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Don’t deny facts – use them instead

If I was sat in the Prime Minister’s chair (I was, briefly), I’d start with the facts to help me with making decisions, and so, policy. There’s been a regrettable trend around some parts of the world to dispense with and even disparage facts that don’t suit the (particularly for populists) message.

Whatever your stance on leave or remain, it’s a fact, like night follows day, that if you put up barriers that which you did easily before will be harder afterwards. Brexit inevitably meant barriers to trade with our largest and easiest market, as a fact, and reduced trade. GDP was, despite all the denials, bound to fall and, as a fact, it has by some £100 billion per annum. That, in turn, voluntarily threw away some £35 billion in taxes that would have been provided for the nation each year and which are now going to be met by increased taxes on citizens and businesses that are likely to depress GDP further. Yet, despite the facts (and OBR confirmation of those facts), there is government denial that Brexit has made us poorer, with Covid and the war in Ukraine the only culprits, instead. This is not governance with the promised “Integrity”: it is deceitful.

Now, the government’s messages are the need for two things: a) stable finances; and b) growth. Growth could be created by looking at and implementing easier trade, with fewer barriers. However, there are two obstacles in the way: firstly, hardline Brexiter MPs who would see “Betrayal”; and, secondly, denial that Brexit has created any growth problem. The former can be dealt with by a cogent argument, well communicated, but the latter is really difficult to solve as it’s not admitted there’s a problem. Labour, for its part is keeping quiet, almost unable to mention the word Brexit. This is tricky as it’s a fact that there’s a problem but the government denies it, while other politicians just keep their heads down for political reasons.

Would an even adequately run business behave the same way? Can you imagine it introduces a raft of additional procedures and costs, sales drop 15% but the board then denies the drop in sales has anything to do with the additional procedures and costs? Of course not: it wouldn’t have done anything so daft in the first place but, moreover, if it had it would recognise the problem and fix it. For business, of course, commercial decisions tend to be logical and not saddled with the sometimes-toxic emotion that accompanies politics. “Freedom”, “Foreigners” (taking our jobs), “Betrayal” “Take back control”, “EU bureaucrats” etc. are not terms influencing decisions in most board rooms in the UK.

You can’t argue that the principle of a referendum on a major constitutional point in the direction of a country is unfair. It has consequences, of course, if there is a change of direction, as there was in the UK. The argument might logically be “The British people voted to be poorer [by voting for Brexit], and we have an obligation to deliver that…”. Except, of course, leave voters did not vote to be poorer because they were told [against all logic] that they would be better off, not worse off. Logic inevitably came about and we are, in fact, poorer.

There appears to be universal agreement across the political spectrum that “growth” would be good for the citizens of this country and fund some of its badly needed services and infrastructure. Surely, now is the time to allow facts a place at the table. Facts about trade will illustrate the individual issues and overall problem that needs to be addressed but there then needs to be acceptance of those facts, not delusion. It seems already likely (given findings of recent surveys of significantly changed public attitudes after the actual {not promised} results of our hard Brexit are becoming clear) that some practical measures to ease trade barriers to boost growth would not have the damaging political effect the parties apparently fear.

Come on, our political representatives! What are you afraid of? Let’s have practical solutions, not dogma or denial. I challenge you to present us with the facts about trade barriers and your practical solutions. The public and business will let you know their views – and you might be pleasantly surprised.

Written by John Boydell

Inflation impact on SMEs

Inflation in the UK is now at its highest for 40 years.

While a lot of media commentary has been on the cost-of-living increase for UK consumers – the Consumer Prices Index (CPI) rising by 9.4% in the 12 months to June 2022 – there has also been a major inflationary impact on UK businesses.

Indeed, it could easily be argued that the inflation pressure on UK business is greater than that on UK consumers – the Production Prices Index has risen by 24% in the 12 months to June 2022.

Consequently, any business that uses large quantities of energy (electricity, gas, or oil) in its production process and/or petrol or diesel for transportation of goods will have been especially affected by the recent inflationary pressures. In practice this effect applies to all goods and services consumed by all businesses.

The Impact of Inflation on SMEs

Inflationary pressures will affect a SME in a number of ways.


Inflation results in suppliers and services providers increasing their prices. As a result, the SME’s input costs would rise.

