Sage has launched Sage One Payroll, the first addition to its family of software as a service tools, offering small business owners a simple, secure, low cost way to manage their payroll. Designed to help entrepreneurs who have no specialist payroll knowledge or IT skills to effectively and efficiently run their payroll, the software automatically takes care of all legislative updates and calculates statutory payments and deductions, giving business owners confidence that their payroll is accurate and peace of mind that that they are always compliant.

Sage One Payroll has been created to help firms with 15 or less employees to pay staff quickly and accurately. It contains a number of features that save entrepreneurs valuable time, including:

• Automatic recording and updating of P11 records;
• Retrospective correction facility that means if a mistake has been made with pay earlier in the year it is easy to correct and ensures employees are compensated in the current pay run;
• Ability to export data for payroll year-end reports directly to HMRC website, eliminating the need to re-enter data.

Because the software integrates with Sage One Accounts, it helps provide a real time perspective on a business’ cash flow and can automatically make the information available to your accountant.

Chris Stonehouse, head of Sage Online, commented: “Sage has a fantastic pedigree within the payroll software space and this expertise has helped shape and inform our first SaaS payroll product. We also spent a lot of time consulting with small businesses and their insights fed into every element from the design to the language used, enabling us to create what we believe is one of the industry’s most user-friendly pieces of software for processing the pay run.”

Costing £5 per month for up to 5 employees, £10 per month for up to 10 employees and £15 per month for up to 15 employees, Sage One Payroll is one of the best value for money payroll software packages available. Until July 2012 it is available to businesses for free.

 

This month’s questions were answered by experts who are part of the Aspen Waite Business Network, which is headed by Paul Waite.

 

 

 

 

 

Question:

We are a relatively new business, having traded for about 18 months. Our cashflow is good, and our income is rising. We want to look at expanding the business at the beginning of 2012, but we’re concerned about getting finance – we’ve always paid our bills on time and have a good relationship with our bank, but we’ve been warned that our credit rating isn’t good enough because we’re not established enough. Is there anything we can do to improve our standing?

Answer:

Most importantly, we can’t create a good business history where there hasn’t been a history at all. All that can be done is to minimise the impact of any other adverse factors. However, you do have some ways to improve your situation:

• Keep your bank manager in the picture, and let him have a properly prepared business plan showing performance with and without the proposed expansion, so that he is prepared for any formal request for finance, and can let you know his thoughts along the way. Avoid him getting any unpleasant surprises. Adopt a realistic approach to finance i.e make the bank managers job as easy as possible to support you.

• Build up funds so that you can put up a chunk of any expansion costs yourselves.

• Keep your credit record as clean as possible by paying on time, resolving disagreements before any possibility of Court action. Deal with any perceived risks from the business plan.

• Consider alternative sources of funding – HP or leasing of assets (even existing assets), invoice factoring, equity in own home. Be prepared to consider equity involvement from family and friends, joint ventures with customers or suppliers, business angels, etc.

• If it is clear that your bank will be unable to help when the time comes, keep your accountant in the picture and ask him for an introduction to someone that he thinks may be able to help. Be well prepared, well organized and well advised in advance of making any formal application.

• If at all possible when setting up the company create a decent amount of fixed share capital even £10k would help. If loaning money to the company consider subordinating the debt.

• Prepare full accounts with good disclosures and file the accounts quickly.

Question:

Following an extremely expensive problem with a difficult employee, who has now left the company, we’re concerned that our business can’t afford another HR nightmare. We’re a business of five people, we don’t have a personnel manager or anyone with any expertise in employment law. Can you give us some pointers on how to avoid staff issues in the future?

Answer:

The first thing is to have in place a written employment contract and a few basic
policies (disciplinary and grievance, family friendly policies) to go into a staff handbook. Employees have a legal right to written particulars but these agreements can also help protect your business. For example, it can be useful to have a contractual clause that allows you to put an employee on garden leave in the event of a dispute. It can also be beneficial for you to be able to make a payment in lieu of notice. Likewise, a written contract can include restrictions on what departing employees do next. This can be particularly important for a small business if the departing employee has a sales role or is close to your clients. Having in place post termination restrictions, in the employment contract, can deter and prevent a departing employee from not only leaving your business but taking your clients with them!

Secondly, make use of available free sources of advice. The ACAS website is a goldmine of information. It is designed for people like yourself who may not have knowledge in employment law. On their website are comprehensive guides on how to, for example, manage a situation if one of your staff is pregnant. Download and print their guides out. They are written in plain English and should be straightforward to follow. Of course, there may still be occasions when you need legal advice, but if you have a basic understanding first, then you will be asking specific questions which will save you time and money.

