed hasn’t actually started.

This means that right now we’re probably closer to the staging area than the finish line, and there is a long road ahead before we reach net zero.

The IPA Group isn’t immune from criticism, and there is more work to be done to honour our sustainable development goals outlined in the IPA Group Annual Report 2021/22. Our role as an organisation is to ensure that regulatory standards and reporting requirements are scalable and understandable for our members and the communities they serve.

Here are some tips that might help you develop sustainability reporting for your business:

Look at sustainability as an opportunity when doing SWOT analysis, and think about what decarbonisation will mean for your

business over the next ten years. Identify the challenges that will influence your ability to remain competitive; develop a business continuity strategy to mitigate risks. Consider opportunities to improve efficiency by reducing consumption that limits waste when developing business cases for sustainability reporting. Learn about best practices with support materials from the International Sustainability Standards Board and HM Government’s 2023 Green Finance Strategy.

Use accounting software to help with carbon accounting, and plugins to develop recommendations to help your organisation establish net zero targets.

Professor Andrew Conway FIPA FFA IPA Group CEO

T: @IPAaccountants

F: /ipaaccountants

L: Institute of Public Accountants

JOHN EDWARDS

Expanding member benefits

Our in-person regional networking events are underway, having taken place in Scotland, the east of England, northern England, south-west England and Wales, London, the Midlands and southern England.

Newly-appointed technical manager Matt Barton has been to several of these to introduce himself to members and talk about his role, including improving our technical support and CPD offerings, ensuring members and IFA credentials receive the recognition they deserve. As always, the regional events are also a great opportunity for networking with other IFA members and making contacts in the wider finance and connected industries.

You can also meet Matt when he joins me for a member update webinar on 24 May. As well as covering some of the topics Matt’s been discussing at regional events we will cover: IFA achievements so far this year; our strategic direction; why your voice matters; and how we represent your interests with HMRC and other organisations to make sure it’s heard. And in times of economic difficulties, we’ll also look at equipping you to be effective, resilient and adaptable to meet those challenges head on. Register at ifa.org.uk/cpd

Improving and expanding the range of member benefits we offer to continuously meet the needs of SMEs in the UK, and throughout the international market, are a constant focus. I’m delighted to report we are now working with three organisations that can offer support to members. White Oak is an FCA-regulated nonbank lender that can provide SMEs with access to non-traditional routes of funding.

Initor Global provides outsourced accounting, bookkeeping, personal and business tax, payroll and other services to accountancy practices throughout the UK. And, finally, Futrli help accountants by providing real-time cash flow forecasting and reporting services. You can learn about

these organisations at face-to-face events, webinars, and articles at financialaccountant.co.uk.

Finally, the Tax Facts card 2023 is included with this edition for members based in the UK, with a downloadable pdf version available online at financialaccountant.co.uk/ magazine

John Edwards FFA FIPA

IFA Chief Executive and Group

Executive International

T: @InstituteFA

F: /instituteoffinancialaccountants

L: Institute of Finacncial Accountants

YouTube: InstituteFA

We are now working with three organisations that can offer support to members

KEVIN REED

Pinpricks of light in the gloom

There is, undoubtedly, some doom and gloom in this issue’s news pages. This is also reflected in our features section, where many of the articles have a ‘defensive’ vibe about them.

Tough, post-Covid, economic conditions haven’t exactly been helped by the cost of energy crisis, which has driven up inflation, and seen everyone suffer further as interest rates tick up.

But it’s not all doom and gloom. My regular and ongoing discussions with UK accounting practice leaders are slanted towards ‘we’ve got too much work than we can manage – with more clients wanting to join every day’.

And then we have the American Express survey of CFOs and senior finance professionals (see page 8), which highlights great confidence in both their business and the condition of the finance function itself.

However, the survey also flags up concerns about ‘a lack of people’ and, for

those they do have, making their skills and roles relevant to a digital and insightdriven world. Finally, do they have the right tech to support their business?

In truth, this concern is mirrored in the practice community: can we automate chunks of work; can we improve the flow of information between the client and us; and do we have the right skills mix to propel us to be more profitable?

So, while we will continue to read about parlous economic conditions and a world fighting a proxy war, finance and accounting leaders will be more focused on their people (skills and development) and tech (data insights and workflow).

WHO SAID THAT?

Go to page 20 to find out

…We’ve lost the push to get clients moving

£

450

Number of company directors disqualified for Covid-19 financial support scheme abuse. For more, turn to pages 10-11.

Source: Insolvency Service

37%

Percentage of UK mothers unable to return to work due to the cost of childcare services.

Source: Indeed Flex

73%

Percentage of UK adults who are worseoff financially than a year earlier.

Source: Plend

26%

Percentage of businesses ‘likely’ to make redundancies during 2023.

Source: Ayming UK

£3,075.14

Estimated monthly cost of living for a single person living in the centre of London, more than a thousand pounds higher than the second-most expensive UK city Bristol.

Source: Stokemount Surveyors

11.5% Increase in outstanding credit card balances for UK citizens in the year to January 2023.

Source: UK Finance

36%

Percentage of UK ethnic minority workers who believe they have ‘no voice’ in the workplace

Source: Rethinkly

£7.1bn

Amount of inheritance tax raised by HMRC during 2022/23, a billion more than the same period a year earlier. For more, turn to pages 8-9.

Source: Office for Budget Responsibility

16%

Percentage increase in the number of corporate insolvencies during march 2023, compared with the same month a year earlier.

Source: Insolvency Service

9%

Nearly one-in-ten UK homeowners plan to borrow more money against their property to undertake renovations.

Source: Together

£

25%

Percentage of SMEs that cited ‘the mental health of their workforce’ as a top-three threat for the year ahead.

Source: Nucleus Commercial Finance

EMPLOYMENT MARKET

Businesses struggle to find finance talent

FINANCE LEADERS ARE LOOKING TO INCREASE headcount in their functions – but are struggling to find the right people.

Major research by American Express finds that more than half (55%) of senior financial decisionmakers expect their function’s headcount to increase in the coming years. However, 74% said

they are finding it harder to recruit the right talent.

Many (56%) expect digital capabilities to become more important for finance function team members, while a third (33%) said that improving such skills were ‘key’ to improving how the function operates.

“With calls from finance leaders for greater digital and analytical skills to interpret and act on organisational data, it’s clear that the finance function is evolving,” said Stacey Sterbenz, general manager, UK commercial at American Express. Accurate forecasting was cited by 85% as ‘critical’ to the finance function’s ongoing success, with 38% saying it was the activity that takes up most of their time and resource. Reporting and control (36%) and strategic planning/financial analysis (34%) were the next most time-consuming tasks.

Despite the concerns and challenges, finance leaders are still optimistic about the future prospects for their business. Some 60% believe their company will perform better in 2023 than 2022, while 90% rate its financial health as ‘good’.

Nine in ten (92%) say the relationship between the finance function and the rest of the business is ‘good’. The research can be viewed here: tinyurl.com/ifa-16257

83%

Percentage of finance leaders that said better-quality data was vital to improve the finance functions’ organisational impact.

Source: American Express

Margin vs Markup: What’s the difference? And how to calculate it

→ tinyurl.com/ifa-16251

PUBLISHED COVERAGE:

Accountancy Age

SME accountants at risk of being left behind amid sustainability surge, cautions IFA → tinyurl.com/ifa-16243

Accountancy Today

How firms can make a secure shift to hybrid

working → tinyurl.com/ifa-16245

American Express Balance sheet examples → tinyurl.com/ifa-16247

Margin of Safety Formula: How to calculate margin of safety → tinyurl.com/ifa-16249

Contribution Margin Ratio: What is it and how to calculate it

→ tinyurl.com/ifa-16253

PQ

CPD: a golden upskilling opportunity

→ tinyurl.com/ifa-16255

REPRESENTATION

We were represented at the

following during February –March 2023:

HMRC, including Agent Support Group, Charter Stakeholder Group and One to Many Compliance Advisory Board

Accountancy Intelligence Sharing Expert Working Group

Anti-Money Laundering

Supervisors Forumchaired by Tim Pinkney

Accountancy AML

Supervisors Group (AASG)

Fraud Advisory Network

Office for Professional

NEWS IN BRIEF

No training ‘a dealbreaker’…

Nine out of ten (92%) employees would consider training as critical in choosing between two potential employers, according to research from imc. It also found that 52% of workers had left a role due to a lack of personal or professional development opportunities.

…as HMRC splashes £150m on IT staff and learning

HMRC has sharply increased its IT staffing budget, to £150m –nearly double the preCovid amount.

