David Hallam, Managing Director at OrderWise
Businesses across the UK are currently battling with a changing political and economic landscape; the decline of the high street and the introduction of new policies are also adding pressure on businesses to keep on top of financial processes. There are now almost daily reports of companies, like Debenhams and HMV, closing their doors and collapsing into administration. An increasing number of retailers are also moving away from trading in high street shops and are now favouring an online platform to keep up with the demands of today’s digitally-minded generation, resulting in consumers opting for omni-channel experiences like click and collect.
Change is continually affecting the business sector; on 1st April this year the Government implemented Making Tax Digital (MTD), an initiative which requires all VAT-registered companies above the VAT threshold of £85,000 to use the new MTD service to submit tax returns digitally using compatible software. HMRC’s ambition is to become one of the most digitally advanced tax administrations in the world and the idea of MTD is to help businesses implement an effective, streamlined approach to their financial services. It is therefore important, now more than ever, for businesses to ensure they have an integrated, automated approach to all their business operations.
VAT is the first part of HMRC’s new MTD program, set to affect around 1.2m businesses. Despite this, a recent survey by the Federation of Small Businesses (FSB) found that nearly half don’t have the right software in place to deal with the new regulations. Businesses that choose not to upgrade their software will have failed to become compliant and are vulnerable to a risk of higher fees.
As business operations continue to become more digitised, it’s vital for all companies to adhere to new rules to ensure they are compliant with current policies. OrderWise, a software specialist based in Lincolnshire, creates business software that is HMRC-recognised for MTD-compliant VAT returns and is fully accredited by the Institute of Chartered Accountants in England and Wales (ICAEW). OrderWise software helps its users to manage all commercial and financial operations and facilitate digital submission VAT returns in line with Making Tax Digital.
As well as adapting its accounts software, OrderWise has already begun tapping into warehouse automation and later this year is launching AI robotic technology.
VAT, however, is just the start; the digitisation of the rest of the tax regime is set to follow. The UK Government has made it clear that other taxes, such as corporation tax, is set to become digitised and is likely to come into play early next year.
Even though MTD has been introduced as part of the Government’s initiative to help companies keep on top of everyday accounting, it will inevitably shine a light on any inaccuracies and inefficiencies in company operations. Entrepreneurs and managing directors should be aware that their teams will need some time to get used to any new software or procedures. Therefore, it is advisable for companies that haven’t already done so to introduce an automated approach to business operations as soon as possible.
Making Tax Digital is a key part of the Government’s plans to make it easier for individuals and businesses to get their tax right and keep on top of their affairs. This change will help companies transition into a digital-first world and benefit from improved reporting, reduced stress and faster results. Making Tax Digital is making fundamental changes to the way the tax system works – transforming tax administration so that it is:
- more effective
- more efficient
- easier for taxpayers to get their tax right
While the idea of implementing automated processes might seem daunting for many businesses, digitising financial processes along with integrating other areas of the business, such as sales, CRM, logistics, stock control and warehouse management, will greatly benefit business growth and productivity. Software that can encompass everything from order processing to accounting ensures that no information is lost, and daily tasks are more automated, increasing accuracy and efficiency across all operational areas.
The new MTD legislation also presents an opportunity to automate business processes and streamline communication between departments through centralised management. More efficient operation in the company creates capacity to take on more business and allows sustainable growth.
At a time when business confidence is low, business rates are rising and Brexit is at the forefront of everyone’s mind, finance professionals will need to fine-tune their understanding of digital procedures to make financial tasks much easier and avoid adding further stress to the equation. It will be interesting to see how MTD will benefit businesses now and in the future as the rest of the tax regime follows suit to create a transparent taxation system.
OrderWise is an award-winning, growing, forward-thinking company which provides a leading business management software solution – integrating everything from sales, CRM, marketing, logistics, stock management, accounting and more. It is used by small, medium and large businesses and has over 15,000 users, including high-profile clients such as John Lewis, local authorities, the MOD and police forces.