Cost of living increases are likely to give rise to employees’ demands for higher wages – another key input costs for many SME.

Operating Margins

With increased input costs, due to supplies being more expensive and higher staff costs, the SME would suffer a fall in its operating margin and, consequently, its profitability.

Selling Prices

To maintain its operating margins, the SME could increase its selling prices – offsetting the input cost rises.

However, the SME’s customers may be resistant to price hikes and therefore delay purchasing or switch to other suppliers, who have not raised their selling prices. Both scenarios would compound the trading difficulties for the SME.

Worst case, if customers are not willing to pay more then the business could very well fail.

Investment Plans

Inflation may cause the SME to delay or, indeed, bring forward its investment plans.

Due to inflation and interest rate rises on any associated borrowing, the cost of investment in production capacity or technological improvement may make the case for that investment unviable.

Also, the market may not now be there (due to reduced demand) to enable the SME to take advantage of any increased production capacity brought about by the investment.

On the flip side, bringing forward plans for further automation of, say, a production process may make more sense if the cost of automating now outweighed the rising employee costs.

Any efficiency through investment should help the SME to repair its operating margins and profitability.

Dealing With Inflation through Cash Preservation

The SME could seek to reduce controllable expenditure such as its indirect costs (e.g. marketing or advertising budget). Indirect cost reduction would provide short term relief, but the SME would need to watch the longer term harm, especially a reduction in marketing.

Cash is the lifeblood of any business so managing cash flow is vital, particularly in times of stress. The SME could seek ways to improve cash retention. Reducing inventory (to release cash tied up in stock) or shortening the working capital cycle would help the SME to continue trading through inflationary difficulties.

Reducing the time given to buyers to pay would allow cash to be collected more quickly and before inflation erodes its value. Lengthening the time taken to pay suppliers would preserve cash for longer and the SME would also benefit from the erosion of value, due to inflation.

Requesting a moratorium on or a rescheduling of debt repayments would reduce debt servicing costs in the short term and preserve cash for trading through any inflationary difficulties. A reduction in cash outflows for debt repayment would also help mitigate the negative cash flow impact of rising interest rates.

Key Defensive Measure

Despite the doom and gloom of high inflation now is the time for every business to go back to basics, look at what it does and why. Seek out and redefine product or service Unique Selling Points, then focus on taking this message to market and create motivation for customers to buy higher value products and services. Sell on the value you are creating not price; this is a tough fight but one that is very much worthwhile taking on to secure long term business sustainability.

Written by Alan Wilson

Euro at Parity with US Dollar – why should we in the UK care?

An ever-strengthening U.S. dollar has achieved parity with the Euro. This is the first time the US dollar has reached parity since the Euro was in its infancy over 20 years ago.

Why should we in the UK care about a strengthening US dollar or a depreciating Euro?


The invasion of Ukraine sent shock waves through both the global food and energy markets – resulting in significant price hikes.

Food and energy are two significant basic needs for consumers. As a consequence of the requirement for many economies to import food and/or energy, those commodity price rises have fanned domestic inflation.

Also, with many global commodity prices set in US dollars, the strengthening US dollar has added to those importation costs and that inflationary pressure.

The USA is both a producer of grain and fossil fuels so, arguably, better able to ride out any turmoil in commodity markets. Having said that, inflation is currently a major issue in the USA – they way it is in many economies across the globe.

US Dollar Strength

Since World War Two, the US dollar has been considered a safe haven in times of global crises and, generally, there is a flight of capital to safe havens when global economic shocks occur.

Any flight of capital (from the Euro, Sterling etc.) will strengthen the US dollar and weaken the other currencies.

Also, the U.S. Federal Reserve has been relatively more aggressive in raising interest rates, thereby increasing yields on US Treasury Bonds, and making the US dollar even more attractive to investors.

All of that has resulted in a significant strengthening of the US dollar, particularly in the past few months.

It is not just the Euro that is under pressure

The Euro has been depreciating against the US dollar for over a year now. It is 15% down in the past 12 months – but 11% of that loss has occurred since the Russian invasion of Ukraine.

The Euro is not alone. Sterling is also down against the US dollar by 15% in the past year and 11% since the invasion of Ukraine.

Against the Japanese Yen, the US dollar has appreciated 26% in the past year with 21% of that gain since the invasion of Ukraine.

