Pensions and what they mean to you

Any other week the topic of pensions would maybe draw interest from a small, select group of people.

This week the topic of pensions is everywhere. The impact of the public sector strikes on November the 30^th  is huge and will inevitably effect the whole country in some way. It is therefore natural, that we start to think about our own future financial security and the word pensions suddenly starts to hold a much greater meaning.

Automatic Pension Enrolment a phrase which doesn’t mean a lot to most people today but by October 2012, much like the public sector strikes this week will be everywhere. 

What will this this mean to you? 

Basically, every single business in the country will start contributing towards their staff pensions from October 2012. This is a huge undertaking and, with this in mind the government has outlined various guidelines and stages which must be followed. The stages are dependent on the size of your business or the business you are part of. Every company will be taking part between October 2012 – and October 2016.

So, what do you need to do now? 

There’s lots of advice and information out there whether you work for a company and are interested to know when it will start effecting you and your future, or whether you are a business and need to be aware about how and when it will be effecting your business and how to go about making plans.

Check out the below addresses.

http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html

http://www.autoenroll.me.uk/

http://www.nestpensions.org.uk/schemeweb/NestWeb/public/home/contents/homepage.html

If you have a spare 2 minutes it would be helpful if you could complete our 2011 SSLPost pension survey https://www.surveymonkey.com/s/sslpost

Saving Money and Keeping Control of your cashflow

Many businesses, big and small, are in the grip of a detailed review of their revenue lines, business costs and cash flow processes. 

Below are a few ideas that I’ve picked up from customers, colleagues and businesses I’ve worked with over the years:

Revenue

1.    Do you have a good contact management system and a cycle of regular contact established with your prospects, suppliers and existing customers? The maintenance of a regular dialogue can be enough to finalise a sale.

2.    Keep an eye on your competition.  Make sure you’re one step ahead on product, customer service, pricing and added value.

3.    Focus on the lines that you have that are most profitable – don’t waste time on those that cost you almost as much as you make

4.    Do you, if relevant, have an efficient ecommerce website?  What more can you do to shorten the basket to check out process and

5.    How quickly do you respond to enquiries?  The quicker you respond, the quicker you can create your sales pipeline

6.     Do you know what your existing customers really value? If they give you testimonials then you can use these when prospecting. Better still will your existing customers use their own social networks to promote your products and services?  Word of mouth is still the strongest form of marketing.

Cash flow

1.    Have you considered making as much of your contact with your customers, suppliers, and prospects electronic – thereby cutting down your post, paper and print bills?

2.    Do you always say yes to customers who want credit or suppliers who want extended terms?  Don’t worry about saying No

3.    You may want to negotiate payment of a percentage of any invoice in advance of delivery.

4.    Is your supply network efficient?  The quicker you can turn around orders the quicker you can send out your invoices and if something in the chain is slowing your down then it’s your cash flow and your reputation with your customers that will suffer.

5.    Consider offering discounts for prompt payments or even early payments.

6.    Have you reviewed all of your costs – where do you spend most money?  Can you negotiate better terms from your suppliers, do you order just in time or do you sit on stock for too long?   As point 1 – what can you do to cut down on big costs like postage, print and paper all of which are prone to price increases on a fairly regular basis.

7.    Do you know which of your invoices are accepted, pending or queried?  Consider software, like secure-send ,which keeps an audit trail on every document sent via secure email which you can view before credit chasing.

How do you reward your employees when times are tight?

I know that we all like to get a pay rise and that we often expect these once a year.  However, when budgets are tight, pay rises are often the first thing to be put at risk.  Worse, some companies are presently giving a message around pay cuts. So, if you can’t give a pay rise to your people how do you show them that you appreciate them and reward them in other ways?

In my experience, there are a number of things that you can do, in the short term, which are almost as valuable as pay.  The simplest is to say “thank you” and “well done” and even to tell people how much you appreciate them.  Writing this, it almost sounds cheesy, but I know it works.  I may be a sucker for a sweet word, but every time I’ve been told “thank you” it’s made me feel special and has a longer term effect than a 1-2% pay rise.  Ok, so not as powerful as a 10% pay rise but good nevertheless.