The Freedom of Information findings by think tank Parliament

Body Anti-money laundering Supervision

(OPBAS)

HM Treasury

Economic Crime

Legislation: Private Sector Legislation

Working Group

Accounting Trailblazer

Groups - ifATE LF&A

Route Review outcomes

LEARNING/ UNIVERSITITES

Our business development team has spoken at and

Street also showed that HMRC has launched a number of training initiatives, including 15 academies delivering professional learning for specific technical roles.

Rounding up the Budget

Our roundup of the big stories from the Budget – and their ramifications –can be found on pages 22-24.

Government borrowing hike

March borrowing by the UK’s government surged to its second-highest total since records began, at £21.5bn, with the energy support scheme estimated to have cost £41.2bn. However, borrowing to the financial year-end 2023 was £13.2bn less than originally forecast by the Office for Budget Responsibility.

INSURANCE Hike in personal assets insured against business failure

INSURANCE POLICIES TO protect personal assets against being claimed from a business failure have shot up.

The Purbeck Personal Guarantee Monitor for Q1 2023 found mitigation insurance applications were up 93% year on year.

Demand was particularly high among the construction and property and manufacturing sectors.

The average personal guarantee-backed loan was £583,539 in Q1 2023, down from £714,576 a year earlier. The typical guarantee amount fell to £141,000 from £174,000.

Access to working capital was the top reason for finance access; for 32% of applications. In addition, finance for investment in

growth initiatives was up 196% by volume compared to Q1 2022.

“The take-up of personal guarantee insurance (PGI) among SMEs provides a barometer for the state of the UK’s lending market,” said Purbeck Personal Guarantee Insurance managing director Todd Davison.

“The increasing demand for cover shows how common it is now for lenders to ask for personal guarantees as security for business loans for SMEs,” he said.

“It is also clear that business owners and entrepreneurs are under no illusions over the personal risks of personal guaranteebacked loans and are taking steps to mitigate those risks as costs continue to rise.”

SMALL BUSINESSES Business owners’

attended events at Kingston, Middlesex and Birmingham City Universities.

AROUND THE WORLD

In-country meetings, online networking events and CPD webinars took place in Ghana, UAE and Pakistan. For members in Bangladesh, videos covering tax management and VAT management were added to the CPD on demand section of the IFA website.

‘low’ wellbeing

SMALL BUSINESS OWNERS have a lower wellbeing and life satisfaction than the rest of the populace, research from Xero shows.

Xero’s The global state of small business owner wellbeing report found that, despite owners in different countries facing varying issues, their mental health is, across the board, lower than their general population.

Only a third (32%) of UK small business owners feel ‘rested’ most of the time.

Alex von Schirmeister, managing director, Xero UK said: “This is a stark reminder of the serious impact that ongoing challenges such as late payments have on small business owners.”

The research can be viewed here: tinyurl.com/ ifa-16259

Covid loan abusers disqualified

MORE THAN 450 directors have been disqualified by the Insolvency Service in 2022/23 for abusing the Covid-19 financial support offerings.

Of the 932 disqualifications during the period, 459 involved Covid loan and grant abuse. Six criminal prosecutions were also brought by the Insolvency Service in that time.

“The purpose of the Bounce Back Loan scheme was to support businesses during the pandemic, but it is clear a minority of company directors chose to maliciously abuse the scheme and defraud the taxpayer. Our team of experts continue to work round-the-clock to bring these criminals to justice,” said Dave Magrath, director of investigation and enforcement at the

Insolvency Service.

However, the government was criticised for acting too slowly to manage the scheme. Andrew Durant, senior managing director in the forensic and litigation consulting practice of FTI Consulting, said the Insolvency Service had “shut the door after the horse has bolted”.

Durant added: “This might take some of the bad guys out of operation for a few years, but it won’t stop them from returning and it certainly won’t get the billions back which was lost as a result of the government’s failure to put in proper controls at the outset.

“Very early on, we set out various actions that the government could take but no-one paid any attention.”

FRAUD

Sheffield businessmen disqualified for Covid loan fraud

TWO SHEFFIELD businessmen have been disqualified for a total of 17 years for more than £60,000 of false Covid loan claims.

Michael Higgins, 56, was sole director of Steel Rigging, which provided driving services for vehicles on outside TV broadcasts. In November 2020 Higgins applied for a £20,000 Bounce Back Loan. The company went into liqudation in December 2021, and an Insolvency Service investigation found that the company’s turnover had been falsely inflated to borrow the Covid loan, and that £20,000 had been transferred out of

NATIONAL INSURANCE NI deadline pushed out to July

THE VOLUNTARY NATIONAL Insurance (NI) deadline has been extended to 31 July, after concerns that the public needed more time to decide whether to fill gaps in their state pension.

As part of transitional arrangements to the new State Pension, taxpayers have been able to make voluntary contributions to any incomplete

the business without evidence that the funds were used for Steel Rigging.

In a separate case, Dean Miller, sole director of IBODYTALKS, an online heath and fitness business, used a predicted turnover of £168,000 to apply for a £42,000 Bounce Back Loan. It went into liquidation owing more than £40,000, and £41,000 had been transferred to a connected company without evidence of any benefit for IBODYTALKS. Higgins was disqualified from acting as a director for eight years, while Miller was disqualified for nine years.

years in their NI record between April 2006 and April 2016, to help increase the amount they receive when they retire. The previous deadline was 5 April.

Accountants and advisers have been contacting their clients and recommending they check their NI status. Taxpayers with incomplete years in their record could be financially better off in their retirement if they make voluntary payments to top up any incomplete or missing years.

The government has extended the deadline after an increase in customer contact.

FRAUD

NEWS IN BRIEF

HMRC consultation - simplifying and modernising income tax

A consultation on modernising the tax system has been launched by HMRC. It includes discussion on the digitalisation of self assessment and PAYE, a ‘digital by default’ approach to registration of new taxpayers, a single customer account (SCA), and clarifying the ITSA criteria. The discussion document can be found here:

→ tinyurl.com/ifa-16241

£235m redress for Woodford investors

Up to £235m will be provided by the businesses tied to manage the liquidity of the LF Woodford Equity Income Fund (WEIF). Link Fund Solutions will provide the redress, alongside a material contribution from its parent Link Administration Holdings. The FCA had found that Link Fund Solutions had responsibility for ensuring WEIF operated with appropriate liquidity risk management and controls. For more visit:

→ fca.org.uk

IHT receipts clear £7bn

HMRC inheritance tax (IHT) receipts were £7.1bn for April 2022 to March 2023, a billion-pound increase on the previous period. “Last year the chancellor decided to freeze the IHT nil rate band until 2028. As a result, more people are going to find themselves caught in the inheritance tax trap,” said Stevie Heafford, tax partner at HW Fisher.

“Fortunately, significant changes to pension allowances announced in the Spring Statement means that there may be an opportunity for

people to leave more to their loved ones via their pension pots.” Read our Budget roundup on pages 22-24.

Prison time doubled for VAT fraudster

The prison time for one of the UK’s most wanted tax fugitives has been doubled for failing to repay the money she stole. Sarah Panitzke, originally from York, was a key part of a multimillion pound VAT fraud. She was jailed for eight years in 2022 after nine years on the run. She has been sentenced to a further nine years for failing to repay a £2.4m confiscation order.

Spring Budget documents

All HMRC tax-related documents and other announcements from the Spring Budget can be found online. To access the documents, go to: → tinyurl.com/ifa-16261

Sick days reach record high

A record number of sick days were recorded in the UK during 2022, according to ONS data. Covid was still a big factor in the figures, though ‘minor illnesses’ were recorded as the most by volume. The ONS estimated the number of days lost in 2022 at 185.6 million, 47.7 million more than before the pandemic struck.

‘Tinyurls’ explained

The ‘tinyurl’ web address at the end of some news items and elsewhere in the magazine are short aliases for longer addresses. Type the tinyurl address in your web browser and press ‘return’ to go to the relevant website for more information on the news item.

CHARITIES

Charity land rules ‘eased’

A SLEW OF CHANGES AROUND CHARITIES’ use and ownership of land have come into effect this spring.

Legal requirements for the disposal (selling, transferring or leasing) of charity land have been simplified. These include: widening the category of designated advisers who can provide charities with advice on certain disposals; confirming that a trustee, officer or employee can provide advice on a disposal if they meet the relevant requirements;

giving trustees discretion to decide how to advertise a proposed disposal of charity land;

removing the requirement for charities to gain Commission authority to grant a residential lease to a charity employee for a short periodic or fixed-term tenancy; clarifying the legal requirements that apply when a charity is selling, leasing or otherwise disposing of land to another charity; and updating the statements and certificates that must be included in disposal or mortgage documents for charity land. Other powers for enabling the Charity Commission to direct a charity to change its working name, if too similar to another charity, have also been beefed up.

