Peer to Peer lending

I have to confess, when I first heard about peer to peer lending, I thought it


Loans (Photo credit: zingbot)

was a bit of a gimmick, not a real world solution which could be useful for our clients.

What changed my mind was listening to the BBC money box programme on ‘Broken Banking’ It is available to listen to on BBC iplayer for a year ahead. After that, if anyone wants to listen, I’ve kept a copy.

The programme explains that peer to peer sites take a smaller ‘margin’ than the banks, and so the lender receives a higher interest rate whilst the borrower pays a lower interest rate than they would have paid to the banks.

The Government has supplied peer-to-peer lenders with £100 million (as reported in the FT) which will aid their growth.

So, which peer to peer sites deal with businesses?

Funding Circle

Funding Circle places your cash with small businesses with at least two years’ trading history. You can choose to spread your cash across lots of different businesses in different risk classes if you wish.

Information for borrowers

  • Fees: one-off 2% of sum borrowed
  • Loan period: 1 to 3 years
  • Minimum/maximum borrowed: £5,000 / £75,000
  • Average rate: around 9%

Information for lenders

  • Fees: 1%
  • Minimum/maximum lent: £20 / no maximum (although maximum £20,000 per loan)
  • Average rate: 8.3%
  • Range of rates: Varies. Minimum 6%-8% depending on risk.
  • Default rates: Estimated 0.6%-2.3%


Thin Cats offers secured loans to businesses. Lenders can lend to a range of businesses to spread their risk.Information for borrowers

  • Fees: £450 listing fee, plus £500 fee for preparation of legal documentation
  • Loan period: a few months to 5 years
  • Minimum/maximum borrowed: £50,000 / £1,000,000
  • Average rate: Lender rate plus 1.5%. Currently 8.5%-16.5
  • Early repayment allowed?: Yes, without penalty

Information for lenders

  • Fees: None
  • Minimum/maximum lent: No maximum. Minimum £1,000 per deal
  • Average rate: No data
  • Range of rates: 7%-15% depending on risk.
  • Default rates: No data


MarketInvoice is a slightly different concept, with a ‘flexible factoring’ approach rather than a loan.

MarketInvoice allows businesses to sell long-dated invoices to investors, who bid against each other to offer the best terms. An auction type market means that invoices are sold quickly and at competitive rates.

MarketInvoice provides access to the cash tied up in invoices, whenever you need it. It avoids the high annual administration fees associated with traditional factoring.

The process is flexible and transparent.

To date, over £28 million has been advanced to businesses of various sizes and in various sectors. Some  customers use it every month, and others use it as and when required.

New rules at Companies House

If you are a company director, from the 1 October 2009 you can protect your home address from disclosure.

1960s semi-detached
Image via Wikipedia

If you would like take advantage of this new concession you need to register a service address, which could be your registered office address, with Companies House. This can be done online from the 1 October 2009. All clients can use our address as their registered office, although this is for Companies House and HMRC correspondence only and not for general business purposes.

If you take no action your home address will be taken as your service address until changed.

Just a quick reminder that other recent changes include:

1. You must be aged 16 or over to be appointed as a director.

2. You no longer have to appoint a company secretary, although you can do so if you wish.

3. You no longer need to hold an AGM unless you opt to do so.

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Paternity leave plans go on ice

Dad and children  on the tour
Image by Photosbychristensen via Flickr

The Government has bowed to pressure from business and proposals to extend paternity leave to six months from April 2010 have been put on hold as a result of the recession.

The Work and Families Act 2006 allows for regulations to be made which would permit working fathers to take up to 26 weeks of additional paternity leave, some of which can be paid, if the mother returns to work before the end of the one-year maternity leave period to which she is entitled.  The new provision would be available during the second six months of the child’s life, so in effect, fathers would be able to ‘share’ some of the maternity leave which is currently only preserved for the mother.  The entitlement would also extend to couples who are adopting and to partners and civil partners of mothers.

The Government had stated some time ago that the earliest date additional paternity leave and pay would be implemented was for babies due in April 2010.  However, a Government spokesman has now said that the Department for Business Enterprise and Regulatory Reform is continuing to review the appropriateness of all new regulations due to come into force in the current economic climate and, as a result, a date has not yet been announced for extending paternity rights.

At the same time, the Government had proposed to extend statutory maternity pay and statutory adoption pay from nine to 12 months (to coincide with the period of maternity and adoption leave) and it looks as if this is also on hold.