So, how often have you stopped to say well done to people?  More importantly, how do you make people believe in the sincerity of your words?  A lot of people can be fairly sceptical about words of praise.  The key is not to make the comments in passing but to invest some time telling your employees why you appreciate them and to give specific examples of things that you think they did particularly well.

Also, people really appreciate honesty so if you can’t give a pay rise, explain why and make your team feel they are bought into the company and share a common challenge.  I appreciate that this needs to be balanced with the fact that some people could find this information scary and unsettling but at least if you are explaining and showing people what they can do to help.  Then, at least, it looks like you have a plan to get the business back on track and that it’s in everyone’s interest to make an active contribution to that plan.

There are a few other things you can do to reward people.  The first of these is to make rewards and discounts available to your employees.  There are a number of organisations that specialise in the delivery of employee rewards.  Discount vouchers, reward vouchers, and cash back services are gaining in popularity and there is a long history of giving extra discounts direct to employees via specialist websites.

For example, we run a service called MyPayRewards which is attached to our electronic ePayslip and online payslip archive services.  Any company that takes one of our secure edocument delivery solutions, which by the way will also save them money in reduced print and post costs, also has the chance to offer MyPayRewards to their employees.  We have a team of people dedicated to finding discounts and offers and making them available by an easy to use website.  We also display the best offers, often exclusive to us, via our electronic payslips so that when employees get paid they can make immediate savings. 

These employee reward schemes also enable employers to buy discounted retail vouchers for their employees too.  This means that rather than offering a pay rise, you could instead give your employees a one-off voucher discount card.  For example, one of the companies that we work with sell Love2Shop reward cards to employers.  The employer can fix the amount they want to load on the cards and then give them out to their employees as and when they think they should.  The employee can then use these cards at a range of very well known retail outlets.

What do other people do?  Have you ever given or receivde a non financial reward that has made a big impression on you? Why not share your views with others.

Plus if you want to know more about our ePaylips, Portal or MyPayRewards products you can browse: sslpost.com, email: dawn.baker@sslpost.com or talk: 08456 425 425

Sending documents from Sage 50 software

Imagine you could have a full audit trail on every document you sent...

Apologies, up front, for specifically writing about one of our own products but it’s relevant to an issue that came up at a recent event I attended.

Last week, a colleague and I attended some Sage events.  During the course of one of the events I got into a conversation with a lady from a small accountants practice.  We were discussing how hard it is for small businesses to manage their cash flow, particularly when they have a high volume of very low value invoices.  When is it cost effective to chase up and resend invoices when the amounts are less than £100 each?  If you are running a small business, you’ll be more than aware how valuable time, is so where do you spend it best when you’ve got to win new business and chase up invoices for business that you have already completed?

Clearly, if you could see where your invoices are and when they have reached their recipient, it would be extremely useful.  It would enable you to sort out any queries, chase those that haven’t been actioned and leave those that have already been approved.

The reason for attending the events was that we were launching our new product – secure-send for Sage 50.  Using our underlying virtual printer technology, our developers have managed to integrate the technology with the Sage API, to create an add-on that links directly into their Sage software.  In essence this means that when Sage 50 users install our software it links to their Sage 50 Accounts system.  Instead of printing an invoice you can now “virtually” print it – this creates a PDF which is then emailed to your customers. 

The immediate advantage is the saving in print and postal costs, the secondary advantage is that, if you are the sender, you can then see when the invoice was sent, received and opened.  We have also built in a recipient response mechanism which enables the receiver to click a button at the top of the invoice confirming the status: accepted, pending, queried.  They can then add a note if they want to e.g. I don’t think that was the price agreed for item 3 and send it back.