Last October, charities were given power to pay trustees for certain services, such as computer consultancy or supplying stationery.

SVB’s collapse put great pressure onto the software community and, in turn, the organisations to which they provide technology. How can smaller businesses understand and mitigate supplier risk?

BUSINESS AS USUAL?

The collapse of Silicon Valley Bank (SVB) sent shockwaves through the software sector and, in turn, the organisations to which they provide technology, forcing firms to scramble to understand the impact on their supply chains.

At its height, California-based lender SVB Financial Group was the 16thlargest bank in the US with $210bn (£168bn) in assets. It collapsed in March, becoming the largest bank to fail since the 2008 financial crisis and the second-largest banking failure in US history.

SVB was a major source of funding for technology companies in the US and a significant player in the UK. Approximately 3,000 UK companies were believed to have financing agreements with its British subsidiary, Silicon Valley Bank UK Limited.

Panic set in among the tech startups that banked with SVB as word spread of a run on the lender, raising the spectre of companies being unable to access their funds, with the inevitable knock-on consequences for the businesses that relied on their tech services.

Tech companies wake up

Those tech companies would have taken a more proactive approach to talking with their suppliers to mitigate any future shocks because “theoretically more of their suppliers would have been banking with SVB”, Niko Nurmi, senior executive adviser at Procurement Leaders, said.

In one example, Rippling, a US payroll services firm that was a customer of SVB, tweeted that it was unable to process its clients’ employee paychecks in the immediate aftermath. The company’s CEO posted

HOW ACCOUNTANTS ADD VALUE TO SUPPLY CHAIN RISK MANAGEMENT

Finance professionals can help manage supply chain risk by providing financial data analysis and assessments, working with procurement teams to manage costs, developing cash flow management strategies, performing risk analysis, and monitoring compliance.

Financial assessment of suppliers: Evaluate the financial health of suppliers by analysing their financial statements, credit ratings and payment histories. Gathering information on their manufacturing processes, quality control measures and capacity to meet demand can give

the company an idea of their financial stability and whether they are at risk of insolvency.

Monitoring costs: Work with procurement teams to monitor the costs of goods and services, ensuring that prices are competitive and aligned with market standards.

Cash flow management: Develop and implement cash flow management strategies that ensure suppliers are paid promptly and that the company can manage changes in demand or unexpected supply chain disruptions.

Risk analysis: Work with risk management teams

an update that it pivoted to begin work with JPMorgan Chase & Co to process the wages.

“A lot of people will be unwinding positions as fast as they possibly can. You will see people starting to move to safer havens to make sure they are not possibly exposed,” Sam Gilks, a supply chain consultant who has advised multinational and small to mediumsized businesses, said.

However, the worst supply chain shocks caused by its collapse were averted by the speedy intervention of regulators. The Federal Reserve stepped in to backstop SVB after the Federal Deposit Insurance Corporation (FDIC) took control of customers’ deposits, while the Bank of England sold SVB’s UK

to identify potential risks within the supply chain. These may be identified into four broad categories: economic, environmental, political and ethical. Knowing how to identify and manage these risks is key to building a supply chain that is resilient and can adapt quickly to changing conditions.

Compliance monitoring: Ensure that suppliers comply with regulations and standards, such as environmental, social, and governance requirements. Regular audits can help identify non-compliance issues or areas where suppliers may be at risk of non-compliance.

subsidiary to HSBC.

“If a lot of smaller companies left without their monies, there would have been a big issue. But, ultimately, there weren’t any massive supply chain shocks because there was such a prompt response from the FDIC,” Nurmi said.

According to Nurmi, the steps that would have had to be taken if things had unravelled would have been to provide more support for the smaller companies they work with such as “shorter payment terms and upfront payments and placing orders ahead of normal demand.”

A wake-up call

Despite the eleventh-hour regulatory reprieve, the crisis has been a

wakeup call for accountants to review their company’s counterparty credit risk, and exposure to critical parts of their supply chain even if their company was not directly affected.

Arif Kamal, chief finance and operations officer at law firm Hunters, says he believes in maintaining “constant dialogues with our key suppliers. Better communication can avoid misunderstandings and disappointments.”

“It is now critical for businesses to know and understand their suppliers and adapt quickly should the needs or priorities change,” Kamal added. “Investment in technology to monitor the risks is critical.”

As part of that dialogue, Sam Gilks says businesses need to ask the fundamental question of whether a supplier is going to be here for the long run.

“How can you demonstrate to me that you are still going to be transacting and can provide a solution in another five years? Because if you are not, it is hard from a risk management point of view to sign off on that,” he said.

Paying a premium Company accountants also play an essential role in managing supply chain risk by assessing the financial health of suppliers, and identifying potential supply chain risks, according to Neil Morling, chief financial officer at global architecture business Handley House.

“We always look at the financial standing of the business,” Morling

said. It is worth paying more for an established supplier. Handley House used outsourcing to derisk cyber security threats and chose “a significant player and probably paid a premium,” Morling said.

Christopher Kinsella, an experienced interim finance director currently at Greater Manchester Police, says the finance function needs to weigh in on “the balance between the two opposing management objectives of value for money and the risk around supplier financial sustainability”.

“One way to identify this potential risk is to conduct an assessment or audit that examines all aspects of the supply chain focusing on the vulnerability and financial sustainability of suppliers together with the dependency of the organisation on certain critical suppliers,” Kinsella said.

He adds that “there is a key role and an obligation for audit committees to take a lead on presenting and challenging this particular risk in a more novel way”.

“Not everyone has a foot in both camps. As a CFO you can - and should - be free to take an interest in anything and everything,” Kinsella said.

A TIMELINE OF HOW SVB UNRAVELLED

8 March: SVB announces that it needed to raise $2bn in capital to shore up its balance sheet. It sold a bond portfolio at a $1.8bn loss.

9 March: SVB’s stock falls 60%. Venture capital investors and startups start to withdraw their funds from the bank.

10 March: SVB is declared insolvent. The Federal Deposit Insurance Corporation takes control of customers’ deposits.

12 March: The Treasury Department, Federal Deposit Insurance Corporation and the Federal Reserve approved plans to backstop both depositors and other financial institutions connected with SVB.

13 March: HSBC agrees to buy Silicon Valley Bank’s British subsidiary.

14 March: The Securities and Exchange Commission and the Justice Department open investigations into SVB’s collapse, according to media reports.

Richard Crump is an accounting/ legal journalist

You will see people starting to move to safer havens to make sure they are not possibly exposed

Astaggering £23.4bn is currently owed in outstanding invoices to UK businesses, according to UK government estimates.

Bad debt can suppress SMEs’ growth, push them into insolvency, and damage economic prospects. There is also a personal cost to self-employed people, who have reported feeling stressed about their financial situation – causing them to lose sleep and confidence.

Bibby Financial Services’ latest SME Confidence Tracker finds the average bad debt among SMEs has risen 61% in one year to £16,641.

More than a quarter of SMEs (around 1.5 million) are struggling with bad debt, while six in ten businesses say it’s taking longer for customers to pay their invoices in full.

Improving the payments culture

GETTING PAID

To deal with what they describe the UK’s ‘poor payments culture’, the Federation of Small Businesses has called on the government to make several reforms, including: committing to legislate to limit the maximum payment terms to small suppliers in law by 2027 if the situation does not improve; banning late payers from public procurement contracts; giving audit committees of large firms oversight of payment practices and reporting on progress

in their annual report; and making the Prompt Payment Code (PPC) mandatory for all local authorities (LAs), and create a payment practice league table for LAs with financial incentives.

The government’s new Department for Business and Trade (DBT) is reviewing prompt payment and cashflow this spring. The review is

examining the progress made in specific economic sectors, and how to improve arrangements for supporting small businesses experiencing difficult payment practices. The review’s terms of reference include the current payment reporting regulations, the Prompt Payment Code, and also the Small Business Commissioner.

Your organisation’s options

While this review is underway, small businesses will have to navigate existing laws, and use the options available for getting paid in this current environment.

These are typically in the areas of: having a routine system in place to deal with a payment which has become due;

managing cashflow and securing credit and assistance from the bank; or

recovering debts and legal action; like reminder letters, charging interest, court proceedings, and writing off bad debts.