Under the current law, working fathers are only entitled to two weeks’ paid paternity leave, which is usually taken immediately after the baby is born.

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Avoid the ‘new account’ fraudsters

In November 2008 the Business and Enterprise Committee made up of a number of MPs, published a report about Companies House.

Like many people, the MPs were taken aback to find that data filed there by companies, accountants etc was not checked and validated. A strong recommendation was made that Companies House should take urgent steps to explain to the public that it cannot guarantee the accuracy of the information it holds.

They stated “It is understandable- but wrong- that some users of its services assume that, because CH is an agency of government,its data can be relied upon to be authoritative- it cannot”.

Unfortunately fraudsters and criminals are well aware of the lack of validation at Companies House. They can easily file fictitious balance sheets,directorships, and registered office changes in order to fool the public and unsuspecting suppliers. Some credit agencies such as D&B, Experian and Graydon do run checks for fraud or unusual records at Companies house, but most other credit agencies don’t. Many just take Companies House data in good faith and add a credit rating to it.

You cannot rely upon this !!

Do your own background checks, have they got a website? Is the company mentioned on other peoples websites? Can you speak to a reliable reference who has dealt with the company?

Making people redundant

Many businesses are being forced to reduce costs, and make employees redundant.  As an employer what are the rules on making people redundant?

The notes that follow highlight a few but not all of the considerations that affect redundancy pay outs:

Q. Do we deduct tax or National Insurance from redundancy payments?
A. No – as long as the amount does not exceed £30,000 and it is a genuine redundancy payment.
Q. Can I make anyone redundant?

A. If the employee is no longer required within the business then yes, but be AWARE that it is possible to unfairly select someone for redundancy, the grounds for unfair selection can be found on the government website here. Also, if there is alternative work within the business this must be offered to the employee before they are made redundant.

You should consult employees individually regardless of the number you plan to make redundant.

If you fail to do so, any subsequent dismissals may be unfair.

For redundancy dismissals, the statutory procedures may form part of the consultation process. However, the procedures only apply in non-collective redundancy situations, ie when you plan to make fewer than 20 employees redundant.

Under the standard procedure, you must write to each employee setting out why you are thinking of making them redundant and inviting them to a meeting to discuss the proposed dismissal. The employee has the right to appeal if you still decide to make them redundant.

If you fail to follow the procedure when it applies, any dismissals you make will be automatically unfair.

Q. Where can I get advice on rights and duties?
A. Try ACAS and BERR

Acas Helpline

08457 47 47 47

BERR Redundancy Payments Helpline

0845 145 0004

Q. What happens if I give an employee a company car or other goods in lieu of a redundancy payment?
A. Anything given other than money is converted to a cash equivalent – if the purpose of the transfer of assets is given to compensate an employee for his redundancy this cash equivalent forms part of the £30,000 tax free sum.

Q. What happens if our business cannot afford to pay the statutory redundancy due?
A. If absolutely necessary, the Redundancy Payments Office will make the payments.

Q. If I give a terminal bonus or payment for extra work done leading up to redundancy, is this tax free?
A. No – only genuine payments for redundancy are included in the £30,000 tax free sum.

Q. Which employees qualify for statutory redundancy?
A. To qualify at all, employees must have completed 2 years service since age 18.

Statutory redundancy pay is based on:

  • the employee’s age
  • the employee’s amount of continuous service – up to a maximum of 20 years
  • the employee’s weekly pay – up to a limit of £330 where the employee’s employment ends on or after 1 February 2008 (£350 on or after 1 February 2009)

Currently, the maximum SRP payable is  £10,500 (£9,900for redundancies before 1 February 2009).

There is a calculator to work out the amount due on the business link website here.
If you have concerns about redundancy as an employer or employee we would be happy to discuss the issues with you.

Can we help with your cash flow?

There is no longer any doubt, we are now headlong into a recession. Now the frightening speculation has turned to “are we entering a depression?”.

It’s as if someone had pushed a button and notched up the incline on the jogging
machine – all of a sudden more effort is required to sustain forward
momentum.So how can we help?

Firstly, the banks are still able to fund good business proposals. Obviously its harder than it used to be, so if you do have  a proposal, we can help to ensure you have a first rate business plan with integrated cash flow forecast.

It’s worth looking at VAT strategies that are available to slow down payments to the taxman.

It’s beyond the scope of this article to give detailed advice, as each business will have different needs. What we have done is outline in general terms some of the strategies that are available – if we have not reviewed your tax affairs recently do call and make an appointment.