Finally, remember that your staff are your biggest asset. Work to engender an open, supportive culture where people feel they can voice any concerns they may have in an informal setting. Don’t be so busy running your business that you’re not available for those you rely on! Consult with your staff regularly and involve them as much as you can in decision making. For example, develop with them a mission statement for your business. This could help give them a sense that they have a say in what happens and will engender loyalty. As far as you can, confer on your staff autonomy over their work. This has been rated as more important to job satisfaction than pay. A lot of employment law is about treating people fairly. So if you treat people fairly, in an honest and consistent manner, you are likely to stay on the right side of employment law.

Question:

We’re currently trading only with UK clients, but we’ve identified a couple of markets in Eastern Europe (particularly Ukraine and Moldova, to start with). We don’t have any experience in international business – we’re concerned about not getting paid, about product liability – we manufacture materials used in the construction industry and we’re worried that something we know nothing about will come back to haunt us. Is there any advice you can give us, or are there any organisations that can help us?

Answer:

Trading overseas is an obvious and often necessary way to expand sales for any business, but many companies fail to understand that it can be very different from trading at home and that each market has its own rules and culture. As with anything, many of the potential problems are very obvious to somebody that knows the market but all too easy to fall into if you do not know they are there.

As a starting point, the British Embassy commercial section and the chambers of commerce in the target country can be good sources of information. Often there are Chambers of Commerce linking the UK to other markets as well as the local chambers in the UK and your country of interest. But do not forget to ask either your own bank or another international bank with representation in country.

The Embassy and the Chambers of Commerce should be able to help answer basic questions regarding trading terms, insurance and other such questions and can also point you in the right direction of other, more specialist help, but in reality the quality of advice can vary greatly from one place to another. Some can be very good indeed.

If the individual sales are larger in value, then using L/Cs and other forms of trade finance can greatly reduce risk but it is often advisable (although not always commercially possible) to ask for payment with order at least for the first few sales to any particular client until a track record has been established. Again, ask your bank for details of this. And do not forget the potential of currency risk – what currency will you sell in and how exposed will you be to exchange rate fluctuations? It is probable that for Ukraine and Moldova you will settle on pricing in Euros but of course this is negotiable on a client by client basis. With countries like Ukraine and Moldova (and the whole of the CIS region) the business culture is very different and it is crucial that you have a very clear understanding of what terms have been agreed. Double check that both sides mean the same thing. Communication can also be more difficult as it is the culture often to only reply when it is possible to say ‘yes’ rather than responding quickly or by a given date as is the norm in the UK. It can often be the best way forward to work with a local partner that can act as your sales agent in the new country.

In addiction to knowing the local market and other potential buyers of your products this can help with any language problems as well as helping to smooth out the communication and other cultural differences. The right agent would also be able to advise you about product liability and other issues although these emerging markets are not as litigious as the UK. It is of course crucial to work with the right agent. Construction is set to boom in all of the markets in the region as they continue to emerge and play catch-up with the west so if you get it right in these markets it can be very good. Just do not think that it will be the same as trading with the UK or indeed other more developed markets.

Very few people expect to be paid by cash or cheque nowadays. But which is the best card for your business?

The gradual phasing out of cheques across the global economy and the desire amongst businesses to keep a closer eye on spending and record keeping should mean that payment cards – across all products – should be an ideal way of allowing key staff the ability to fund their expenses as they go about their business.

As a low cost and easily managed service, they are easily scale-able and can be tailored to each individual business’ requirements.The small business sector has often been amongst the early adopters of new technologies and financial service concepts, where the costs are acceptable and the benefits clearly identifiable. The development of the early telephone banking schemes targeted at the business sector and the adoption of first generation online delivery channels are two such examples.

And now it’s cards. Whether you want just an easy way to pay, or the option of a few weeks free credit, or even the opportunity to pay off larger purchases over a flexible period, payment cards may be for you. Below, we list the different types of card available, but essentially they fall into three different categories.

The first is a debit card. It works in the same way as your personal debit card – every time you use it, the money is automatically debited from the account to which it is linked. If you don’t have any money in the account, you may get the transaction refused. There’s no credit, no time to pay.