I think you get the point – this audit trail could help in more ways than one.  Secure-send for Sage 50 isn’t just for invoicing, it also covers statements, quotes, payslips, P60s etc.  In addition to sending the documents cheaply and securely, a copy of each is also back up in a secure online store – giving you extra peace of mind.  In addition, if you use the ePayslip service it also creates an account for each of your employees so that they can get past copies of their payslips at any time they want to.

If you are interested in finding out more, then you can email me and I’ll include you on our list for our next webinar dawn.baker@sslpost.com

Sending pay details electronically

Do you still send or receive your payslips on paper?

More and more businesses are looking at every single business process to see where money can be saved.  One of the biggest areas of expenditure both in time and effort is often in the production of payslips every month or week and the annual production of P60s.

Many large businesses have already moved their payslips into an electronic portal and/or to a secure electronic email solution, so as a small business what are the pros and cons for you and your employees and how do you go about choosing a solution?

For those of you who are unaware

A portal solution is a secure website where employee payslips and other documents can be stored.  Every month, the employee visits the website, logs in, using their password and views their payslip online

An electronic email solution is when employees are emailed every month and informed that their payslip is ready for viewing.  They click the link in their email and enter their password.  They can then view a PDF of their payslips on their computer.

So how do they weigh up?

The pros of a portal

The employee can access their current and past payslip at any time, from any computer

A range of documents related to each employee can be stored online

It saves on print, paper and postal costs

It reduces the impact on the environment

The cons of a portal

Employees have to remember to get their pay details

Someone in HR needs to ensure a correct upload of pay details every month

The reduction in paper is only valid as long as the employee doesn’t print a copy of their pay details

The pros of electronic payslips?

The employee receives an email every time they are paid as a reminder to open their payslip

The PDF can be customised to look just look like a payslip

The HR team just print to a virtual printer instead of a normal one so it’s very easy to install and use

It saves on print, paper and postal costs

It reduces the impact on the environment

The cons of electronic payslips

The data isn’t stored automatically so if employees want to get back copies of their payslips, it’s harder to do so.

The reduction in paper is only valid as long as the employee doesn’t print a copy of their pay details

Clearly there are advantages and disadvantages to both systems.  The ideal solution is, therefore, a combination of the two, which indeed some companies now offer.  This has the advantage of pushing the pay details to the employees every month combined with the advantage of storing easy to access back copies in a secure online portal.

Of course, neither will be successful if you don’t engage and communicate with your people.  The most important part of the process is to be honest about why you’re moving this way – it’s cheaper, quicker and more secure and how it will benefit them: the business is healthier, they’ll get their pay details more efficiently and there is no risk of any data loss.

What do you think of the different solutions?

Do you send or receive electronic payslips?

As a business we provide both secure electronic payslips and an online archive.  If you want to find out more visit our website: sslpost.com or call me or one of my colleagues: 08456 425 425

Dawn

More legislation

Are you aware of all the forthcoming PAYE and  pensions legislation?  How will SMEs gear up for the changes?

Despite repeated promises to SMEs by successive governments that the administrative burden is set to ease, nothing really seems to change. 

One subject close to my heart is the forthcoming changes to pension legislation and the change in PAYE submissions.

Apart from the extra burden that is going to be imposed I also have a concern that the government aren’t doing enough to inform SMEs about what’s going on, why it’s going on and how it will impact them.

I’m going to endeavour to help but I would recommend that what I write is my understanding and it may require some verification, not least because some elements have yet to be defined and set in stone.

Pensions

Some of the most important changes to the pension system will start coming into effect from October 2012 so the clock is ticking.

By 2016 every employer in the UK will be affected by this new legislation.  Whether you employ one person or more you will be required to automatically enrol them into a pension scheme – this is being called “auto enrolment”.  In addition, when you enrol them you will also be expected to make a contribution to the pension on the employees’ behalf (this changes over time but will be between 1% to 3% i.e. you can start with 1% but by late 2017 it looks like you will be expected to contribute 3%). Plus, you will be obliged to keep an audit trail of contributions, auto enrolment conversations and opt out decisions for every employee for more than six years.