The legislation that sets out the way in which you calculate the VAT to pay each quarter offers a number of opportunities to ease cash flow.

    * Cash Accounting – if your VATable turnover is under £1.35m and you are not using cash accounting, now would be a good time to switch. A few companies will not benefit, especially if you are paid for the goods or services you sell at point of sale, a retailer for instance. If you sell goods on credit and you are usually owed more than you owe (to suppliers etc) cash accounting would probably reduce at least the first payment you make when you join the scheme. Essentially you only pay VAT when it is collected from customers. Outputs and inputs are based on monies received and paid, rather than amounts invoiced.
    * Flat rate scheme – another of the special schemes offered to small businesses is the flat rate scheme. If your turnover is under £150,000 and you have small amounts of input tax to reclaim each month, this scheme may increase your retained profits. Each business sector suffers a different rate of VAT so the only way to see if this scheme would be beneficial is to crunch the numbers.

Even if you don’t qualify for a special scheme, don’t forget to claim bad debt relief. Any debt that is over 6 months old qualifies as a bad debt and you can reclaim the output tax you will have paid. (Note: the flip side also applies. If you have invoices unpaid from your suppliers more than 6 months old, you should repay any input tax you have claimed!)

It is also worth filing your VAT return online. You are given an extra 7 days to file the return and if you pay your VAT by direct debit the payment will not appear on your bank account for a further three days.

Making losses, or less profit.

One of the more obvious effects of recession is a downward trend in profit creation, and if your business is badly affected, making losses. The notes that follow set out a few ideas for capitalising on the tax planning opportunities this affords.

   1. Self assessment payments on account – if your current years profit is likely to be lower than the previous year, you may be able to elect to reduce the payments on account for the current year. The claim should be based on realistic trading results.
   2. Losses – if your business is currently making losses it may be possible to carry these losses back to previous years, when you may have paid significant tax. Any tax overpaid as a result can be reclaimed.
   3. Change of accounting date – in some circumstances it may be beneficial to either extend or reduce a company’s accounting period end to make use of a fall off in profitability. There are limitations to this type of planning so careful consideration of the facts is required.

Need more time to pay

Generally speaking if you are late paying your tax or VAT, interest and in some cases penalties will be applied. If you can justify the reasons for your inability to pay it is usually advisable to contact HMRC and agree a payment timetable that your cash flow can afford. Burying your head in the sand is not a useful strategy!

If your business is starting to feel the pinch, pressure on profits and cash flow, do keep in touch. As mentioned at the beginning of this article each business is unique and there are a number of strategies we have not had the space to showcase in this article. Please call if you need help.

Three-quarters of SME’s would not have Alistair Darling on their payroll!

A poll carried out among owner-managed businesses across the country by Clifton Asset Management has found one third of UK companies believe the media is in danger of “talking the economy into recession.”

The survey, also found that almost three-quarters of SMEs would not trust Alistair Darling with their own company finances by appointing him as their FD.

The majority (65 per cent) said the Chancellor showed no signs of being “business friendly”, and not a single one believed that Gordon Brown’s government acknowledges the value to the UK economy of the small business sector.
The research also found that the majority of owner-managed businesses (56 per cent) feel totally neglected by their bank since the onset of the credit crunch.

Ellis Organ, financial director of Clifton Asset Management, said: “While there can be no denying the gravity of the situation facing the UK economy, many businesses – 33 per cent – clearly feel that media commentators seem determined to talk us into a full-blown recession, with only 15 per cent of respondents to our survey agreeing with the view that a recession is imminent.

“Only 11 per cent told us that they are seeing the symptoms of a major downturn, with approaching half of those who took part in our survey highlighting strong order books and no noticeable increase in problems over issues such as late payment.”

“Only one in five owner-managers in our survey said they would consider employing Alistair Darling as their FD – but not without references and a thorough interview process, leaving just 6 per cent who have real confidence in his ability,” said Ellis Organ.

Credit Crunch
The survey found that reaction to the credit crunch by banks is causing problems for some businesses. Of those surveyed, 14 per cent said their existing facility had been reduced, or that higher interest rates and collateral security had been imposed. Although, 28 per cent said their bank had been happy to extend facilities with no change in interest or security arrangements.

Ellis Organ stated: “While 15 per cent of our survey sample said they had seen a noticeable upturn in the amount of contact they received from their bank, eager to check on their exposure and solidity, some 56 per cent felt that they may as well not even exist as their bank is concerned.

