Financial Monitor (June 2006)
Quote of the month
“The best sales strategy has the shape of an ear”.
Don’t accept late payment as normal
Maintaining cash flow is probably the most important business need but all too often it is overlooked, which can lead to business failure. In order to protect themselves all businesses should establish the following rules:
- Send written confirmation of credit terms to customers before they start trading with them. This will avoid disputes later.
- Find out about the customer’s procedures. Who signs off invoices? What’s their credit limit? What format do they want the invoices in?
- Don’t try and chase money in a remote fashion by sending letters. Speak to customers on the telephone and with large organisations get friendly with somebody in the accounts department.
- Set tolerance levels and stick to them. Isolated instances of late payment should not cause concern, but after three or four instances in a row the account should be reviewed to consider whether credit should continue to be given.
- Above all, chase payments firmly, consistently and fairly.
Licensing of houses in multiple occupation
The mandatory licensing of houses in multiple occupation (HMOs) is coming into force and landlords need to apply for a licence from their Local Authority. Mandatory licensing applies to higher risk properties being those comprising three or more storeys which are occupied by five or more occupants and occupied by persons living in two or more households. In addition local authorities can apply discretionary licensing to other HMOs.
The licences last for up to five years and for properties with five or six people occupying in Sheffield the fee is around £600. Application forms can be obtained from the Sheffield City Council website at: www.sheffield.gov.uk
It will be an offence to operate a licensable HMO without a licence and conviction carries a maximum fine of £20,000.
Before granting a licence the Local Authority must be satisfied:
- That the house is reasonably suitable for occupation by not more than the maximum number of households or persons or that it can be made so suitable by the imposition of conditions (applicable to mandatory licensing only).
- That the proposed licence holder is a fit and proper person to be the licence holder, and the most appropriate person to be the licence holder.
- That the proposed manager of the house is either the person having control of the house, or a person who is an agent or employee of the person having control of the house.
- That the proposed manager of the house is a fit and proper person to be the manager of the house; and
- That the proposed management arrangements for the house are otherwise satisfactory.
In addition, from October 2006 all landlords who take deposits will have to join an authorised Tenancy Deposit Scheme.
Business rate relief for small firms
In a recent survey it has been established that more than half of eligible businesses are failing to claim Small Business Rate relief. The relief came into effect in April 2005 and allows qualifying businesses with rateable values of less than £5,000 to claim 50% relief. A form of tapered relief applies to businesses with rateable values between £5,000 and £10,000.
Eligible businesses must submit an application to their Local Authority every year and within six months of the end of the financial year. The deadline for 2005/06 claims is therefore 30 September 2006.
10 key points to the new Age Discrimination law
- The all important date is 1 October 2006.
- The regulations will cover employment and vocational training which includes recruitment, promotion, development, termination, pay and benefits.
- The law will cover people of all ages.
- All employers will be subject to the new rules.
Upper age limits for unfair dismissal and redundancy will be removed.
- A national default retirement age of 65 will be introduced making compulsory retirement below 65 unlawful.
- All employees will have the “right to request” to work beyond the default age of 65 or any other higher age set by the company.
- All employers will have an ongoing duty to consider all requests from employees to work beyond 65.
- Occupational pensions are covered by the regulations as well as employer contributions to personal pensions.
Benefits based upon length of service will also be affected.
Tax payment date – second instalment due 2005/06
The second payment of 2005/06 income tax is due on 31 July 2006. If you do not receive a payslip by 19 July or you are not sure what amount is due, please contact our tax department.
If you believe your tax liability for 2005/06 is likely to be lower than that for 2004/05 please let us know as we may be able to reduce the amount payable at the end of July.
Improve the clarity of your sales letters
Easy to read text increases the response to your sales letters. Here are some tips.
- Be brief. Readers want to find out quickly how they will benefit. Keep your letter to one single A4 sheet with no more than 230 words split into around 20 sentences.
- Limit the number of syllables - multi-syllable words make text harder to read. Most of your letter should have one syllable words with about 25% in two and three syllable words.
- Use easy words. Avoid jargon and difficult terms. In Word you only need to press shift and F7 to find simple alternatives to difficult words.
ISA investments
We are grateful to a number of our Financial Adviser contacts who pointed out an error in our May 2006 edition of Financial Monitor. The maximum investment in a cash ISA is £3,000 but this can be topped up with £4,000 into an equity ISA not £3,000 as stated.
Misleading pricing - help for traders
Under consumer protection legislation it is an offence for traders to give consumers misleading price indications, whether they are supplying goods or services and no matter how the pricing details are given (eg. in TV/press advertising, on websites, in catalogues or at the point of sale). The DTI has released a code of practice to help traders to comply with their legal obligations. It is available to download from the DTI website at: www.dti.gov.uk/publications/index.html
* Use the search facility quoting URN 05/1573.
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