Posts tagged ‘Year End’

On Wednesday 24th March the Chancellor, Alistair Darling gave what could be his last budget. Many are saying how the budget was a waste of time, being so close to an election and the lack of assistance to small businesses or real attempt to recover from the significant budget deficit certainly supports this view.

Businesses however, should consider reviewing their own budgets and make sure they are set appropriately. As someone a lot wiser than me once said ‘failing to plan is planning to fail’.  Just as sinful is spending time creating a business plan and annual budget and not reviewing, updating or revising them on a regular basis.

Budgets are an important tool for anyone in business and at least an annual review should be considered. Many businesses approach their accounting year end at this time of year so it is an ideal time to appraise how your business is doing and what you wish it to achieve in the future.

Here are a few tips to consider when reviewing your budgets for the year:-

  • Are you producing management accounts on a regular basis, if not, what financial information can you easily extract from your accounting system that would help you monitor the business?
  • Business forecasts and cash flow projections should be prepared for a minimum of twelve months giving you something to monitor performance against;
  • You should ensure budgets are realistic in the current climate,
  • Are there any costs that can be trimmed back? Do you know which of your costs are fixed and which are variable, in reality in the short term most costs are fixed, if you need to go through a cost cutting exercise you need to know which costs can be varied and when.
  • Is cash flow behaving as expected? Are you likely to need further banking facilities at some point in the future?  Are your debtors and creditors being managed appropriately?
  • If you are selling a product, it is important to know at what point the business is generating a profit, following the recession with pressure on prices the break even point can be higher than you realise, you need to be aware of this.
  • If you are selling a service, do you know how many of hours of time you are invoicing out a month, you may feel busy but is it resulting in billable income.
  • How are you generating new business, and what is this costing you in terms of time and resources.  Are you being realistic about how much new business can be won?

Focus your attention

Reviewing your businesses budget can be a very valuable exercise.  It will focus your attention on how your business is doing and help you to keep control of costs.  It should also give you a target to achieve for the future.

If you are in business on your own, it may be beneficial to speak through your budgets with someone who understands your business, like your accountant, for example as this may help you to look at the bigger picture, question your processes or brainstorm ideas.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.

The Charity Commissioners have been quite public about their detailed and sometime rigorous reviews of registered charities’ compliance with their public benefit tests.

The two key principles of this imperative test being:

support tree1. There must be an identifiable benefit (or benefits)

It must be clear what the benefits are, how they relate to the aims of the organisation and they bust be balanced against any detriment or harm.

2. The benefit must be to the public (or section of the public) 

The beneficiaries must be appropriate to the aims.  If a section of the public is the target, the opportunity to benefit must not be unreasonably restricted by geography or ability to afford fees etc.  People in poverty specifically must not be precluded from the opportunity to benefit and any non-public benefit should be incidental.


The implications of losing charitable status are huge.  Not only would the loss affect public confidence and therefore the ability to raise funds, but H M Revenue & Customs have the right to ‘unwind’ tax exemptions claimed in the past six years which could create liabilities that would simply end the organisation’s ability to continue.

If you would like to see some of the Commission’s “Emerging Findings” reports, take a look at their website.  http://www.charity-commission.gov.uk/publicbenefit  You will notice that they seem to be targeting fee charging schools as they are suggesting that offering a few bursaries to good students that can not afford to attend, does not constitute ‘public’ and is not going far enough to remove restrictions, but all charities are susceptible to this review.

Any charity with annual income above £25,000 (effective for accounting periods commencing 1st April 2009) must attach a Trustees’ Report to their financial statements and file these with the Commission with in 10 months of the accounting year end.  For incorporated charities this is in addition to the required Directors report.

This report is in my view, the best defence against a review as it gives the Trustees the chance to explain the activities of the organisation in both financial and non-financial terms as well as stating the aims, objectives and policies of those charged with governance.  It should tell the ‘story’ of the charity for the year giving those who are not trained in business the ability to understand how the charity is performing and the impact it is having on the public.

Much of my time spent working with trustees of charities revolves around this key report, guiding and advising them on structure, essential disclosures and helping them to explain the accounts and performance of their organisation.

The information provided in this blog illustrates my opinions and experiences, it does not constitute advice and I do not accept responsibility for any actions taken or refrained from as a result of reading this post.