TIPS FOR BUSINESS EXPANSION
Alan Sutherland, CEO of Kind Consumer
Every successful business had a beginning. Its founders usually looked for ways to gradually expand, attract new customers and increase monthly revenue. From the outside looking in that type of success often feels as though it requires some form of magic or hidden formula.
So how do you drive success? There are two which are fundamental to success. On first glance they may seem obvious, but they are often neglected.
Do you have a strong team?
No matter how great your business or idea you will not drive it to its full potential without a strong team behind you.
The process of recruiting and finding the best talent is never easy. You must over-invest time in the process as it is a fundamental investment and future growth driver. Two principles I have learned over the years when looking at recruitment are, to surround yourself with people who are better than you and do not be afraid to recruit someone who could make you redundant.
If you can achieve these, the benefits are clear. Better business results, stronger talent pool, and with capability future fit plus built-in succession planning.
Have you created a road map?
Strategy should not be complicated, as it is the set of choices you make to help you deliver your goals. It is your roadmap.
In thirty plus years of corporate life I have reviewed many. Countless textbooks have also been written on the subject, but there are some basic principles that I firmly believe work best. Namely, the vision should be clear, motivating, and understood by all in the organisation. In addition, it’s important to remember ‘less is more’. Too often strategy papers can be voluminous and complex. The best strategy work I have seen is on one piece of paper with clear, simple articulation of the choices you will do and equally what you will not do. It is very empowering to tell a team what you are not going to do.
Have you established a core market?
In any business, the “core” needs to be healthy before you divert any significant level of resource to expansion, there are thousands of examples where enthusiasm to grow has caused companies to fail.
As you evaluate expansion, having an array of ideas and opinions needs to be balanced with a clear brand that consumers feel they relate to. Whilst adding new products or services is an organic part of company growth it needs to be tempered, so you do not drift too far from your core market.
Therefore, before ploughing resources into new markets, you do need to ensure that new product and services will be of value to existing (or new) customers. You may need to ask some critical and challenging questions such as, is there a clear need for this? Is it marketable? Does it sit within the brand equity? How much will consumers pay for it?
If you conclude that the demand is there, only then should you move onto executing that new idea because it will require a significant amount of investment of time, resources, and money. If the market entry cost is potentially high, you should also evaluate a test & learn approach by launching in a limited way and, if early traction is good, then expand.
Once you have revised your existing offering, you need to engage with these new consumers to increase brand recognition. If your business is not online, add this to your to-do-list because in today’s era, convenience is key.
A website is the shop window to your brand and, done well, can allow you to build up a direct one-on-one relationship with your customers. If it was already an important criterion before, the impact of Covid-19 will make it indispensable.
With social media and the abundance of mobile technology, it is not difficult nor expensive to drive traffic to your site, so you need to ensure the site is engaging, easy to navigate, informative with a call to action to purchase. Loyal customers who return to your site are worth their weight in gold!
Do you have a healthy working capital?
Finally, a healthy working capital is essential not just for growth but for the day-to-day operations of running a business. Even as you start to see your business develop, you must keep a scarcity mindset with cash and make sure you have some reserves for when something goes wrong. This has caused thousands of start-ups to fail as they hit unexpected turbulence and had no contingency in place.
In today’s global economy, there is a lot of uncertainty so there has never been a more important time to maximise liquidity to meet short term obligations and avoid going bust. Not to mention, flexibility is key when a business is looking to expand and without enough working capital a business can lose this flexibility.
BITCOIN COMES OF AGE
Katharine Wooller, Managing Director, UK and Eire, Dacxi
The Bitcoin halving event, which occurred on the 11th May, has been a watershed moment for the industry. It has been a deafening theme for crypto narrative in recent months, and more recently has caught the eye of professional investors and conventional media alike, with some predicting it will be the catalyst for a substantial boom. It appears bitcoin, finally, has a hard-won place in the mainstream.