Even against that other traditionally safe haven currency, the Swiss Franc, the US dollar has appreciated over 6% in the past 12 months – almost all of that gain since the invasion of Ukraine.

Despite the recent media headlines, the Euro is not alone in being under pressure – albeit parity with the US dollar is an added psychological factor for the Euro.

Interestingly, the exchange rate for Sterling v Euro has not moved much in the past 12 months – it was 1.17 a year ago and is just above 1.18 now (down slightly from 1.19 at the time of the invasion of Ukraine). As such, the UK cannot ignore what is happening to the Euro.

What does this mean for businesses and consumers?

Movements in global currencies can have a major impact on businesses that sell their products abroad or depend on imported raw materials for inputs into their own finished goods.

Higher importation costs (plus a strong US dollar) put pressure on business operating margins that can only be repaired by raising selling prices. Factory prices rises, of course, lead to inflationary pressures. Factory price rises can also dampen consumer demand which in turn affects businesses cash generation and profitability.

Domestically, inflationary pressure is often tackled by raising interest rates but that also hits consumers through higher mortgage servicing costs.

Those significant cost of living increases lead to wage demands – we are seeing those and a greater incidence of strikes in support of higher wages.

As employee costs are another significant input for businesses, especially in the UK where our level of automation is below that of other major competitor economies, any wage increases will add to inflationary pressure.

In turn, that inflationary pressure would result in further factory price rises, put additional stress on consumer demand and, ultimately, lead to an increase in unemployment. That is a vicious cycle that can easily result in recession and, even, stagnation.

To answer the question raised at the start of this article – yes, we should care about the weakening Euro and the strengthening US dollar.

Written by Alan Wilson

Getting The Most Out Of Your Banking Relationship

Getting the most out of your banking relationship

Every business has a bank account. Most businesses will also have a relationship manager who managing the bank’s relation with your business. Small businesses may not have a named relationship manager and may also find themselves dealing with a call centre.

If your business has a relationship manager – great! But how strong is that relationship? Like any worthwhile relationship, your banking relationship should be supportive and collaborative. Is your bank supportive of your business?

Check your bank’s pro-activity

Your bank manager should be acting as a guide to the bank’s products & services that could help solve your financial headaches or support your business growth.

Ask yourself the following questions to check your bank’s pro-activity:

  • Do you have a named relationship manager?
  • Does your relationship manager understand your business?
  • Do you recall when your relationship manager last contacted you?

If you would answer “no” to any of the questions then your business is unlikely to be getting a sufficiently pro-active service from its bank

In that situation a business should consider seeking an improved banking relationship through:

  • Requesting a change of bank manager or banking channel
  • Moving to a more pro-active bank

Check your business’s pro-activity

Any good relationship should be two-way. We have looked at the bank’s side of that relationship equation. We shall now look at some practical steps a business itself can take to improve the banking relationship.

Ensure accurate financial forecasting

  • Don’t ignore mid-month overdraft peaks – build in headroom. For example, what would be the consequences if your payroll were due on the 25th of the month but your biggest customer delayed paying you by a week from the 21st until the 28th?
  • Don’t commit to onerous debt service obligations (interest payments & capital repayments) – that could risk leaving your cash flow too tight for normal trading

Maintain good control of cash

  • Don’t rely too much on short term borrowing – it requires annual renewal and could leave you open to changes in pricing (likely to be upwards!) or, even, refusal to renew
  • Don’t use cash to purchase capital assets if that could leave you short of day to day working capital
  • Don’t lose focus on debtor control – a bad debt can seriously hurt your cash flow

Communicate with your bank

  • Keep your bank informed
  • Don’t hide bad news – Banks hate surprises

Keep your side of the bargain

  • Don’t breach terms and conditions of loan agreements – if it says the provision of management accounts within 21 days of month end then ensure that happens
  • Don’t give the bank any reason to question its level of support for your business

Be aware of your business vulnerabilities

Don’t be too dependent on one supplier – you leave yourself open to the risk of price hikes or reduced credit terms

Don’t be too dependent on one customer – you leave yourself open to the risk of delays in receiving large payments or, even, of the customer taking their business elsewhere without warning

How Ampios Can Help 

Here at Ampios, we have a team of dedicated specialists that can work with you and your bank. We can also help you find not only a more pro-active bank but also the most appropriate forms of finance for your business now and in the future. We have comprehensive links with banks and alternative finance providers. If you need to get in touch, we’d love to have a chat. Give us a call on T: +44 (0)333 987 4672 or send us a message via our contact form.