There is a widespread feeling that Gordon Brown’s government does not appreciate the contribution that SME’s make to the economy.

Only 4 per cent of firms said decisions such as the recent U-turn on capital gains tax were proof that their contribution is recognised by government, while 9 per cent say there is some element of appreciation, notwithstanding a reduction in tax benefits for owner-managed businesses.

Ellis Organ concluded by stating: “This leaves 85 per cent in our survey effectively feeling snubbed by this government.

“For most of these, there is no question that the ever-burgeoning mountain of red tape is their biggest headache, and that Gordon Brown’s promise to “light a red tape bonfire” remains an empty one.

“The people who responded to our survey, and countless others like them across the country, form the backbone of our economy. Our survey highlights once again that these individuals continue to feel ignored by… a government which only appears to pay attention to the concerns of big business.”

The survey was commissioned by Clifton Asset Management, the country’s leading alternative to banks for owner-managed business finance and strategic planning.

Meeting successfully-10 tips for successful business meetings.

Any meeting or negotiation can be won or lost before you even step foot inside the meeting room, by good forethought and planning.

To feel in control of any scenario, you must plan, this is the difference between success and failure.

Here are some tips on how to successfully plan a meeting:
1. Ask yourself if a meeting is really necessary
Often the same things can be accomplished via the phone or e-mail etc.

2. Pick someone to chair
If it’s not you then arrange for someone to chair the meeting.  Somebody has to be in charge of a meeting to ensure that it accomplishes what it’s meant to accomplish.  Agree this up front.

3. Have a plan
Create an agenda for the meeting and distribute it in advance, to everyone who is going to be present.  Then ask them to provide you with any changes or additions to the agenda, again, do this in advance of the meeting.

4. Have the meeting somewhere that is easy to find and get to
Pick common ground for most of the attendees.  If a meeting will be held off-site or involves getting clients to your location, always provide clear directions.

5. Arrange the meeting at an appropriate time
Too early in the morning and you risk people being late because of traffic.  Too close to lunch and they’re thinking of food.  Too close to the end of the day and they’re thinking of going home.  Normally in the mid-mornings/afternoons is best.

6. Stay with and follow the plan
You will have drawn up an agenda and everyone at the meeting has seen it, so stay with it.  If it’s not appropriate for the meeting, file it away for another time.

7. Stay focused
Anecdotes or irrelevant conversations will always crop up, especially as the number of the people attending increases.  Have the chairman stay in control of the meeting and keep everybody focused on what the outcome is.

8. Create an action box for other issues
Some issues may need to be dealt with but it may not be an appropriate time to do so.  When these issues come up, note them down and place in the action box and deal with them after the meeting.

9. Good time keeping is essential
Never let a meeting run on longer than anticipated.  Keep to your original plan.  If you find you can’t get everything done, simply schedule, there and then, another meeting.  If you don’t finish on time it’s either because you didn’t stick to your agenda (so why should the attendees suffer?) or the issue really needs the extra time and attention a second meeting will bring.

10. Make a quality action plan
There is nothing more frustrating than sitting through a meeting, hearing lot’s of good ideas and dealing with quality issues, only to find that nothing will be done about it.  Give the meeting the importance it deserves and make an action plan giving clear instructions of what is needed to complete the next steps and gain buy-in to these actions from those present.  Let the attendees know that what has been produced in the meeting was, indeed valuable, and worth their taking the time to attend.

Dealing With Disaster

floodFor those who haven’t experienced a disaster first hand it’s difficult to imagine, even from the graphic images fed to us by the media, the realities of the situation. What pictures cannot convey is the frustration of an owner watching their business suffer through the several days or weeks during which power is unavailable, transport facilities are out of operation, communications are down and access to the premises is prohibited. It’s exactly those restrictions that can spell the death of a business caught up in a disaster and unprepared to deal with the consequences.

Are you prepared? Ask yourself these questions, they cover some of the most critical aspects of keeping the business afloat after a disaster.

  1. Have you audited your premises to assess how well they would stand up to the type(s) of disaster most likely to occur in your region?

  2. Do your premises have emergency backup power and lighting sources?

  3. Could you quickly obtain temporary equipment and replacement stock to keep your business going?

  4. Do you have access to a secondary site from which to operate your business if your primary location was damaged?

  5. Do you have an alternative source of supply if it is your supplier who suffers a disaster?

  6. Are your vital records (accounts, customer data, inventory records etc) backed up with a current version stored in a safe place? Consider internet back up software – set it and forget it, anything you change or add gets backed up for you.