Halving: In a nutshell
Bitcoin has a key feature; there are a fixed amount available, and, crucially it has a pre-programmed supply reduction built in. The miners, who maintain the bitcoin network, validate transactions and add them to the blockchain when they are verified. They do this at considerable electrical and computing cost and thus are paid in bitcoin. Periodically, the reward for doing so halves. In the past this supply reduction, which previously occurred in 2012 and 2016, has coincided with a strong run-up in its price.
Bitcoin has now been in existence more than ten years and has survived the doubters, the scammers, the hackers, government attempts to quash it, and along the way it has given rise to new innovations using the blockchain technology that underpins it. To overstate this amazing “survive and thrive feat” as well as the innovation it represents would be difficult. Bitcoin, conceptually, has exceeded expectations. Alas the 5,000+ crypto currencies that have sprung up alongside it include the good, the bad, and so very ugly. Nearly all of these should fall away as Bitcoin dominates; at time of writing it is 67% of daily traded volumes. Understandably, there is a very short list of 3 what we call blue-chip coins (LTC, BTC, ETH) that the institutional investors have shown interest in.
Solving some our largest problems
There is a clear appeal of digital currencies to the cashless internet economy based, including 24/7 price transparency that is available, cross border usage, divisibility to many decimal places, as well as third party oversight and controls. Bitcoin has been on a roller coaster ride over the last two years and has held its value throughout the current dramas and even increased in value as governments have stimulated their economies on a massive scale via printing cash endlessly to avert a market meltdown. This is likely to create a massive inflationary environment into the future and sets the stage for Bitcoin to make its next move upwards after stocks and real estate prepare to reset valuations and attractiveness.
A new gold?
A lot of the dialogue around bitcoin talks about an improved version of gold, as a medium to convey value. Improved by virtue of the technology being quicker, and cheaper to both store and move. Indeed, a recent transaction of $1.1bn worth of bitcoin, by bitfinex, cost $84. Unsurprisingly this has caught the imagination of the financial infrastructure industry. Some market commentators postulate a 10x increase in prices in the next 12 months, based on a few % of the global appetite for gold switching to crypto, with bitcoin being the heir apparent.
For the industry as a whole, it is great news that bitcoin is now demonstrably decoupled from traditional markets. It is apparent that the price of Bitcoin is outside the traditional assets’ ecosystem, and the market is determined by a new set of criteria. Bitcoin now has the crucial “social proof” that it cannot be altered by external forces, no matter how powerful, bringing much joy to the libertarians and retail investors alike. Indeed, google searches for ‘bitcoin halving’ hit an all-time high in the late April, suggesting firm interest from newbies. Further, the quality of exchanges available to both retail and institutional investors has improved substantially in recent years, providing a much-needed ease of entry into the market.
Indeed, leviathan investors, such as Paul Tudor Jones, coming out in praise of bitcoin, as a viable hedge against inflation, saw bitcoin enter – unexpectedly – stage left to a much broader financial audience. Bitcoin is viewed as what gold was in the 1970s, thus driving increasing interest from his fellow baby boomer cohort. Indeed, Dacxi, a digital exchange focusing on educating retail investors, saw some of its busiest weeks in the run up to halving. The addition of global pandemic and imminent worldwide recession has been the perfect storm for the world to crave safe new assets. Crypto is firmly out of the niche and into the zeitgeist.
In my opinion, crypto has reached critical mass in terms of adoption. There’s no going back. I was delighted to wake up in London on the 12th May and see the BBC reporting on halving – it doesn’t get much more mainstream than that!
As digital currencies become the increasingly dominant technology, anyone with an interest in markets and investing would be well placed to educate themselves on this seemingly unstoppable asset class. With the recent momentum gained from the halving, crypto is likely to be a broader theme of daily life for decades to come.
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