The second is the credit card, again the same as a personal credit card. Any transactions will be put on to a balance and you’ll have a set period in which to pay off the balance before you incur any interest fees. If you don’t pay off the full balance by the set date, interest rates will be charged. While credit card interest rates are usually higher than most other borrowing costs, they are also much more flexible, allowing you to pay off as much or as little as you like – provided you make the monthly minimum payment – according to your cashflow.

The third is a charge card, which are available although less common for personal accounts. Like a credit card, the transactions are moved in to a single account, for which you will be billed, usually each month. This bill needs to be paid off in full; it is not a form of credit and if you don’t pay it off in full, you’ll be stung by some hefty fees, as well as possibly seeing your company’s credit record damaged.

The business card

‘Business card’ is a generic term used by the payment system organisations,and the principal function of these products is to provide a service to the SME business sector. A range of added-value features and benefits are available through either the payment system organisation or through the card issuer. These might include extended warranty, legal referral services, supplier discounts, etc. MasterCard’s Europe Business Exclusives and Visa’s Savings for Business programmes are examples of how the payment system organisations have been able to use their power to negotiate a wide range of discounts for cardholders at a variety of merchants. In common with the other commercial plastics, this type of product also offers the potential to simplify the associated administrative processes.

The online debit card

This product is designed to work solely with an online environment where all transactions are subject to authorisation. Facilities such as these might be made available to employees to provide them with access to cash from the business account via an ATM or to allow them to make purchases from selected retailers. The product is particularly suitable for new businesses or those new to credit, whether they hold a bank account or not. The card can also be issued safely to businesses that have a sub-prime or badly impaired credit status. The deferred debit or charge card Whilst the statement arrangements may vary, this product allows the payments made with the card to accumulate between billings. The total of the amounts charged to the card is then submitted for payment or electronically debited to a predetermined account.

The travel and entertainment card

These products are now available from all of the main marques and can offer many important benefits to small businesses, including:

• cashflow management;
• improved analysis, budgeting and control;
• the inclusion of the potential to identify cost savings through negotiation;
• the ability to police compliance with travel policy;
• improved management reporting of travel expenditure.

The level of management information provided by T&E schemes has been an historic strength of this type of programme. Additional benefits typically include reward schemes, travel, car hire and baggage insurance with a level of emergency support services.

The revolving credit card

This card directly emulates the credit lines available to personal sector clients, and might typically carry a similar tariff and other product features. It carries a full credit risk, determined by the line made available to the cardholder, and pre-qualification will be necessary before such a product can be issued. This card may be issued in the name of the business for many different purposes. It may be carried by employees in order to ensure that they can draw on an account for which the company is responsible when they need to make disbursements or acquire cash.

The executive business card

Such products are issued as either debit or credit cards according to the strategy of the issuer and their availability through the respective payment system organisation. They enjoy more distinctive designs and appropriately higher product specifications. They may be issued as Gold, Platinum or Black, and may enjoy the advantages of the highest products within the provider, eg, Infinite, World Signia. The products are targeted at customers of the highest standing, and carry a portfolio of mandatory benefits specified by the marque, such as concierge service, in addition to optional extras added by the issuer.

Fuel cards

Those businesses that spend a lot of time on the road are more than well aware of the growing fuel costs they are having to suffer. And if you have staff who regularly need to fill up at the petrol station, they may not be so keen to simply buy the fuel themselves and then claim it back. These card services are often normally associated with larger organisations, but they also have a valuable role to play for the small business.

The lodged card

If your business regularly uses a third party to source products and services for you – for example a travel agent to arrange regular business travel – it may be worthwhile to provide that third party with its own credit card in your name. These are known as lodged cards – it’s your card and your responsibility to pay the balance, but you won’t ever use it to make any payments. While you need to trust the organisation you log the card with, this card can prove a very useful way of keeping track of certain types of expenditure, while giving you the convenience of knowing that the products and services you need can be easily sourced. Unless you’re expecting to have a huge balance to clear every month, youcan just use a normal credit card, but there are some specialist lodged cards products that are designed specifically for the purpose.

The Federation of Small Businesses (FSB) and All Party Parliamentary Small Business Group (APPSBG) are launching an inquiry into entrepreneurship today, as new figures show that almost a third of small businesses at start-up stage have difficulty finding suitably skilled staff, ahead of employment statistics next week which are set to show another rise in unemployment.

New statistics into the barriers small businesses face when starting-up show that 27 per cent of small businesses found it difficult to find suitably skilled staff. With unemployment at 2.62 million and youth unemployment more than a million and set to rise next week, this is a worrying figure.

