< Previous40 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk FINANCE There are many challenges and potential pitfalls to overcome for businesses as the furlough scheme comes to an end and the pandemic continues to depress the economy. Although some of these issues have arisen as a direct result of the coronavirus crisis, the outbreak has exacerbated many pre-existing financial burdens, making difficult trading conditions more hostile for businesses. One of the biggest threats is that – post- furlough – cashflow is weak as outstanding and uncollected invoices build-up and there’s a halt the movement of products and services is halted. Since lockdown, many businesses have been more cautious and have made cost- saving measures – such as searching for cheaper suppliers or letting go of some suppliers altogether. Elsewhere, companies have lost contracts and longstanding clients as other companies seek to reduce overheads or have been forced to shutter their operations in the wake of the outbreak. On its own, this weaker cashflow would be a major hindrance, but it comes amidst an already established culture of late payments that has pervaded the corporate world for years. A study from the Federation of Small Businesses (FSB) shows that sixty-two per cent of small businesses have been subject to late or frozen payments in the wake of the outbreak. Only ten per cent of those firms surveyed have agreed to payment terms with clients, meaning most of this fresh wave of poor practice has not been formally signed-off by creditors or debtors. Indeed, late payments contribute to 50,000 insolvencies every year, costing the economy £2.5 billion. If it was an issue that businesses were contending with before the outbreak, it’s only been heightened in this ‘new normal’. However, there are ways in which a company can secure funding to cover the gap in cashflow posed by late invoices. Chief among these is invoice finance. This is the simplest means of releasing cash tied up in a businesses’ outstanding invoice. It sees a business sell its invoices to a third party who will advance some of the funds it is worth up front for a cut. financing With the furlough scheme at an end, businesses will be looking to secure finance to fill shortfalls and take measures such as redundancies to help improve cashflow. Rethinking 40-43.qxp_Layout 1 02/09/2021 16:28 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 41 FINANCE © Shutterstock /Sergey Nivens Thousands of businesses already rely on this kind of financing to maintain a healthy cash position, whilst others use it to take back control of cashflow issues that arise from late and unpaid invoices – more so since Perhaps the biggest draw is that businesses can be paid most of an invoice within forty-eight hours instead of the typical thirty-day period specified on most invoices. Of course, this is far from the only finance solution businesses can draw from. Asset-based finance is a specialised method of providing companies with working capital and term loans that use accounts receivable, inventory, machinery, equipment and real estate as capital – essentially, any loan to a company is secured by one of that company’s assets. This option is commonly used to pay for expenses when there are gaps in a company’s cashflow, but it is also frequently used for start-up financing as well as refinancing existing loans, financing growth, mergers and acquisitions, as well as management buy- outs and management but-ins. Although it’s not suited to meet every business requirement, it can prove useful for those that have stretched their credit limits with vendors and reached lending capacity at the bank. Companies can also take out loans to fill the gap and bolster cashflow, though some companies may already be at their limit with their banks or otherwise don’t meet the requirements for securing loans with traditional lenders. In these situations, companies can turn towards alternative lenders and finance providers. Private equity, for example, is where investors provide long-term equity capital investment in a company in return for either shares, a percentage stake in the business and/or, sometimes, a seat on the board. Although many businesses might be loath to dilute their ownership, private equity does offer a good option of raising capital for businesses that aren’t ready to list on the stock exchange. Another form of private finance is an angel investor – a high net worth individual who makes use of their own personal disposable finance and makes 42 Á 40-43.qxp_Layout 1 02/09/2021 16:28 Page 242 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk FINANCE their own decision about making an investment. Angels would normally take an equity stake in a business in return for providing equity funds. As well as capital, angels can also provide their experience, knowledge and contracts, making them especially attractive to early stage businesses. Every investor is different and will therefore provide differing amounts, but typical investments range from between £10,000 and £500,000, though deals of up to £2 million are becoming more commonplace as angels group together in syndicates. Although angels are one of the most significant investors in start-ups, that shouldn’t deter more established firms from making enquiries. It’s important to keep in mind that securing an angel can be a difficult and protracted process, as well as being harder to research and contact compared with a private equity firm. Although securing finance of one form or another is a way in which companies can strengthen