Financing Issues For Businesses & The Impact Of The Bank’s Reaction

Financing Issues for Small To Medium Sized Businesses

Financing Issues

In other words, the risk of running out of cash in your business.

This can be caused by a range of factors:

Poor financial forecasting

  • Ignoring mid-month overdraft peaks leading to insufficient headroom in borrowing facilities
  • Debt service commitment (the cash needed for interest payments & capital repayments) uses up too much of your cash flow
  • Too much reliance on short term debt meaning annual renewal and exposure to changes in terms & conditions or refusal to renew

Poor cash control

  • Purchasing capital assets from cash flow and leaving the business short of day to day working capital
  • Inadequate debtor control (e.g. collecting debts too slowly)

In-built business vulnerability

  • Allowing too long a period of credit – this may attract financially weak customers with the accompanying risk of bad debts
  • One predominant creditor – financial impact of changes in terms of trade (e.g. reduced credit period)
  • One predominant debtor – financial impact of delay in settling payment or taking business elsewhere
  • Seasonal trading or fluctuations in taste or fashion
  • Competitors are much larger – under-cutting on price and better able to ride out a squeeze on profit margins

Any financing issue will raise concerns with a business’s funders and, especially, its bank.

Banks’ Reaction to a Financing Issue


If your bank offers additional support – great news!

However, that additional support may come at a price – additional fees and, possibly, an interest margin increase due to greater perceived risk.

Not Supportive

What happens if your bank doesn’t want to provide additional support?

Because of the greater perceived risk mentioned above, a business could still be faced with higher financing costs even if the bank isn’t supportive – a further strain on an already tight cash position.

Also, the business’s owners would still have the problem of finding another solution to the original financing problem.

Some Bank Reactions when Businesses have Financing Issues

  • Higher pricing for borrowing facilities due to an increase in risk – interest margins, arrangement & monitoring fees
  • Increased security requirements – request for personal guarantees from directors, possibly supported by personal assets
  • Additional financial conditions – management accounts monthly instead of quarterly, weekly cash flow forecasts
  • Additional and/or tightening of financial covenants – increased debtor cover
  • Pressure to enter into costlier bank products  – interest rate hedging or switch from overdraft to invoice financing
  • Risk of being moved to “intensive care” – with resultant monitoring fees levied by the bank
  • Insistence on an independent business review – appointment of investigative accountants with the cost being picked up by the business

Overall Impact on your Business of Bank Reactions

  • Higher costs at a time when cash flow is already tight – after all this was caused by a financing issue
  • Valuable management time used up – responding to the bank rather than guiding the business through its current difficulties.

How Ampios Can Help

Here at Ampios, we have a team of dedicated specialists who can work with you and your bank. We can also introduce you to alternative finance providers. All that to ensure your business has the right forms of finance for its needs now and in the future. If you need to get in touch, we’d love to have a chat. Give us a call on T: +44 (0)333 987 4672 or send us a message via our contact form.

Government Support For Business

Government Support for Business

We are all well aware that Government, in all its guises, is a major creditor of any business (National Insurance Contributions, VAT, Corporation Tax & Business Rates).

However, on the other side of the balance sheet, Government is also a major provider of business support –  even more so in the current economic climate due to the pandemic.

Local Support

Some Government support is delivered locally or regionally. There has been locally delivered pandemic related support such as business rates relief and grants.

In January, the Chancellor of the Exchequer announced a further £4bn grants package – for the retail, hospitality and leisure sectors – to be delivered through local authorities.

As well as locally delivered UK Government support, there is also direct business support from local government.

For example, in Lancashire there is the Business Growth Hub & Rosebud Business Finance scheme through the County Council & business growth support through the Local Enterprise Partnership.

Looking at the wider North West region, there is business support in the form of equity and debt financing available through the Northern Powerhouse Investment Fund (NPIF). The NPIF offers:

  • Micro-financing (£25k to £100k)
  • Debt financing (£100k to £750k)
  • Equity financing (£50k to £2m) for early stage to late stage businesses

Ask yourself, is your business utilising all the local & regional business support that is available?