Contractual terms and conditions

Taking some of these in turn, common advice from solicitors and accountants

Despite being a fundamental element of business, late payment - or even total lack of payment - remains a perennial issue, writes Stephen Lynch.

to SMEs is to create clear terms and conditions in advance as part of their contract with each other. This is likely to mitigate the potential for disputes over payment methods and timings. Information that’s recommended to specify in the terms and conditions can include: acceptable methods of payment; payment due dates; penalties for late payments (e.g. fees or interest rates due); any additional fees due like credit card fees and VAT; and a requirement for compliance with government and tax legislation.

Once they are complete, they must ensure that their clients have signed the contract, including the terms and conditions, before they provide any goods or services. Template T&Cs are also available online, and some accounting firms who specialise in credit control procedures can guide SMEs through this process.

Debt recovery for small businesses

For those debtors who fail to pay an overdue invoice following standard credit control procedures, there are

two types of letter available. Firstly, the pre-action protocolcompliant ‘letter before action’ (LBA) and ‘late payment demand letter’ (LPD) give the debtor a short period in which to make a payment or respond with suitable payment proposals. Not all of these will receive a response, and some will require an escalation in the process and issuing court proceedings can be a next step. If a court determines that a debt is properly owed, it will make a judgment in favour of the claimant and a period will be stipulated for payment (usually a fortnight). If this payment is then not made, the court can enter the enforcement process, where the debtor is forced to pay. There are various enforcement options available, with each method having its own strengths and weaknesses. These include: instructing bailiffs to seize assets to be sold to pay off the debt; providing that a proportion of the debtor’s earnings are deducted by their employer and paid direct to the creditor until the debt is fully repaid; freeze bank accounts and seizing money on behalf of creditors; and

imposing a charge on the debtor’s beneficial interest in a specific asset.

It is also worth remembering that debt claims must be brought within six years of the sums falling due or they become statute-barred, unenforceable, and at that point, they should be written off as a bad debt.

“Recovering cash from debtors is partly about ensuring you know who you’re dealing with – monitoring them and trying to get an inside track on their cashflow and any issues as they develop - and partly about getting to the front of the queue, explains Mike Pavitt, head of corporate restructuring and insolvency at Paris Smith solicitors.

“A legally compliant protocol letter from a solicitor, a legitimate threat of a statutory demand or (for corporate debtors) winding up petition can often achieve the latter, particularly where the debtor is a larger entity and/or may suffer reputational damage if they fail to pay on time, but great care has to be taken that the steps you take do not backfire with adverse costs.”

Stephen Lynch is a freelance journalist

IMPROVING YOUR CHANCES OF PAYMENT

Smaller businesses have options to improve the chances of getting paid on time: Sending email payment reminders. Simple but very effective!

Automating this with apps that plug into your cloud accounting software (e.g. Chaser) helps with this. Adding a payment

link to your invoice, e.g. Stripe or PayPal, to make it easier for customers to pay.

Requiring payment by direct debit (e.g. GoCardless).

Taking an upfront deposit before starting work.

Credit checking new clients before starting to work with them, and

checking their average payment times. Calling overdue debtors.

Using debt collectors (this can be done cost effectively through Chaser).

Pamela Phillips is co-founder and director of accountancy firm de Jong Phillips

As a portion of accounting practitioners age, they consider retirement and look to exit the industry. There is currently a large number of accounting practices being put up for sale, creating an opportunity for buyers.

There are several areas where a seller can increase the value of their practice to maximise its sale price. A successful sale requires preparation, planning and getting under the bonnet to understand what makes it hum, and fix any issues that could affect its value.

Getting above the parapet

Keith Underwood, managing director of consultancy Foulger Underwood, advises owners to begin planning at least 18 months out from a sale, and to put their “head above the parapet”, while looking at their business from the perspective of a larger buyer.

The planning phase will require an honest appraisal of the practice’s strengths and weaknesses.

This will encompass a review of financial performance — including revenue, expenses, profit margin, and cash flow — the client base, management structure and internal processes.

“Are you commercially running your business with good service, and applying technical tax advice where required, leading to high client satisfaction levels?”, Underwood said. “If that is going to be the larger firm’s parameters for looking at you commercially, do you actually meet that requirement?”

Sellers should also review how their firm operates. Buyers will look for accounting practices that have robust workflow processes, reliable

THE VALUE PROPOSITION

In the second part of our practice M&A series, Richard Crump broaches what buyers are looking for in a deal – and how you can use that knowledge to increase the value of your firm.

(and ambitious) people and financial infrastructure in place. This includes systems for monthly direct debit billing and invoicing, bookkeeping and accounts production, payroll, and compliance.

For instance, that could involve a review of how the practice prepares for, runs and follows up on a client meeting, and whether it holds similar and consistent processes for every client meeting without fail, according to Paul Shrimpling, managing director at accounting consultancy Remarkable Practice.

“If there is a systems robustness, anyone doing due diligence on your firm will have greater confidence you have got your act together, which then increases the value of your outgoing business as you leave it,” Shrimpling said.

Improve your financial metrics

Buyers will look for firms that have a profitable operating model, a steady revenue stream with a track record of long-term growth, and a low debt burden. Charge-out rates should be reviewed and price increases on lowmargin business should be pushed through before going to market.

Businesses that have “shown traction for growth” at least in line with the market or above the market will appeal to buyers, according to Daniel King, associate director for M&A at Azets, one of the UK’s fastest growing accountancy firms.

Buyers will also favour practices that can push through price increases amid a period of high salary inflation to maintain gross margin, according to King. He said Azets has seen practices where their margin has decreased over the last year as

“salaries have gone up but pricing increases through the client base haven’t stuck”.

Azets has completed around a dozen acquisitions in the UK and the Nordics in the last 18 months. It is looking to ramp up to 12 a year.

“Finding businesses that are able to put through pricing increases to maintain their margin is going to be quite important,” King said.

King says he looks for practices that produce “good quality management information”. He suggests that firms bring forward some annual, or

is a lot of work, there is a lot of pulling information together,” King said.

“It just makes life from a due diligence perspective much easier because they are 90% ready to go rather than 0%.”

Embed your client base

One of the most valuable assets of an accounting practice is the client base — and client retention is one of the key metrics that a prospective buyer will consider when deciding the value of an acquisition target.

But clients in small practices are traditionally loyal to the partner, not the firm. It is essential that loyalty continues after the sale, or the purchase price could get whittled down through clawbacks.

Sellers should consider a period of consultancy post completion where they are “bedding in those clients” with the purchaser to avoid losing any money if the deal structure caters for clawback, according to Underwood.

“If you are going to have clawback you are possibly going to lose some of the consideration for people leaving, so you will want to make sure your clients are really well embedded,” Underwood said.

quarterly processes and run monthly numbers, or monthly processes “so when you come to the time of doing a deal you have got much cleaner numbers”.

Sellers should put themselves in the shoes of the buyer, consider what they would be interested in and start to think about how to pull together their financial, HR, insurance and other management information.

“Due diligence isn’t the easiest process in the world for sellers; there

Buyers will also look for firms with a succession plan in place, and want to understand who are the “up-andcoming stars around the business that will be the future leaders of the business and will be key to continued success”, according to King.

“If an entire partner group want to retire on a transaction, there is a significant risk that clients and staff might churn, you might be left with nothing. From a buyers’ perspective that is unattractive,” said King.

Richard Crump is an accounting/ legal journalist

If there is a systems robustness, anyone doing due diligence on your firm will have greater confidence you have got your act together

The latest phase of the government’s flagship programme for digitising HMRC, Making Tax Digital for income tax and self assessment (MTD ITSA), has now been delayed until April 2026, allowing a further two years for firms to prepare.

The previous timelines were pretty tight, especially given the considerable amount of change required to get the internal systems and processes in place, and in helping clients make the move to digital tools. So, you would expect that most accountants and bookkeepers would welcome pushing back the start of mandation.

Breathing space

That’s very much the case for Jonathan Brave, managing director of Ferrer Accounting: “This is definitely what I would call breathing space, and we are now able to take a more controlled approach. We would have

LIFE AFTER MTD

The tax system’s metamorphosis into ‘fully digital’ has been placed in hibernation. Richard Sergeant asks practitioners and experts about whether UK SMEs should continue their own transformation timeline — and why.

made it, but primarily because we would have had little choice. I suspect we would have been fixing leaks as we found them in the first year, whereas now I’d like to think we could be in much better shape before the get go”.

While this is the overarching theme, it would be fair to say that it is a little more nuanced, as Sam Mitcham, owner of SJCM Accountancy explains: “I am more relaxed about it because now we don’t have a pending deadline, but I would have loved to have kept my plans in place and pushed all the sole traders onto and using software by now.

“I’m one that believes that the advantages for clients, but also for us, are going to be there. Now we’ve lost the push to get clients moving.”