cashflow, there are other options such as reducing overheads and operating costs and downsizing. Depending on the company and, indeed, the severity of the financial shortfall, this approach may be pursed independently or in conjecture with invoice financing or a loan. In this current financial climate, with the effect of the pandemic, and with the end of the furlough scheme forcing many employers’ hands, a lot of businesses may soon be looking at redundancies as a necessary way to improve and increase their cashflow. Payroll is often the biggest expense for a business so, in times such as these, it’s often one of the first places bosses or financial advisors will look at to save money. It’s a simple but effective method – a company can save tens of thousands of pounds a year by letting staff go, be that through shuttering whole departments, or consolidating multiple job roles into one. Although nobody wants to lose their jobs, it’s often necessary for companies to take such measures to stay afloat and to continuing trading through this period of increased economy strain and 40-43.qxp_Layout 1 02/09/2021 16:28 Page 3www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 43 FINANCE uncertainty. However, it’s worth noting that there are other ways to cut payroll costs without letting staff go – such as cutting salaries, turning full-time staff into part-timers, cutting bonuses, enacting leaves of absences and shortening the working week. The coronavirus crisis remains an unprecedented and challenging time for businesses. As well as bringing its own unique set of challenges, it has also heightened many existing issues, making cashflow problems a more pressing challenge for businesses. In many cases, it has forced companies to take drastic measures to remain afloat and continue to navigate the ‘new normal’. Solutions include invoice financing and securing loans, be that from traditional lenders, from private equity providers or alternative finance, and making cost cutting measures in- house, such as redundancies. In any case, there exists expert advice to help inform business decision making so companies can make the best decisions to bolster cashflow and continue trading. © Shutterstock /DavigGyung Post-pandemic business recovery – where to begin? Begbies Traynor Group explores options available to businesses for recovery following the closure of the furlough scheme. The Coronavirus Job Retention Scheme (CJRS) comes to an end on 30 September 2021, concluding the government’s financial contributions towards furloughed employees’ wages. As the economy reopens, company directors will be required to consider what the future holds for their business in this new and challenging landscape. Some businesses may find themselves unviable in their current form and, therefore, require some level of reorganisation at both a financial and operational level. Company rescue advice is critical to secure the survival of your business, stabilise company operations, and ensure long- term viability. A licensed business restructuring expert can conduct a financial health check of your business to diagnose the pressure points and address financial health concerns. Company restructuring Recovery for a distressed company can be achieved through a moratorium procedure that allows the business to continue trading with an insolvency practitioner acting as ‘monitor’. This gives breathing space while a turnaround plan is solidified. Alternatively, a Company Voluntary Arrangement (CVA) or a Restructuring Plan may help an indebted company negotiate an affordable and sustainable repayment plan with creditors. When a company is threatened with legal action, administration can halt litigation until a long-term solution for maximising creditor returns is identified. Company finance There is a range of corporate finance solutions available, including invoice finance, asset-based lending and traditional commercial loans, which may give your business a necessary injection of capital. Our UK-wide locations include offices in Yorkshire and Lincolnshire where we offer a free, confidential consultation to company directors. For more information call 0116 406 2965 or email leicester@btguk.com © Shutterstock /Afiq Sam 40-43.qxp_Layout 1 02/09/2021 16:28 Page 444 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk TAX What are the tax implications of hybrid working arrangements? By Jennie Brown, Tax Partner, Streets Chartered Accountants Hybrid working is essentially flexible working, and something that in recent years many employers have had to consider in order to provide competitive remuneration packages to potential employees. Quite literally overnight, the pandemic saw this previously perceived perk as a necessity for those businesses who could continue to operate in this way. Now, many businesses are considering adopting formal hybrid working arrangements as they seek to allow their employees to attend the workplace for part of their working time, and continue to work at home or elsewhere remotely, for the remainder of their working time. Of course, there are a whole host of areas that need to be considered collectively by employers when considering hybrid working arrangements. Whilst reduced office space and even parking space may help to reduce a business’s outgoings, there are other areas such as Legal and HR, even Payroll that need consideration. Tax is also a key consideration and specifically, the impact on an employee’s permanent workplace and changes to expenses and benefits should be understood, together with associated the employer