National Support

We have seen unprecedented levels of business support from the UK Government due to the pandemic.

There are two key programmes of pandemic related support from the UK Government:

  • The Furlough Scheme – currently extended to 30th April
  • Coronavirus Business Interruption Loan Scheme – currently extended to 31st March

Focusing on CBILS, this support is free of interest & fees for the first 12 months. As such, not only would a business get a cash injection from a CBILS facility but there would be no cost attached to that borrowing in the first year.

CBILS loans are repayable over a maximum of 6 years (likely to rise to 10 years) and overdrafts are repayable over a maximum of 3 years. SMEs up to £45m turnover are eligible. CBILs support can be accessed through 117 lenders across the UK from the big banks to specialist business finance providers. Consequently, CBILS support can be tailored to the needs of your business.

Other UK Government support is available through specific national bodies such as Innovate UK.

Finally, some UK Government support is tax related. It may be a surprise to some that there is support from HMRC but, in fact, there are 3 significant tax relief schemes:

  • R&D tax credits
  • Embedded Capital Allowances
  • Patent Box

R&D Tax Credits

R&D tax credits are available to businesses developing new or improved products, processes, materials, services or devices.

That sounds “techy” and narrow in scope but, in practice, the application of the relief is broad. It can be relevant to almost any company – many you wouldn’t naturally associate with the term ‘R&D’.

Latest figures reveal £5.3bn of support was received by over 59,000 businesses who claimed R&D tax relief. That was an average of £90k of tax relief or tax refund per claimant- cash in their pocket not the taxman’s!

59,000 businesses is very small when compared to the total number of UK businesses. Consequently, there must be many businesses out there who are not availing themselves of R&D tax relief.

For SMEs, R&D tax relief has an additional benefit in that they can claim an extra 130% of qualifying costs giving total tax relief of 230% of R&D spend.

The principal industry sectors that have accounted for the greatest level of R&D tax credits are:

  • Manufacturing
  • Information & Communication
  • Professional, Scientific & Technical
  • Wholesale & Retail
  • Support Services
  • Construction & Mining
  • Arts & Entertainment

Ask yourself, has your business claimed R&D tax relief?

Embedded Capital Allowances (ECA)

ECAs could be available if you have bought or improved commercial property.

Property acquisition costs can be split into embedded fixtures & fittings (qualifying for capital allowances) & “bricks and mortar”.

On average, 25% of a property purchase cost may be embedded fixtures & fittings. That percentage varies with property type & use, with industrial sheds having lower percentages and buildings such as care homes having higher percentages.

Some of the fixtures and fittings that qualify for ECA are:

  • Lifts, escalators & moving walkways
  • Space and water heating systems
  • Air-conditioning & air cooling systems
  • Hot & cold water systems (but not toilet and kitchen facilities)
  • Electrical systems, including lighting systems
  • External solar shading

Ask yourself, has your business acquired or improved premises and, if so, have you claimed Embedded Capital Allowances?

Patent Box

Finally, Patent Box is designed to encourage businesses to keep and commercialise intellectual property in the UK. A lower rate of Corporation Tax of 10% applies to profits earned from patents in a Patent Box.

How Ampios Can Help 

Here at Ampios, we have a team of dedicated specialists that can help point you in the right direction or work with your business on an ongoing basis. We have comprehensive links with a range of lenders and can also introduce you to accountants and other specialists who are expert in liaising with HMRC. If you need to get in touch, we’d love to have a chat. Give us a call on T: +44 (0)333 987 4672 or send us a message via our contact form. 

Apply For The Coronavirus Business Interruption Loan Scheme (CBILS)

Coronavirus Business Interruption Loan Scheme (CBILS)

About the scheme

The CBILS was launched by the UK Government last year to provide financial support to SMEs that were losing revenue or having their cashflow disrupted as a result of the pandemic.

Since its launch, CBILS has been expanded meaning that more businesses can now access CBILS. One of the key changes to the scheme is that SMEs who would have previously met the requirements for a commercial facility can now access CBILS.

CBILs has also been extended due to the continuing economic impact of the pandemic. Currently, CBILs availability expires on 31st March 2021 but a further extension is likely.