Respondents to the FSB ‘Voice of Small Business’ Survey Panel also said that they found regulation requirements onerous (47 per cent) and had difficulty securing finance (34 per cent) at start-up.

These figures come as the FSB and APPSBG are launching an inquiry with Iain Duncan Smith, Secretary of State for Work and Pensions, into entrepreneurship to see how these barriers can be removed. With 95 per cent of private sector businesses employing less than 20 members of staff, the inquiry will look at how these firms can be encouraged to take on staff and how budding entrepreneurs can be supported in setting up their own business against a backdrop of uncertain economic times.

The Government has introduced a raft of new measures aimed at supporting entrepreneurs, however, the FSB’s ‘Voice of Small Business’ Index shows that employment intentions and business confidence has dropped. For small businesses looking to grow, there are still fundamental problems with hiring skilled staff, regulations and access to finance.

The FSB is calling on the Government to:

• Reinstate the graduate internship scheme to give graduates the opportunity to acquire the skills they need for starting and running a business
• Prioritise enterprise education by putting it in the statutory curriculum
• Take on the Independent Commission on Banking’s recommendations to create more competition in the banking sector
• Extending Work Trials to the first day someone signs on to Jobseekers Allowance to help create 46,000 more jobs
• Reduce the flow of regulation and tackle the stock of existing regulations

John Walker, national chairman, Federation of Small Businesses, said:

“Challenges posed to entrepreneurs will always vary, but we know from our members that common issues at start-up stage include, finding suitably skilled staff, complex regulation and access to finance. And coming up against these at the very beginning of their entrepreneurial career can prevent them from growing. With the private sector being relied on to drive economic recovery, these barriers need to be removed – budding entrepreneurs should be supported in setting-up in business, and existing businesses should be encouraged to innovate, take on staff and grow. This inquiry into entrepreneurship will cover a raft of issues and working with the Government, we hope that these issues can be put to bed once and for all.”

Brian Binley MP, chairman of the Small Business APPG, said:

“We hear from small businesses time-and-time again that they are finding it difficult to get staff with the skills necessary to run their businesses. Small and medium sized businesses and entrepreneurs are expected to be driving economic growth in support of Britain’s recovery but they are finding it difficult to get the right people to help them in that task. I am hopeful that this inquiry will go some way to addressing the challenges of rising youth unemployment and the skills crisis we have thanks to the legacy left by the previous government.

“I know that John Hayes, the Skills Minister, is working hard to bridge the skills gap which is especially important to the precision engineering companies in my own constituency of Northampton. However, John Hayes’s work is being hampered by the poor performance in our primary and secondary schools, especially with regard to literacy and numeracy and whilst Michael Gove, the Education Secretary, is pulling out all the stops there is still a lot to do. Our review will be looking at ways of improving those basic skills as well as the more advanced skills required to meet industry’s needs.”

 

Almost two-thirds (63 per cent) of small, family-run businesses would not survive the loss of a key member of staff due to ill health or death, according to new research by Scottish Widows.

The findings show that more needs to be done to educate small businesses about the risk of losing key staff members, said Iain McGowan, head of savings and protection at Scottish Widows.

The Scottish Widows Business Protection Report, which details research carried out with over 500 UK business decision makers, shows that the majority of businesses are still reluctant to protect themselves from the unexpected loss of a business owner or key member of staff.

By their nature smaller businesses are more exposed to certain risks and in particular the loss of a key player. Despite this, 60 per cent say they do not think they need a protection policy in place. And the research also shows that only six per cent of UK businesses have financial protection to cover the death of key person while only four per cent have protection for a key person suffering a critical illness.

“Small businesses are the lifeblood of the UK economy making up 99 per cent of the private sector. Even in these challenging economic times today’s entrepreneurs must be prepared for the financial impact that a critical illness or death of a key employee could have on their business,” said McGowan.

“Businesses need to consider the key risks they face to all aspects of their operation. This includes planning for the very real risks their business could face from death, critical illness, or long term incapacity of a key employee or business owner. While small businesses receive assistance and advice when starting up, they also need help in taking a long term financial view of their business and planning for risks accordingly.

“This responsibility for further education and understanding sits with the industry, Government and businesses themselves.”

John Walker, chairman, Federation of Small Businesses said: “The loss, even temporarily, of a key staff member or other interruption is always going to hit the smallest firms the hardest. A single member of staff could be half your workforce. It is therefore vital that small businesses get their contingency plans in place now, not when trouble strikes.”