This is far more reaching and will have much more impact than the stakeholder pension schemes that were introduced a few years ago.

Starting from 2012 everyone earning over the standard pension allowance (£7,475 – 2011/12) will need to be automatically enrolled into a scheme and the employer will have to make some kind of minimum contribution.  If the employee decides not to join they will need to “opt-out” and the employer has to have on record, in a way that can be proved,that the conversation has been had and that it was the employee’s decision to opt out.  Not easy to do this efficiently but critically important if you don’t want to get fined!!

The bigger employers will start first but it’s amazing how time flies – every business will need to comply in less than 5 years from now!

Key Dates:

Oct 2012 – Largest firms go first PAYE of more than 120,000 employees

Nov 2012 to March 2013 – 10,000 to 120,000 PAYE employee companies

April 2013 to Sept 2013 – 1250 to 9,999 PAYE employee businesses

Oct 2013 to July 2014 – medium size businesses of PAYE 50 to 1249 employees will need to be enrolled

August 2014 to Feb 2016 – small businesses – fewer than PAYE 50 employees

New PAYE schemes started between April 2012 and March 2016 have until Sept 2016 to enrol their employees

There are some exclusions as to who needs to be offered the chance to auto enrol – those aged 16-22 and those over state pension age have some slightly different qualifying criteria – suggest you check this out nearer the time!

Employers can start this process before these key dates, which may be wise as there are possible penalties if the dates are missed.

In terms of schemes, probably the most popular for the smaller businesses will be the Government’s own scheme called NEST (National Employment Savings Trust).  The scheme is designed to be low cost but there are still some annual management charges.

Plus, the government has estimated the cost of simply administering and complying with the new regulations at around £46.00 per employee per year based on an Employer with fewer than four employees, while the Federation of Small Business has suggested the total cost to the same employer will be will be at least an extra £2,550 per year in administration and pension costs.

Confused yet?  I’ve spent a few months trying to get my head around this and it’s still a bit unclear.  However, the good news is that, together with Wealth Management Group, we’re working on a cost-effective and automated system that will take the headache and a lot of these admin costs away – watch this space and our SSLPost tweet account for updates nearer the time!

Changes to PAYE

Have you heard of PAYE RTI (Real Time Information)?  HM Revenue & Customers (HMRC) have confirmed that its Real Time Information is going ahead with a pilot in the beginning of April 2012.  If the pilot is successful then it will go ahead from April 2013 and everyone is expected to be in the scheme by October of that same year.

But what is it?  In brief it’s that employers will have to report tax and NI deductions at the same time as they pay their employees rather than at the end of the financial year.  As you can imagine this change could be significant for SMEs and won’t be possible unless their existing software/payroll bureau providers come up with a way of doing this automatically.  This is what the pilot is all about.

Again, we’ve been working with BASDA (Business Application Software Developers Association) to try and keep abreast of what’s happening.

HMRC say that RTI is aimed at:

a.    making it easier to ensure individuals pay the right tax after a change of job

b.    removing the need for the P45/P46 process over time

c.    simplifying the PAYE end of year reconciliation process for both employers and themselves

d.    removing any errors in the tax credits systems

There was even talk about employers having to pay HMRC before any employees got paid but I’m not sure whether that’s still on the cards.

Again, watch this space – I’ll try to keep you udated

For more information please click the following link to an article on "accounting web":

http://www.accountingweb.co.uk/topic/tax/hmrc-takes-pressure-rti-launch/491484

Leadership and Management

What makes a good leader and can you apply the same principles to a business of 1 or a business of 1000s?

Michael Rake, Chairman of KPMG International summed it up when he wrote “Every leader has a responsibility to set the right tone at the top.  To live the values the company espouses and to lead by example; just repeating the rhetoric is not enough.”

For me, leadership is more about actions than words.