Accessing CBILS

There are currently 117 lenders across the UK involved in the scheme. These include:

  • High-street banks
  • Challenger banks
  • Asset-based lenders
  • Specialist local lenders

The first port of call for most businesses would be their existing bank. A refusal from that bank does not preclude a business from approaching other CBILS lenders.

What is available through CBILS?

SMEs can access finance in many forms:

  • Term loans
  • Overdrafts
  • Invoice finance
  • Asset finance

As such, the CBILS support can be tailored to suit the specific needs of the business. It is not just the case of having to take on a term loan.

Key features of CBILS

  • Finance of up to £5 million
  • Government guarantee to the lender to encourage them to lend
  • The borrower remains fully liable for the borrowing
  • Government pays the interest and fees on the CBILS facility for the first 12 months – so cost-free to the SME in the first year
  • Term loans and asset finance facilities can be repaid over a maximum of six years (but may possibly be extended to 10 years)
  • Overdrafts and invoice finance facilities can be repaid over a maximum of three years
  • No personal guarantees for facilities under £250,000
  • For facilities above £250,000, personal guarantees may be required by the CBILS loan provider but exclude the guarantor’s Principal Private Residence and any recoveries under personal guarantees are capped at a maximum of 20% of the outstanding balance of the CBILS facility (after the proceeds of business assets have been applied)


A business must:

  • Be UK-based in its business activity
  • Have an annual turnover of no more than £45 million
  • Self-certify that it has been adversely impacted by the COVID-19
  • Not have been classed as a “business in difficulty”, if applying to borrow £30,000 or more

Businesses from any sector can apply, except:

  • Banks, insurers and reinsurers (but not insurance brokers)
  • Public-sector bodies
  • State-funded primary and secondary schools

What lenders will need from you

  • An indication of the business uses of the funds requested
  • Management accounts
  • Cash flow forecast
  • Business plan
  • Historic accounts
  • A breakdown of your business assets

How Ampios Can Help

Here at Ampios, we have a team of dedicated specialists. We can help you with your business planning. We can also work with you to make the right approach for the most suitable CBILS funding for your business. If you need to get in touch, we’d love to have a chat. Give us a call on T: +44 (0)333 987 4672 or send us a message via our contact form.

Government Support For Business

Unlocking Your Cultural Potential

The Way We Do Things Around Here

Increasingly in recent years, ‘the way we do things around here’, has become the preferred definition used to describe the culture of an organisation. Do you subscribe to this definition?

It has a lot to recommend it. The definition is simple and concise and there is something quite unifying about it. But it also appeals to a sense of togetherness that we like to feel about our lives and our work. So what does this definition tell us about culture?  Is this definition helpful when considering culture with a view to ‘culture change’?

Firstly, ‘the way we do things around here’ suggests that there is a way of doing things that we all agree with and support. It suggests that an organisation’s culture is something uniform and consistent, a defining characteristic perhaps. Do you think an organisation’s culture is as constant as this implies?

Culture In Victorian England

Try this … think about how you would describe the culture in Victorian England. Take some time to think about this. What would you say?

Many would say something like … Victorians were ruled by a detailed code of manners and etiquette, that they were straight-laced and prudish. They would say that Victorians prized propriety and reputation and that the lives of Victorian children were very formal and often lacked outward expressions of affection.

Whilst this may have been true, increasingly so perhaps over the course of Queen Victoria’s reign, it was never universally true of course. It was just true enough, often enough that it came to define the Victorian era.

How Do We Define Culture?

Cultures vary from country to country and from region to region, even in a country as small as England. In an organisation, whatever the size, culture can vary from site to site and from team to team. And it might even be true to say that the culture of a particular team can vary from time to time.

So, to define culture as if it were something uniform and constant (or that it could be), is neither accurate, nor is it particularly helpful when it comes to deciding how to improve it.

A prevailing wind in a particular place is a wind from the direction that is predominant or most usual. Occasionally however, the wind blows from another direction.

Influencing Culture

We believe that culture describes the prevailing personality or character, the feelings and beliefs of a group of people. As such, when thinking about influencing and achieving the culture you aspire to have for your organisation, the goal should be to have the work place environement that you want, more present in more groups of people for more of the time.

How Ampios Can Help?

And here’s a thought … you probably have the culture you want already, but it might not be present enough, often enough for it to be defining.