then reimburses, ordinarily this would result in a tax charge. However, the Government introduced a temporary relaxation on this point, but only up until 5 April 2022. Importantly, this relaxation is conditional on the offer of reimbursement being made to all employees generally on similar terms. Contribution to Employees Household Running Expenses Employers can make tax free payments of £26 a month without receipts, to cover reasonable household expenses, but this is conditional on the employee carrying out duties at home, under a formal home working arrangement. This will typically require a formal home working arrangement document which requires the employee to work from home regularly. Ordinarily this exemption for home running expenses would only apply to payments made by the employer however, again the Government introduced a temporary relaxation to allow employees to make a personal claim for tax relief, but only if they have to work from home because of COVID and it doesn’t apply if they work from home out of personal choice. This temporary concession for the employee to make the claim is only available until 5 changes required to tax reporting and costs. Permanent Workplace An individual’s contract will refer to their permanent workplace. The rules are that individuals cannot receive tax free reimbursement of home to permanent workplace travel. Changes to the place of work, the employees’ home, will require employment contracts to be updated and importantly such changes must be made on the basis that it can be demonstrated the individual is required to perform substantive duties at home as an objective requirement of the job. If the individual is still required to go into the office say two days a week, this may mean their current office will remain the permanent workplace due to the rules around is attendance frequent and does it follow a pattern. Provision of Equipment Where employers provide equipment to employees who are working from home, if the ownership of the equipment remains with the company and the employee’s private use is not significant, then there is a specific tax exemption that will apply. However, if an employer asks their employees to buy equipment which 44-45.qxp_Layout 1 02/09/2021 16:30 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 45 TAX April 2022. It is important to note that any changes as a result of changes to working practices, are reflected in company expense policies. A change in the type of benefits that attract employees A further consideration is the impact of hybrid working on the demand for employee benefits. Company cars, workplace car parking and season tickets may prove less popular whereas other benefits may become more attractive, and this is something employers will need to consider. Internationally mobile employees The pandemic has not only highlighted how many businesses are able to operate with employee’s working from home, but in-fact that employees could be working almost anywhere and perform their role. Businesses may therefore have to deal with tax issues around greater global mobility across its employees, whereby an employee works remotely in a country other than that of their employment contract. There are many aspects to consider here, whether the employer already operates on a global scale or not, and there are considerations from both the employees individual tax position and that of the employer which need to be fully considered. No doubt many employers and their HR teams will be looking at or considering the need and benefit to changes in working arrangements over the coming months. It is, however, well worth taking advice on the potential tax implications from a tax adviser. 44-45.qxp_Layout 1 02/09/2021 16:30 Page 246 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk CORPORATE HOSPITALITY More memorable events © Shutterstock /V agengeim 46-47.qxp_Layout 1 02/09/2021 16:31 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 47 CORPORATE HOSPITALITY As businesses start to organise events and entertain clients in person again, it is vital to stand out amongst the crowd to excite, engage, and enhance relationships with guests. Whether planning dinners, galas, anniversary parties, product launches, networking evenings or other occasions, providing a memorable experience is as important as ever, to place your firm at the forefront of clients’ minds, ahead of competitors, and ensure the event was worth the time, effort, and budget. Business Link proposes simple, yet effective, ways to make your event a distinctive delight and an experience that attendees will be eager to share stories of, both online on social media and in general conversation. Exciting entertainment Securing a special group of performers to entertain and engage guests is a sure-fire way to make a corporate event stand out and increase the energy in a room. Professional acts from classic magicians and mentalists to comedians, musicians, dancers, variety acts, circus performers (think acrobats and fire breathers), and gameshow activities can certainly intrigue guests, providing a great conversation starter as well as stimulating discussions that continue well after the event is over. When booking entertainment, ensure to read online reviews, view video footage of performances, and check bios to gauge their suitability. In addition, confirm costs for not just paying the entertainer, but any potential requirements to cover lighting, sound, stage set up and other expenses for the performance. Meanwhile, little touches like photo booths can also be a good source of fun