Moving from clients to internal systems

The changes have also forced a shift in priorities in terms of technology, and where the focus for deployment

should lie. Those that have started to see these shifts first-hand are, of course, the software vendors themselves, like Chris Downing, director of product marketing at Sage: “One of the key requirements of MTD was to get as many of your clients onto digital bookkeeping solutions as possible and quickly, and that’s been hard. Not least through resistance to adoption if they don’t see the benefit, but also that firms have had to consider the parallel line which is how to do all the work.

“With less urgency on putting tools into the hands of clients, the one thing you can focus on is practice management. In other words, systemising the onboarding, pricing and back-office processes like risk, AML, and letters of engagement. All the stuff that clients don’t see, but are easy to streamline and help to create an efficient practice.”

These kinds of changes have a broader impact than just MTD ITSA for firms such as Jonathan Brave’s. “Some things we’re looking at are less focussed on MTD ITSA, such as general improvements to the way that we handle new and existing clients. If we can make sure some of the things we need to do for our own

compliance and internal efficiencies are in place, then we’ll have more of the platform ready to bring clients on to software in the future”.

Business as usual?

For all the talk of the space to take a more considered approach, there is also the realisation that thinking about MTD ITSA was always on top of the day job, and that day job is already pretty demanding.

Without the deadline, accountants and bookkeepers like Sam Mitcham, will never be short of things to do as an alternative. “Being in practice can be stressful, there are very high demands. Even if you are not a deadline-chasing practice there are always deadlines approaching. Even if you’ve got all your year-ends done for the period you’ll have the VAT and payroll and CIS to do. All of these things start to take priority over what would have been ‘let’s go all in’ on MTD ITSA.”

For Downing though, the choices are becoming clearer around deadline management.

“Choose to try and be ahead, rather than work up against them, whether this is self assessment or year-end accounts. MTD is inevitable, so you can afford to take the long view, and consider what changes are going to be most effective and get your reward - whether that’s growing, selling or retiring.”

Finding this balance between preparing for the future and dealing with the here and now is a perennial issue, but the reality remains that this is just a delay. And that MTD ITSA is still the expected reality.

Richard Sergeant is managing director of Principle Point and a freelance journalist

This is definitely what I would call breathing space, and we are now able to take a more controlled approach

What little excitement over the Spring Budget measures announced on 15 March (see p24 for more) soon tapered off as the dust settled, and the hard reality of the UK’s economic environment became clear.

Chancellor of the Exchequer Jeremy Hunt declared in his Budget speech that his was “a Budget for growth” with the UK avoiding recession in 2023 – despite the Office for Budget Responsibility (OBR) predicting a 0.2% contraction for the year. A month later, the Office of National Statistics (ONS) said on 13 April that February’s GDP growth had underperformed expectations, flatlining at 0% –sparking concerns that businesses and households would continue to

Santhie Goundar dissects business’s and parliamentary thoughts and questions following the Spring Budget. We also round up the Budget’s headline changes and announcements.

BITTER BUDGET SQUEEZE

feel the squeeze well into next year.

Many, of course, felt the squeeze sooner. Supermarket giant Tesco announced its pre-tax profit in the year to February 2023 had halved, due to a double whammy of high inflation across its supply chain and lower sales volumes as consumers continued to tighten their belts. Meanwhile, the Financial Times reported on 31 March that UK companies were upset at the corporation tax rate rise on 1 April, meaning businesses would be £9bn a year worse off just as the government dropped its energy support package for businesses and cut R&D relief for SMEs.

“Sadly, the Conservative party is about to plunge the UK’s small businesses into a week of woe: tax up, energy bills up, employment costs up, inflation up – but the government is oblivious and now running out of road to make a difference,” Craig Beaumont, Federation of Small Businesses’ (FSB) chief of external affairs said on the day before the rate rose to 25% from 19%.

Committee concerns

His concerns – and more – were echoed during various parliamentary committee hearings scrutinising the Budget. Andy King, OBR member of the Budget Responsibility Committee, told a House of Commons Treasury Committee that Hunt’s Budget was potentially “a recipe for debt ratcheting high”. OBR chair Richard Hughes added that the freeze in fuel duty – which had been in place since 2011 – was one of “a growing number of fiscal illusions… smoke-andmirrors, that the chancellor is using to get round his rules [and] meet his targets”.

Labour MP Angela Eagle called the frozen income tax thresholds

“a stealth tax… dragging six million people into higher tax rates” during another post-Budget Treasury Committee hearing. Conservative MP Anthony Browne urged the Treasury “to look at the interaction between pensions tax and inheritance tax,” asking why Hunt chose not to set up a specific NHS pension scheme to encourage doctors back into work. Hunt told the committee a doctor’sonly pension scheme “would have been more regressive… and would have cost potentially almost as much as removing the pensions lifetime allowance for everybody”.

Meanwhile, during the House of Lords’ Economic Affairs Committee hearing later in March, Conservative peer and chair Lord Bridges asked Hunt if there was any prospect of lowering taxes on families “who are very hard-pressed right now”, between now and the next general election. Hunt responded that his

CARD SHARP

With a new tax year begun, the IFA is pleased to provide members in the UK with our 2023 tax card, included as an insert with this issue.

more important priorities were stability and the competitiveness of the UK economy, “from which comes the growth which means we can afford to bring down tax”. This, Hunt said, was why he announced full capital expensing – a capital allowance measure equivalent to a £9bn corporation tax cut.

Squaring growth with taxes

But, Lord Londesborough noted the 25% corporation tax rate was set to raise £18bn “albeit softened by the £9bn” cost of full capital expensing. “If we look at overall taxes including employers’ National Insurance, we will now have one of the highest rates in the developed world, and the highest rate of overall taxation on business in the UK ever – that does not square with a plan for growth,” he said.

With most business plans having a minimum timespan of five years, and with corporation tax changing ten times in the last 13 years, Londesborough told Hunt “this constant chopping and changing” led to uncertainty, rather than stability, and didn’t help long-term business plans or growth.

“Low level of business investment have been partly responsible, not wholly responsible, for low levels of UK growth,” he added. “It’s difficult to see how we’ll get out of it.”

Goundar is

Santhie

a freelance journalist

Sadly, the Conservative party is about to plunge the UK’s small businesses into a week of woe: tax up, energy bills up, employment costs up, inflation up

ROUNDING UP THE BUDGET’S MAIN POINTS

It was RSM tax partner Chris Etherington who levelled the “bland ideas” criticism, noting that “flashy tax giveaways for individuals were not on the agenda” from chancellor of the Exchequer Jeremy Hunt. Crowe UK corporate tax partner Simon Crookston said the Spring Budget was also “bland from a business perspective”.

Corporate taxes

With the corporation tax rate rising to 25% in April, Hunt noted the current 19% rate failed to “incentivise investment as effectively as countries with higher headline rates”. He unveiled a new capital allowance policy over the next three years of full expensing for main rate assets and 50% first year allowance for special rate assets – a corporation tax cut worth an average of £9bn a year.

PwC head of tax policy Jon Richardson said businesses were “relieved the chancellor has acted to soften the blow” from the hits of rising corporation tax rates and ending

the super-deduction.

However, Martin McTague, Federation of Small Businesses (FSB) national chair, said small businesses felt “overlooked and undervalued”.

“The Budget spends £27bn extra on big business taxes, arguing small businesses are already catered for –this will leave a feeling of being left behind instead of considered equal partners in economic recovery,” McTague said.

Institute of Directors chief economist Kitty Ussher urged the “very welcome” capital expensing policy to be continued after three years. However, Ussher was “disappointed” the chancellor chose to target R&D tax credits to some parts of the economy, after Hunt announced additional tax relief for R&D-intensive SMEs. From 1 April 2023, SMEs with qualifying R&D expenditure of at least 40% of total expenditure will be able to claim a higher payable credit rate of 14.5%, while restrictions on overseas expenditure in R&D tax reliefs are delayed for a year to 1 April 2024.

The announcement of 12 new investment zones across the UK – “12 potential Canary

Wharfs,” Hunt said – was hailed as “a welcome move [which] puts the North of England squarely on the map from an investment perspective,” according to Marc Goldberg, CEO of commercial finance at Together.

Audio-visual tax relief reforms commence from 1 April 2024, with Hunt introducing an expenditure credit at 34% for film, high-end television and video games, and 39% for animation and children’s television.

The qualifying threshold for highend television stays at £1m. Current 45% and 50% reliefs for theatres, orchestras and museums will be extended for another two years.

Personal taxes (including pensions)

Hunt announced the pensions annual tax-free allowance would increase to £60,000 from £40,000 and abolished the lifetime allowance – reforms he said would stop more than 80% of NHS doctors from receiving a tax charge, incentivise experienced/ higher-paid NHS workers to stay in work longer, and the simplify pensions tax regime.