And that might be just the key you need to unlock your cultural potential and develop the culture you long for.

If you have any concerns about your company culture, get in touch to discuss how we can help you.

Learn A Lesson From Patisserie Valerie.

Learn a lesson from Patisserie Valerie.

Like us, you may have been reading about the issues and subsequent legal exchanges around the demise of Patisserie Valerie. The popular chain collapsed in 2019 following the emergence of a major accounting scandal. The Directors of the company are now suing the Auditors for negligence and for failing to spot an alleged manipulation of its books. This has now resulted in the board “being unaware that the group has insufficient funds to continue to trade”.

We can’t guess which way the case will go, but it may prove to be another example of how things can go catastrophically wrong if the directors don’t follow the rules. If it can happen to a large chain, it could happen to anyone.

The bottom line

The bottom line is that the ultimate responsibility for the success or failure of any business lies with its Directors. In businesses, directors have certain fiduciary duties which are part of the Companies Act 2006 and are therefore statutory.

Legal Responsibilities 

The Companies Act 2006 details the legal responsibilities you carry when becoming a director as follows:

  1. To act within powers in accordance with the company’s constitution and to use those powers only for the purposes for which they were conferred.

    As a director, it is important to be familiar with the articles of association for your business. These articles are likely to restrict your individual decision-making powers.

  2. To promote the success of the company for the benefits of its members.

    You should act in good faith to promote success for the company and its shareholders. You need to consider the outcomes of your decisions for everybody involved in the business. It is also important to consider the impact your decisions will have on the environment, the reputation of your company and your business’ success.

    All decisions should be made within the best interests of the company, not to benefit any individuals. However, be broad-minded when evaluating those interests, keeping in mind other stakeholders. The financial aspect is not the only perspective to consider.

  3. To exercise independent judgment.

As a director, you are legally obliged to exercise judgment independently and be prepared to question the decisions of others. If the existing board make decisions, it is important to question why that’s the best thing for the company. But if you have a different approach in mind, you should voice it.

  1. To exercise reasonable care, skill and diligence.

    In your position as director, you are expected to make decisions based on diligence, knowledge, skill and experience. If you have specific professional training, you will be held to a higher level of accountability than less-qualified members of the board.

  2. To avoid conflicts of interest.

    A conflict of interest could arise if you have a close, personal interest in the business of competitors or other third parties. Alternatively, if you are responsible for a decision regarding an employee or potential employee with whom you have a close relationship, this would also constitute a conflict of interest. If you find that you have a conflict of interest, you must declare this to the board. However, it is important to ensure that your non-financial interests do not take precedence over your duties as a director.

  1. Not to accept benefits from third parties.

You must not accept benefits with the expectation of you doing, or not doing, something within your power to influence a decision.

  1. To declare an interest in a proposed transaction or arrangement.

If you have an interest in a deal or transaction, you must make it known. If a close friend or family member will benefit from you doing business with a specific supplier, you must declare this to your board members.

By following these simple legal requirements your business is much less likely to suffer the fate of Patisserie Valerie.

How Ampios Can Help

If you have any concerns about how your board currently operates or are uncertain about how to make your board even more effective, get in touch to discuss how we can help you.

Coronavirus, Cash, And Your Business Survival

Coronavirus, cash, and your business survival

While vaccine development and its impressive rate of rollout is to be celebrated, the economic fallout caused by Coronavirus has been great and is set to continue.

It is likely you have already responded with widespread change in your business. Over the past 9 months, you’ve found new ways to serve your customers and protect cash flow. But what challenges await and how well prepared are you?

The CBI reports that manufacturers expect a sharp fall in new orders and output in the months ahead. With widespread coronavirus-related disruption, knock-on from overproduction ahead of our departure from the EU, border challenges and delays arising from Brexit.

You can sit tight and hope for the best, but it makes sense to understand the impact this could have on your cash position.

Identify your pinch points and plan how you can avoid and reduce expenditure. What cash needs to be raised from new sources? You must ensure that you are communicating with suppliers, customers and your bank.

Remember, the Chancellor and your local Council are very unlikely to offer the same level of support that you have benefitted from since the start of the pandemic.

As Captain Tom would say, “Tomorrow will be a good day”. But maybe a solid plan today will help deliver his promise.

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