and a way to remember the event. Intriguing venues If you and those in your industry often pick the same types of venues for every event it may well be time to switch it up. A dinner does not have to be isolated to a restaurant or ballroom for instance. The region is full of quirky and unusual indoor and outdoor spaces that will make an impression and create a buzz, from country houses to castles, museums, wildlife parks, converted industrial spaces, new unique bars, boats, and more - a novel venue makes for a more Instagram-able and Tweet-able event, raising its, and a business’s, profile. Just ensure that the venue remains in easy reach for guests, with ample parking for those driving, strong transport links or hotel choices. The venue should also be able to accommodate accessibility requirements. Additionally, pairing a venue with a creative theme - as long as it is appropriate for the company culture - can really take an event to the next level, whether this be based around a certain decade, a carnival, circus, Las Vegas, A Midsummer Night’s Dream, or something else. Match your food, drinks, and activities, and one could also integrate a centrepiece/talking point to mirror your theme, such as a magnificent ice sculpture for a winter wonderland. An experimental menu Business events can quickly be brightened up with a more experimental menu or interesting method of catering. Street food trucks that introduce guests to new flavours and out of the box meals, artisan goodies, thematic food stations, donut walls, snacks providing a journey around the world, or even comfort foods and nostalgic flavours, can all be a welcome replacement of a traditional three course meal. However, make sure vegetarian, vegan, and other dietary and allergy requirements can be accommodated for any guests with specific needs. One may also want to consider keeping to seasonally appropriate flavours and produce, and sourcing locally to show support for the area’s businesses. To push the boat out further, take a look into the extraordinary, such as colour changing cocktails, and to keep your business visible within the catering, try some branded food. Small flourishes There are a lot of smaller touches that can also make for a memorable event. Just making guests comfortable, providing them with everything they need, and putting these things in front of them, is a good place to start, making them feel well looked after. On a simple level, this can involve a well-stocked bar with little wait. Offering a valet service, coat racks, welcome drinks and name tags, a hashtag for social media, and personalised swag bags are all to be appreciated too, and don’t forget to thank attendees for their time. Furthermore, ensure to film and photograph the event for use in future marketing activities and follow- up communication with guests. A video editor can create a polished highlight reel to be featured on websites and social media, and which you can encourage others to share. Many businesses are resuming event planning, ready to treat and thank clients and employees. To really reap the rewards from these occasions, though, and stand out from competitors, it’s time to consider getting more creative. 46-47.qxp_Layout 1 02/09/2021 16:31 Page 248 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk RECYCLING AND WASTE MANAGEMENT Raising recycling rates 48-51.qxp_Layout 1 02/09/2021 16:33 Page 1www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 49 RECYCLING AND WASTE MANAGEMENT Recycling and responsible waste management continue to grow in importance to businesses and their customers as environmental concerns rise. How waste is disposed of can significantly impact whether a business is perceived positively or negatively, can be the key to a sale or contract win, whatever sector they are involved in - from construction to retail to agriculture - and can affect company culture and staff morale. It is therefore vital that not only rules and regulations are followed, but efforts are actively made to handle waste in the greenest way possible. Meanwhile, waste management can be a major money pit if not properly dealt with. Reducing waste sent to landfill, and even achieving zero waste to landfill, in a cost-effective way, is a key starting point for many businesses seeking to enhance waste management and cut a practice that is notoriously bad for the environment, especially as landfill tax continues to rise (up to £96.70 per tonne in April 2021 from £94.15 per tonne in 2020) to encourage use of other waste management options, including recycling, composting, and recovery. Simultaneously, many nations are banning waste imports or limiting them, increasing costs. Turkey, for example, is banning the import of certain kinds of plastic waste after a Greenpeace study found plastics sent to the country for recycling from the UK were in fact mainly being dumped in landfills and incinerators. Illustrating that shoddy waste management is just as much of a problem closer to home, Donald Ward, Operations Director at Ward, the waste management specialists, said: “Recent research published by the Chartered Institution of Wastes Management (CIWM) estimated that nearly two-thirds of businesses advertising to handle waste appear to be unregistered. That’s over 238,000 individuals or organisations in 50 Á © Shutterstock /Mikko Lemola © Shutterstock /V .stock Sustainable practices are only becoming more important to businesses and customers, prompting firms to take a fresh look at their waste management strategies. 48-51.qxp_Layout 1 02/09/2021 16:33 Page 2Next >