Archives for Cash

Cloud Computing and Nature Concept

Cloud Accounting Software a Must for Making Tax Digital

The government’s vision of being one of the most digitally advanced tax systems in the world relies on modernising the tax system and making it easy for businesses to work with and therefore comply with their tax obligations and requirements. Making Tax Digital is being rolled out and the first step comes into force in April 2019 for business that have a turnover which is above the VAT threshold. This does not preclude smaller businesses from using the system, but they are not yet required to do so. So how does it work and what part does cloud accounting software have to play in making it happen?

Making Tax Digital is underpinned by four elements:

  • Using information more effectively
  • Real-time tax
  • A single financial account
  • Digital interaction between HMRC and businesses

Cloud-based accounting systems can help achieve all these in the following ways:

  • Real-time data. By being stored on the cloud, digital accounting systems offer the flexibility of storage and access of data from anywhere, as long as there is an internet connection and a device to access it from – e.g. a tablet, laptop, or even a mobile phone.
  • Onestop access. Cloud-based accounting systems will reconcile your invoices, payments, and orders and can even manage payroll for you. This automatic reconciliation means you do not have to go through your paperwork every so often and do it manually; this way the most up-to-date information is at your fingertips and can be submitted to HMRC at the push of a button. With quarterly accounting becoming part of Making Tax Digital, what could have introduced additional work without cloud-based accounting packages will actually make your, and your accountant’s life, much easier and with a lower margin of error.
  • Effective use of information. Whereas you now have to submit much of the same information year-on-year to HMRC when you file your tax return, using cloud-based accounting software this will not only be automatically submitted the first time, but will not need to be re-submitted unless something changes. An online HMRC account also allows you to keep an eye on what information they hold for your business and only update it when things change. Using systems that will ‘talk’ to each other – including banking details, other government departments, and employers – HMRC can access what they need without regular re-submission of the same data.
  • Digital interaction. You will be able to interact with HMRC whenever you want. No longer tied down to a set time each year, the link between your online accounting software and your HMRC account means that at the press of a button you can send or receive whatever information is required whenever you choose.
  • A single account. As the roll-out of Making Tax Digital takes effect businesses will be able to see all their liabilities and entitlements in one place – as they currently do with a bank account – saving everyone time and money.

If you would like more information on Making Tax Digital and how cloud-based accounting software can help your business meet its obligations, our tax specialists at Cain and Beer can help and advise. We are on 020 3633 1340 or at whenever you need us.

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Cash is King

When you start out in business one of the first things you should do is write out a ‘Credit Policy’ outlining your payment terms and the stages that you will use to make sure you have done everything to ensure you are paid to your terms.

Inform your client when you want to be paid and once you have supplied the goods or completed your work obtain either a signed timesheet or written confirmation that your client is happy with the service / products received. If you are dealing with businesses, it would be wise to check their credit rating before offering them credit terms. There are a lot of companies out there that offer credit check facilities.

This is the point when you should raise an invoice confirming the terms agreed; if you haven’t offered any credit terms then payment should be made to you straight away; happy days!!

However, if you have agreed that your client can take time to pay whether it is 7, 14, 30, 60 or even 90 days (if you can afford to offer that length of time) you should diarise a note to remind you. What should you do now? Ask your client to pay you: this may sound like a daunting task to actually ask for your money; but guess what, it’s yours!!

Your customer pays you on time and everyone’s happy but what happens if you don’t receive ‘YOUR’ money on time? Well this is where the next stage of your ‘Credit Policy’ comes into play and it may look something like this: –

  1. Contact your client and remind them that payment is due and request your money
  2. If payment not received within 3 days then send 1st reminder letter or email informing client that payment not received and that their remittance is required.
  3. Assuming payment has still not arrived a 2nd chasing letter or email goes to the client saying that unless payment is received in 3 days; you will consider taking further action.
  4. After 3 further days and still no payment you could send a final letter called ‘Notice Before Proceedings Under County Courts Act’
  5. Hopefully, the thought of legal action spurs your client into paying you.
  6. If your client doesn’t pay you by the date mentioned in your final letter, what should you do? Well you have informed them that you would be taking legal action so unfortunately, you have to take the next step and apply to pursue the matter through the courts. You may want to give them a quick call first to inform your client that you are serious and will be taking legal action if they don’t pay today!#

In most cases your client will pay you on time but you have to consider your options and what time you will give your client to actually pay you.

It is not recommendable to let your clients know that they have more time before you will take legal action because you are basically telling them that although your terms are 30 days you will allow them another 30 days before you will instruct solicitors or start proceedings yourself.

Always, always, always keep on top of your customers (debtors) and make sure you are paid on time; a lot of businesses fail due to bad cash flow.

If you would like help preparing a ‘Credit Policy’ or need some advice on bad debts or court action please get in touch by calling us on 020 3633 1340, emailing or via our website www.cainandbeer.com

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