  7. Do you have current and multiple contact information (e.g., home and cell phone numbers, personal email addresses) to communicate with your employees if a disaster prevented them from coming in to work?

  8. Have you consulted with an insurance professional to determine if your insurance coverage is adequate to help you get back in business following a disaster?

With disasters, both natural and man made, now very much in the spotlight, numerous government agencies and business organisations have developed information brochures and programmes advising SMEs on how to mitigate the effects of a disaster and speed recovery.

In developing a disaster plan and dealing with the aftermath your accountant should be one of your most valued partners. The weeks and months following a disaster can be confusing and difficult with numerous financial issues and personal concerns to address. People who have been through a traumatic experience often have difficulty making sound decisions. Your accountant can help you develop a financial recovery plan for regaining your financial footing following a disaster by reconstructing lost records, documenting income lost as a result of the disaster, preparing and defending insurance claims, acting fast to apply for loans and grants and applying for tax relief concessions.

Many businesses that are forced to close after a disaster never reopen at all. SME owners who educate themselves in disaster management and have a planned process for returning to normal operation maximise their chances for recovery.

What Employees Want

employee of the monthThe difference between working with engaged people and a group of alienated, uninterested ones isn’t just the difference in productivity you can expect from each – it gets right down to making the difference between feeling you want to go in to work or stay away to avoid becoming depressed by the unenthusiastic atmosphere.

Managers can’t force employees to be motivated but they can contribute to creating an environment that encourages and promotes them to feel self-motivated. Motivation is getting people to do what you want them to do because THEY WANT to do it. The right sort of environment can be summed up in 4 words: security, involvement, responsibility and appreciation.

Making employees feel secure

If you think you can motivate people by instilling fear in them then think again. Over the short term, fear can keep people at a task, if not exactly ‘motivate’ them to do it. But all the while they are being fearful they are plotting how to get back at you. And that doesn’t make for a productive workplace.

The boss who openly threatens to fire employees when they make a mistake or blames individuals when things go wrong is creating a fear culture. On a less obvious level, tolerating things like sexist behaviour or racist slurs in the workplace equally creates a sense of fear in the target.

The workplace should be a level playing field where every team member is treated fairly and respectfully so as to build a constructive atmosphere free of fear. You can go a long way towards creating that sort of environment by clarifying your expectations about how people are to behave (including yourself) in a written company code of conduct or through clearly defined policies about ‘how we do things around here’. Clearly defined expectations also form the basis for consistent decision making in other areas of importance to your employees such as fair performance appraisal for deciding promotions.

Getting them involved

People are more motivated when they feel ‘in the loop’ of what is going on. The key here is good communication. Employees can’t work to achieve the business’ goals if they don’t know what those goals are. You need to communicate your vision and goals for the business to them so they don’t feel like they are working in a vacuum. Better still, provide opportunities for them to actively contribute to the business through regular team meetings and promote the contribution of suggestions that could help improve the business. Suggestion schemes encourage engagement and can result in valuable ideas for everything from improving operations and developing new products to providing better customer service.

Empowering your people

If you find yourself micromanaging your employees by constantly telling them what to do you can be certain that you are having a detrimental effect on their motivation. Being given responsibility for something is an important motivator for humans. Your intentions may be good but your ‘help’ is likely to be perceived as lack of trust.

Managers interested in keeping their employees motivated should set the ground rules and expectations and then allow them to get on with their job. Shift your focus from making sure that specific tasks are completed correctly to establishing standards and expectations. Where the standards aren’t being met, the way to fix the situation isn’t to constantly look over their shoulder and direct them, it’s to help them improve their performance through a coaching or training programme. Most employees actually want to learn new skills, gain new experience, build their personal attributes and take on new challenges, all of which improve motivation.

Showing appreciation for effort

Public and private praise can work wonders in keeping people motivated. Achievement in any area considered important by the company, such as an outstanding sales record, contributing a valuable suggestion or providing great customer service, should earn some form of appreciation. And don’t overlook opportunities to build morale by celebrating the business’ wins, like getting that new contract. These only happen because of the combined effort of your many individual employees.

While some employees will be innately more passionate about their jobs and careers than others, organisational structures and management styles that deliberately foster engagement with their work play a key role in raising the motivational barometer.