Stevie Heafford, HW Fisher tax partner, said they were “long overdue reforms” and called the chancellor’s updating of the taper mechanism for the annual allowance to £10,000 a year from £4,000 “a smart move”.

The tax gap

With HMRC seeking to recover some of the £48bn tax that remains unpaid, Dawn Register, BDO head of tax dispute resolution, said it was “pleasing to see more resources earmarked” for HMRC in today’s Budget. “Tax debt is currently running at around twice prepandemic levels and HMRC needs to have sufficient resources.”

Tax debt is currently running at around twice pre-pandemic levels

Welcome to new members & new fellows

We welcome new IFA members who joined in March/April and congratulate our new fellows

New members

Mr Danish Abbas AFA MIPA

Mrs Maria Abid AFA MIPA

Mr Daasebre Kofi Adu-Boahen AFA MIPA

Mr Eugene Agyemang-Yeboah AFA MIPA

Mr Bilal Ahmad IFA AIPA

Mr Waleed Ahmed AFA MIPA

Mr Mohamed Wasim Aravassery

Noordheen AFA MIPA

Mr Frank Asare AFA MIPA

Mr Aboobackar Sidique Ayikkare

Puthiya Purayil AFA MIPA

Miss Duvia Babu AFA MIPA

Mr Mirza Baig AFA MIPA

Ms Tracey Bianchi IFA AIPA

Mrs Radostina Darakchieva-Dukova

AFA MIPA

Mr Amir Farid AFA MIPA

Mr Zaeem Farooqi AFA MIPA

Mrs Syeda Hyderi Fatima AFA MIPA

Mr Muhammad Ghufran AFA MIPA

Mr Syed Muhammad Raza Hassan IFA AIPA

Mr Jayalath Arachchige Indika IFA AIPA

Mr Muhammad Kashif AFA MIPA

Mr Muhammad Saad Khalid AFA MIPA

Mr Ranken Kumwenda AFA MIPA

Mr Muhammad Latif IFA AIPA

Ms Anisa Llangozi AFA MIPA

Mr Ahmed Mahmood IFA AIPA

Mr AKM Masum AFA MIPA

Mrs Pauline Mcbride IFA AIPA

Mr Mir Moaddab AFA MIPA

Miss Zubeidatu Mohammed AFA MIPA

Mr Faizan Ahmed Munir Ahmed AFA MIPA

Mr Mithun Nair AFA MIPA

Mrs Stella Ntow AFA MIPA

Mr Adeshina Olanrewaju IFA AIPA

Mr Alexander Panayil AFA MIPA

Mr Tim Pinkney AFA MIPA

Mr Ranjith Raghunath AFA MIPA

Mr Fazul Rahman AFA MIPA

Mr Waleed Rajput IFA AIPA

Mr Muhammad Riaz AFA MIPA

Mr Muhammad Hassan Sajid AFA MIPA

Mr Muhammad Sarfaraz AFA MIPA

Mr Muhammad Nadeem Shad IFA AIPA

Mr Muhammad Ibrahim Shafiqi IFA AIPA

Mr Muhammad Muzammal Shaheen

Shaheen Ahmad AFA MIPA

Mr Chetan Kumar Shanthilal AFA MIPA

Mr Abdullah Siddiqui AFA MIPA

Mr Olugbenga Sobande AFA MIPA

Mr Rizwan Subair AFA MIPA

Mr Funminiyi Taiwo AFA MIPA

Mr Sammad Ul Hassan AFA MIPA

Mr Asad Ullah AFA MIPA

Mr Chika Unogu AFA MIPA

Mr Suleman Vadseryia AFA MIPA

Mr Shiju Varghese AFA MIPA

Ms Dinushika Thamali Yaggaha

Ruhunage IFA AIPA

Mr Frank Yeboah AFA MIPA

Mr Philip Yeboah AFA MIPA

Mr Puraveen Yogarasa IFA AIPA

Mr Shahzeb Younis AFA MIPA

New fellows

Mr Anoop Bahorun FFA FIPA

Mr Ajay Talwar FFA FIPA

Mr Terrance Whitney FFA FTA

It’s the news that no finance professional wants to hear. Despite all the long hours that you’ve put in, all the extra projects you’ve volunteered for and all the CPD points you’ve notched up, you’re not going to be promoted. Not this time.

Inevitably the big question that this development will have you asking is: Why? And if someone you work with has got the nod ahead of you, the next question you will probably be torturing yourself with is: Why them and not me?

As you mull over these painful questions, you will inevitably end up doing plenty of soul searching, either on your own or with your friends and family, and quite possibly down the pub.

It goes without saying, however, that you are very unlikely to come up with an accurate assessment of your own abilities – either good or bad – after a few glasses of your favourite beverage. What’s more, excessive rumination is unlikely to shed any light on why you didn’t manage to scale the next rung of the career ladder and only leave you feeling bitter and demoralised.

So what should you be doing instead?

1 Remember that you’re not alone. People are overlooked for promotion all the time and they still go on to achieve great things in their careers. Perhaps you’re not quite ready for the additional responsibility right now, but you might be ready in the future. So, think about the skills and competencies that you will need to take on a more senior role and set about acquiring them. With accountants benefiting from high

BOUNCING BACK

You’ve been overlooked for promotion. So what happens next? Sally Percy explains…

levels of career mobility at present, you are in a good position to ask your employer to invest in your development. Even if they didn’t offer – or couldn’t offer – the promotion you dearly desired, they will almost certainly want to retain your services.

2 Don’t see the lack of promotion as a missed opportunity. See it simply as an opportunity. Maybe the current career path you’re on isn’t quite right for you and you should be looking to do something different instead.

For my book, Reach the Top in Finance: The Ambitious Accountant’s Guide to Career Success, I interviewed Ronan Dunne, now chairman of Six Nations Rugby. Previously

he was executive vice president and CEO of Verizon Consumer Group and CFO, then CEO, of Telefónica UK. Dunne advises against making any assumptions about the direction your career should take.

“A lot of finance people presume that they will stay in their current role until they are promoted to the next level up,” he explains. “So they have a narrow base of expertise, and their only option for promotion is landing their boss’s job.” Instead he suggests they should get “a broad base of knowledge and experience that creates opportunities for them to be promoted”.

3 Ask for feedback (even if you secretly don’t want to hear the answer). You are more likely to get honest feedback if you ask your manager to provide constructive advice on what you can do to improve your chances of gaining that crucial promotion in the future, rather than focus on why you lost out on this occasion. If you were aiming for a partnership, sound out several partners in

the partnership to find out why you weren’t seen as partner material. What can you do to build the experience they think you lack?

4 Don’t hand in your notice. Well, not straight away at least. If you have a skills gap, consider whether you would be more likely to plug that gap by staying in your current organisation for a while longer or whether you really do need to leave in order to develop yourself further. In light of the current costof-living crisis and high demand for finance professionals, you might be tempted to jump ship as soon as possible for the highest-paying wage you can find, but that might not be the best move for your career in the long term. So, if you do decide to leave, don’t take the first role you see advertised. Instead, look around, talk to recruiters about the different opportunities that exist, and make sure you pick a job that will suit your values while helping you to further your ambitions.

There are very few people who can honestly say that they haven’t suffered career disappointments from time to time. So don’t let being passed over for promotion hold you back.

As Rachel Baillache, a former global head of people, performance and culture at KPMG International, says in my book: “I have seen senior managers who were passed over for partner once but were later promoted because they got good mentoring and support and access to new opportunities, which gave them a fresh perspective.”

Sally Percy is a finance journalist and author of Reach the Top in Finance: The Ambitious Accountant’s Guide to Career Success (Bloomsbury)

You are very unlikely to come up with an accurate assessment of your own abilities –either good or bad – after a few glasses of your favourite beverage

The process of identifying, evaluating, and prioritising risks that could have a negative influence on an organisation’s goals or operations, and creating methods to manage those risks, is known as risk management. As the process assists in identifying potential risks and uncertainties that could have an adverse impact on a business’s financial health, it is a crucial task that heavily involves the finance function and, by definition, accountants. By adopting what I call the “accountants’ risk management cycle”, the process should become more robust:

Identify Accountants should identify potential risks and uncertainties that may have an influence on the financial stability of the business. These hazards can be internal or external and range from fraud and mistakes to shifts in the market or the regulation.

Evaluate Following the identification of the risks, accountants should evaluate the possibility and consequences of each risk and rank them accordingly.

Strategise Based on the risk assessment, accountants should create risk management strategies to minimise or eliminate the hazards that have been identified. This can entail putting internal controls in place, creating backup plans, contingencies or obtaining insurance.