Too often, companies spend a lot of time and produce a lot of paper around what values & behaviours  the company should live by (this can be included in their brand positioning – see my thoughts on brand) but give very little thought about how those values should be lived once they have been decided.  In the end they produce manuals that can contain a long list of words, with values like: integrity, trust, authenticity and innovation and behaviours like: passionate, collaborative, agile etc.  These are usually understood by those that have created them but for others it becomes a test of recall rather than of understanding.

Call me cynical but you don’t teach your children their values by giving them a long list of words by which they must live their lives.  You “teach” and “show” them what is right and what is wrong, what reaps positive rewards and what creates conflict.  I’m not saying all parents get it right, far from it, but the journey, shared together, often gets the best results.

I’ll stop now as I’m beginning to sound self righteous, which is not my intention.  I am just staggered by the number of words that are written about leadership and yet how few people are really capable of it.

Don’t get me wrong, I believe in a shared leadership standard.  This is particularly important for small businesses which are growing rapidly, as they need to quickly impart to each new member of the team what it means to be part of the business and for each new manager the standards that they should operate by.  

However, simplicity is the key.

I would summarise it like this:

1.       Know each member of your team – learn about them and how to get the most from them

2.       Look forward not down, and certainly not back

3.       Learn and evolve

4.       Be the best that you can be – make an effort to improve yourself

5.       Hesitate - involve and engage others even when you think you have the answer

So what do I mean by this?

1.       Getting the most out of each member of your team is all about understanding how they tick.  I know from past experience that I tried to handle everyone in the same way.  It wasn’t that I was thoughtless; I just assumed that because everyone liked me that meant I was a good manager.  It wasn’t until I got the results from a 360 degree survey that I found out the truth.  Yes I was well liked, yes some liked my management style but others positively hated it (I should point out my natural inclination is to be an activist – i.e. to jump straight in and get on with things.  This didn’t suit the reflectors and the theorists in the team who preferred to have time to plan and consider).   I worked really hard to adapt my style to suit those around me rather than to suit myself.  This is what I mean about getting to know your team and adapt accordingly.  If you do this then they should naturally follow and hence you’ll generate a natural cascade of style where everyone can learn by example.

2.       To a varying extent I believe that we all look to our managers to be visionaries.  This isn’t about expecting them to produce Einstein moments every day but more about creating an environment which encourages a shared vision for the future considering the market, the customers, the competitors and the individuals within the business.  Leaders shouldn’t seek to place blame on individuals for things that have gone wrong in the past nor should they spend their time entirely focused on the here and now.  Although, clearly some time needs to be spend on the immediate requirements. 

3.       In order to look forward it is important to reflect on things that have gone well and not so well with every project.  We are all too ready to move to the next task and project without spending the time analysing what has gone before.  A good leader creates a positive discipline around post-project analysis.  This is something that, I believe, most military groups do well.  They will always do a post-campaign debrief before they move on to the next exercise.  Business is no different if we don’t learn from what we have done how will we, our managers and our teams learn and improve?

4.       As I have mentioned before, don’t assume that being who you are today is all that you can be in the future.  Take the time to reflect on your style of management and what has worked well, and not so well, when you are handling other people, customers or peers.  If you can create some time to learn more, whether through formal qualifications or extensive reading, then this can only help.  If you can bring in a consultant to work with the team then even better, as you will then share a common understanding and a better grasp of those around you.

5.       In my experience many leaders believe their role is about managing projects and people through a series of tasks, many of which they think they can do better if they do it themselves!  However, how will anyone (including you) learn how to do things better if they are simply on a treadmill with no opportunity to influence?  Take the time to stop and discuss with your team or peers – is there a better, different, enhanced way to do something?  Engage people in a discussion to contemplate: what is right about what you are doing? What information might help us do this better?  How could we do it differently? What is wrong about what we are doing?  Rather than having all these answers in your own mind, call upon the complementary knowledge, experience and behaviours within the entire team involved.  This approach should also be the same in one to one discussions.  Don’t just tell your team member what to do but engage them in a discussion about how it could be done, improved, enhanced etc.

I’d love to hear from other people – do you have any other thoughts to add to, improve or enhance this blog?