Establish Accountants should put controls in place to properly manage the risks that have been identified. Finance professionals should ensure that the organisation has suitable risk management

Run the risk

accurate, succinct, and timely, giving interested parties the knowledge they need to make better decisions.

Educate You should instruct staff members on risk management techniques and the significance of internal controls. Organisations can foster a culture of risk management and assist in preventing possible problems before they materialise by training their workforce.

policies and procedures in place and constantly implement them.

Monitor To ensure that the designated controls are effective and that any additional risks are quickly discovered, accountants should routinely monitor the identified risks. With organisations relying heavily on technology, cybersecurity has emerged as a danger. Collaborate with IT experts to safeguard private financial data and halt data breaches.

Report The finance function should inform senior management and other stakeholders of the risks that have been identified as well as the efficacy of the controls that have been put in place. This reporting should be

CPD Accountants should keep up to date on regulatory changes that may influence the financial stability of an organisation. You will be in a position (or directly responsible) to verify that the company is adhering to rules and that the necessary procedures are in place to handle any associated risks by remaining informed.

In conclusion, accountants play a major role in efficiently recognising, evaluating, and managing risks consequently RM is a critical duty for accountants; according to a quote from Deloitte: “If you treat risk management as a part-time job, you might soon find yourself looking for one.”

Faisal Sheikh is senior academic and programme leader, UG accounting & finance, at Salford Business School

Faisal Sheikh breaks down his process for assessing potential risks

Describe yourself to us

I am originally from the US and have a background in law. After law school I worked at various ‘public defender’ offices before switching my career (slightly) to anti-money laundering (AML) and compliance. I recently moved to London from the Bay Area in California, and I love it here.

What is your role at the IFA?

I am part of the compliance team ensuring that members are adhering to the bye-laws and regulations, and handling any compliance queries they may have. I also help with answering the phones, so I get to know our members, which I enjoy.

What is the most interesting part of your job?

I enjoy investigating compliance breaches and learning new aspects of AML. I’ve learned a lot from the AML Alert emails we send out each month.

Most embarrassing/funny moment you’ve faced?

My most embarrassing moment is when I was a cheerleader in high school. I was a ‘flyer’ which involved being lifted into the air for stunts. We performed during the half-time of a football game and my stunt group dropped me in front of hundreds of people. Luckily I wasn’t injured, but I was nervous to fly after that!

What is the most memorable/ rewarding moment in your career?

One of my most rewarding moments in my career was when I

OUR STORY

IFA compliance officer

Erin Campbell on moving to the UK from California, and the perils of cheerleading.

worked for a public defender’s office and was able to convince the judge to sentence my client to probation instead of prison time. This allowed my client to carry on with the personal growth he had made in being a contributing member of society.

What is your favourite food?

My absolute favourite food is Tex-Mex. The food is cheesy and delicious. If you are ever at a Tex-Mex restaurant in America, please order the ‘queso’. It’s been a challenge finding Tex-Mex since moving here. Luckily my mum sends food and spices from the US so I can make my own.

Who is your role model, in life or in your career and why?

My dad is my role model. He gave me the space to try new things and fail, which is why I felt comfortable leaving the legal sector. Growing up he told me: “You never know until you try.” Without this advice I never would have gone into AML and compliance.

How do you spend time away from your role?

I enjoy walking my dog (I have a German Shepherd and he needs a lot of walks), Pilates, reading murder mystery novels, and exploring London with my husband. I am currently reading The Family Upstairs by Lisa Jewell.

Why is the future bright with the IFA?

A few weeks ago I spoke with a member, and she discussed how beneficial the IFA has been for her career and how it has opened a lot of doors for her. I think this reaffirms how we are constantly trying to improve the member’s experience and add value. We have recently invested in the IT system for both the member and firm returns, to try to make members’ lives easier and save them time.

ERIN CAMPBELL

ONLINE

IFA 60-MINUTE WEBINARS

60 minutes with IFA CEO

John Edwards and technical manager, Matt Barton

24 May | 12 - 1pm (UK)

CPD hours per webinar: 1

Price: Free

CHARITIES SERIES

Build a better understanding of charity accounting, tax matters specific to charities and independent examinations with Alison Cook. Independent examinations

25 May | 9.30am - 12pm

Price

IFA members - £70

Non-members - £90

CPD hours: 2.5

Bundle price (three webinars: charity accounting, tax matters, independent examinations)

IFA members: £189

Non-members: £243

FINANCIAL REPORTING QUARTERLY UPDATE

Preparing financial statements and annual statutory accounts is a constant part of an accountant’s role – especially those working for a small business or advising them. Matthew Shaw updates the changes in financial reporting requirements, and any small changes in the accounting treatment of different areas.

Quarter 2

21 June | 10am - 12pm

Quarter 3

20 September | 10am - 12pm

Quarter 4

6 December | 10am - 12pm

CPD hours

Per quarter: 2

Bundle: 8

Price per quarter

IFA members - £55

WEBINARS AND MEETINGS

Non-members - £79

Price per bundle (four webinars)

IFA members - £198

Non-members - £284

IFA TAX SERIES

Focusing on tax topics relevant to small business, our quarterly series features speakers who are experts within the industry. The webinars run across three weeks and last two hours each.

Quarter 2

15, 22, 29 June

Quarter 3

14, 21, 28 September

Quarter 4

16, 23, 30 November

CPD hours

Per quarterly series: 6

Bundle: 24

Price per quarterly series

IFA members - £109

Non-members - £130

Price per bundle (12 webinars)

IFA members - £390

Non-members - £468

Maintaining your continuing professional development couldn’t be easier, wherever you are.

RISK MANAGEMENT

Find out how accountants can employ risk management methodology and analysis to benefit their business and/or clients, with Matt Barton.

1 June 2023 | 9.30am - 11.30am

CPD hours: 2

Price

IFA members - £55

Non-members - £79

Management accounting tools and techniques

Matt Barton explores a range of tools and techniques that management accountants employ to add value to the businesses they work in and support, and explore how financial accountants and accountants in practice can employ some or all of the tools to benefit their business and/or clients.

21 June 2023 | 1.30pm - 4.30pm

CPD hours: 3

Price

IFA members - £55

Non-members - £79

AML matters

Join the IFA for a programme of practically-focused webinars that will support you and help build your understanding of antimoney laundering requirements as a member and accounting professional.

The IFA AML Matters webinar series will be led by Tim Pinkney, the IFA’s Head of Practice Standards and two members of the AML Review team, Karolina Kowalczyk and David Erichsen. How to create policies and procedures

24 May 2023 | 9.30am - 12pm

How to conduct a risk assessment for your firm and your clients

24 June 2023 | 9.30am - 12pm

CPD hours: 2.5

Price

IFA members - £70

Non-members - £90

Price per bundle (three webinars)

IFA members - £189

Non-members - £243

FACE TO FACE

Regional networking meetings

Midlands | 15 June | 5pm – 7:30pm

Mattioli Woods office, Conference room, Ground floor Business Lounge, 1 New Walk Place, Leicester, LE1 6RU

CPD hours: 2

Meetings are free of charge and open to students and non-members.

IFA conferences

Our flagship event covers a broad range of relevant topics carefully chosen to meet the needs of those working in micro, and small to medium-sized enterprises and accountancy practices.

London conference | 7 June | Royal College of Physicians, London Midlands conference | 28 June | National Conference Centre, Solihull

CPD hours per conference: 6

Price per conference

Members - £115

Non-members - £145

Visit ifa.org.uk/cpd for more information about events and to register.

SCOTLAND REGION IN FOCUS: SCOTLAND

All change in Scotland

After what had been a long process, the UK government set out which areas would be classed as freeports – with Cromarty Firth and Forth Green (Leith, pictured below) chosen in Scotland.

Freeports are areas within the UK’s borders where different regulations apply – namely tax, customs and investment incentives for operations developed within a freeport’s boundaries. Originally, the Scottish government had set out to create ‘green ports’, a scheme that was to introduce investment benefits for the creation of sustainable and ‘fair work’ ports. Eventually, the two schemes merged in Scotland and are now billed as green freeports.

My firm merged with another larger practice on 1 September last year – we now have offices in Edinburgh, Berwick-upon-Tweed and Kelso with 35 staff. I’m still very much part of the business but hoping to retire in a couple of years.

I spent a long time finding a firm to merge with, and it’s going well. They’ve taken some of the process and compliance work away to allow me to develop the business and undertake advisory.

My previous clients now have access to a broader service provision and more expertise.

I’m also looking to devote more time to Six Steps to SuXcess – the course is online and aimed at helping businesses build a strategic action plan. You can find out more at duncanwalkerpartnership. com or email me at Duncan@ duncanwalker partnership. com.

What’s the current economic and business environment in Scotland?

We have a new first minister but it’s yet to be seen what impact

he will have. The economy is suffering as people face up to the challenges of the cost of living crisis through higher energy prices, higher interest rates and inflation. One good thing is the freeport status for two docks, which will create jobs.

How does the IFA work with business, people and the local community?

The best thing is being back to face-to-face meetings with members, alongside the online stuff – it’s a better balance.

It’s great to meet people and chat – that’s certainly building up again. I think that the IFA is getting recognised more and more nationally and internationally than ever before — credit to the staff at the centre and members for promoting the IFA.

We’re still building up online content, because people can look at things when it suits them – which means face-to-face leans more heavily on networking.

We’ve definitely more members engaged than we’ve ever had, which is in part due to the quality of the CPD offerings and events.

A £300m investment by US firm Quantum will help to regenerate and redevelop the Ardersier Port on the Moray Firth. The fund will help reinvent the area as one focused on offshore wind, while decommissioning oil and gas infrastructure, reports The Scotsman. It is understood that several thousand new jobs could be created by the project. More than £7m of funding has been secured by Aberdeen-based battery technology provider Verlume, with £6.6m coming from the Scottish National Investment Bank, reports The Herald. Richard Knox, chief executive of Verlume, said the move would “provide the funds necessary to execute significantly larger projects”.

Some 1,300 offshore oil and gas workers held a 48-hour strike at the end of April, a move described by union Unite as the “biggest stoppage in a generation”. Five operators are involved: Bilfinger UK; Petrofac Facilities Management; Stork Technical Service; and Sparrows Offshore Services; but strike action at Worley Services was suspended to allow for further talks, reported the BBC.

Scottish ambassador Duncan Walker says that, despite tough times, members are making the most of IFA networking and CPD events.

Image: Alamy

What has changed in your life and career since we last spoke in 2021?

Well, I’ve changed my way of life –taking more time for leisure to cool off, taking things a little bit more slowly; and more family time. I’ve got a new job supporting SMEs with internal audit.

What has happened in that time with your work with the IFA?

We’ve expanded quickly - more members. I think we’ve also grown in relevance and recognition. We’re trying to build partnerships and looking for education partners for training in Ghana.

Since we last spoke, what has happened in Ghana?

We recovered faster than expected from Covid, but we’re still battling forex issues and inflation; otherwise we’re doing quite well.

Have your thoughts on doing business in Ghana changed?

If so, how and why?

It’s still a great opportunity to do business over here. There are more avenues and incentives for foreign enterprises to come here

5.4% GDP in 2021 $1.1bn Trade surplus in 2021

YOUR WORLD

IFA representative in Ghana Christian Ohene talks us through life in the West African country.

and do business, certainly around tax rebates and tax ‘holidays’ for companies to take advantage of.

We’re seeing the ‘one factory, one district’ government support proving popular, through the Ministry of Trade and Ghana Investment Promotion Council. We’re building the biggest auto hub in West Africa, with Volkswagen and Toyota opening assembly plants.

What events have you run in the last year on behalf of the IFA?

Last December we had our first face-to-face CPD event, focused on bringing members to meet and greet, but also to promote the presence of the IFA in Ghana – and educate on the role of SME accountants in Ghana. Attendance was great, with more than 120 attendees. And then we’ve had a series of online CPD webinars, and hope to have our first SME Conference in Ghana.

What is the

future of the IFA in Ghana, and why?

It’s very bright! The government is promoting SME support. Now we have to continue to identify the relevance of our members in this sector and educate them.

Ghana has taken a big step to manage it $58bn (£46.5bn) of debt, as it called on creditors to enable a restructuring that would unlock a $3bn bailout from the International Monetary Fund (IMF). Debt

3.2% Estimated GDP growth in 2022

32.8m Population in 2021

52.8% Inflation in February 2023

Amount Ghana is seeking in a bailout from the IMF

servicing is predicted to have taken up to 47% of revenues in 2022.

With $5.5bn owed to foreign governments and state banks, Ghana’s finance minister Ken Ofori-Atta said he “hoped”

creditors would allow enough debt relief for Ghana to be able to access the IMF package.

FACTS AND STATS $3bn

However, as the FT notes, the IMF’s board will also be required to agree the bailout, which is reportedly a new

hurdle for Ghana – and other countries - to surmount.

Despite Ghana continuing to grow its GDP, it has faced rampant inflation, with energy costs and commodity prices being hiked.

GHANA

What do I need to know about new flexible working rules?

Flexible working is becoming increasingly common as many businesses and employees adopt working practices which are outside of the traditional ‘nine-to-five’.

Under British government plans currently passing through parliament, employees will have a greater say over when, where and how they work. The rules aim to ensure more people can access flexible working and support employees who balance commitments such as caring for children or older people, with working.

For employers, it means thinking carefully about how roles can be fulfilled within their organisations and whether they can accommodate flexible working within their team and, if so, what form it could take.

Flexible working isn’t just about working from home. It covers various situations, such as job sharing, flexitime and working compressed, annualised or staggered hours.

While employees have the legal right to request flexible working, they do not have a right to be given it. Whether the application is accepted will be dependent on the business

needs at the time of the request. However, employers do need to hold open and constructive conversations with employees about flexible working options and try to accommodate requests and find solutions where possible.

The Employee Relations (Flexible Working) Bill will enable employees to make two flexible working requests within 12 months rather than one; reduce the deadline for employers to respond to flexible working requests from within three months to two months; require employees to consult with employees before rejecting an application for flexible working; and remove the requirement for employees to explain the effect.

‘Day one’ requests

The legislation also includes measures to give workers the right to request flexible working from the first day of their employment. Currently, new employees have to wait 26 weeks before they can request a change to

their working hours, times or location but the new rules will allow requests from day one.

It means businesses could potentially be faced with a scenario where they advertise and appoint a full-time, office-based role only to receive a request for flexible working on the first day of employment.

This is a big change for employers which could potentially create difficult situations for businesses to manage.

Businesses should make sure they are aware of the legislation before it comes in.

By embedding flexible working within the culture of their business, they are widening the pool of applicants during the recruitment process by reaching those who will benefit from it, as well as creating a working environment for their wider team which supports higher productivity and staff retention.

Joanne Stronach is head of employment law and HR at Cartmell Shepherd Solicitors

Flexible working isn’t just about working from home. It covers a variety of situations

BUSINESS DIRECTORY

Tax relief

Catax

Catax are experts in specialist areas of tax relief. They have been helping clients secure tax relief for 10 years and have identified over £204m in tax benefit for their clients to date.

The average client benefit for capital allowances is £47k and the average for research & development and the Patent Box is £51k. We break down the claims process for you, so all your clients need to do is provide us with some details, and we’ll take care of the rest. There

Online accounting software

IFA Books+

IFA Books+ is affordable online accounting for small businesses. It’s simple to use with an intuitive interface, making it easy for you and your clients to manage their finances. Here are just a few of its benefits: Affordable pricing. Starts from only £5/month (inc VAT), add or remove features from £2/month (inc VAT).

are no complicated forms to fill out, no legal language to unpick and no tax law to get your head around.

Headquartered in Manchester, with offices in London, Edinburgh, Glasgow and the Channel Islands, Catax work with businesses across the UK. They have a team of more than 100 in-house experts which includes surveyors, tax technicians, accountants, and report writers. They are also ISO 9001 accredited.

It’s all online and MTD ready.

IPA Books+ Cloud Advisor Program Training, tools, revenue & resources to grow your firm and support your clients –join for free!

IFA practising certificate members receive 5 FREE IFA Books+ subscriptions.

Self-invested personal pensions

Mattioli Woods

With offices UK wide, we administer over 10,000 clients and hold £8.3 billion of assets.

We can proudly claim to be a leader in the field of self-invested personal pensions (SIPP) and small self-administered schemes (SSAS), and such arrangements are often central to our clients’ pension strategy.

We take full account of the wider opportunities, including ISAs and other forms

of personal investment; taxation and trust planning; and work with our clients to develop a balanced financial plan.

Our Financial Reporting bundle is available now

£ 284 £ 316

•Earn 8 CPD hours

•Expert-led webinars

•Keep recordings of all 4 webinars

I am happy to say that the IFA’s quarterly financial reporting update webinars are value for money. I especially appreciate how relevant and straight to the point the sessions are and am reassured that any questions I may have will be answered. I would recommend these sessions to all members and anyone else interested in attending.

IFA member on Q4 Financial reporting update 2022