Cumbria Tourism, one of Cumbria’s many quangos, is having to re-invent itself because of the Government’s spending cuts.

The Chief Executive, judging by his comments in last week’s Westmorland Gazette, seems to be struggling with the concept however.

I have written a letter to the editor pointing out the weakness of his argument.

If the Chief Executive of Cumbria Tourism wants Cumbria Tourism to be a “private sector business” perhaps he should start acting like a businessman.

Justifying the “success” of Cumbria Tourism in terms of how much tax other businesses pay (“For £1 of public funds spent by Cumbria Tourism , £7 finds its way back to the Treasury in terms of taxation” Letters August 12, 2010) reveals his public sector mentality.

Cumbria Tourism members and other businesses struggling with the recession will not be as easily impressed.

Now, I just have to wait to see if it’s published!

Like most of the country I just don’t understand how the banks have got away with it.

They have ruined the economy, having extracted huge amounts of money for themselves in the process. We, the taxpayers, were forced to bail them out and will be paying for that privilege for years and the one thing which hasn’t changed is the banks’ attitude.

Today, a client learned that HSBC hadn’t paid one of his direct debits despite him having sufficient (cleared) funds to pay it. One thing which did puzzle him was why the direct debit no longer appeared in the list of direct debits on his HSBC web pages.

Rather than phone HSBC he contacted the firm which should have received the money, first to apologise and second to ask if they knew why the money hadn’t been paid. On checking their records they told him that the direct debit had been cancelled.”Impossible”, he replied,” I haven’t cancelled it” but the firm told him it was a forced cancellation.

On speaking to HSBC he was told that because the direct debit had not been paid previously the bank had cancelled it (without telling him). Worse still they would not reinstate it.

No other business would dare to behave like this with their customers.

HSBC’s statement that

With our global experience, local knowledge and support, HSBC can help your business achieve its ambitions.

doesn’t seem to hold water.

This ended my week very nicely.

Call from @StuartJones puts my mind at ease. Nice to have a friendly & accessible accountant – I couldn’t suss out the HMRC rules.

Thank you David.

The Lex Column in yesterday’s Financial Times had an interesting story on “free cash flow” and it’s importance to investors.

To paraphrase the article considerably, it said that analysts would be busy calculating free cash flow because alternative measures of performance such as net profit or earnings before  tax, interest, depreciation etc. misrepresent what really matters to shareholders: hard cash. Later it warned that the results can deceive, too. Fast-growing retailers often have ongoing negative working capital positions as shoppers pay upfront for goods while suppliers get paid later. For example, Amazon’s second-quarter results showed that for the 12 months to the end of June, growth in accounts payable less the growth in accounts receivable contributed $707m to operating cash flow – almost a quarter of the total. This does represent real cash but investors would be wrong to assume that the growth allowing this to happen lasts forever.

Amazon may seem a million miles from most small businesses but their “success” in managing cash flow by being paid early and paying suppliers late can cripple smaller businesses. And, too often, it’s the advice given by inexperienced “business advisors”.

Quite simply, as Lex says, it

would be wrong to assume that the growth allowing this to happen lasts forever.

One day your business will literally run out of cash and die. It is therefore imperative that in generating a good cash flow you understand where the money is coming from and manage that cash wisely even if it does mean ignoring popular advice and paying your suppliers early instead of buying expensive assets for the business.

HMRC have changed their debt collection policies by hiring four (private) debt collection firms in an attempt to collect extra millions of unpaid taxes.

Private debt collectors in my experience are a lot “harder” than HMRC. They expect more money and they expect it sooner and they are more likely to use distraint.

The Revenue have said, however, that before a debt is referred to an external agency, they will write to the debtor to provide a final opportunity to pay or reach an agreement with the taxman.

My advice is to take that opportunity rather than have to deal with commercial debt collectors.

Interestingly, the UK Insolvency Helpline echoes my views when referring to the Collector (of Taxes) by saying:

The collector should act within the law, and you need not fear the illegal behaviour that is sometimes reported of bailiffs who carry out distraint for other debts

Don’t whatever you do ignore the revenue it will be more difficult, stressful and costly in the long run.

Not everything I do is about numbers!

Recently a client asked me for some advice about a business he was thinking of buying and in my research I found the Garden Design Guru blog. Written by the Principal of the Oxford College of Garden Design it is not surprisingly mainly about gardens and gardening but one article did catch my eye:

How Much Should I Charge per Hour? Calculate your hourly rate based on facts not fiction

For those about to start business who will be charging by the hour it’s well worth the read.

And it won’t do those who are already in business any harm to read it to make sure their hourly rate is still correct

The rise in share prices (a bull market) over the last year has meant more and more people are thinking about investing in the Stock Market.

Yesterday’s Financial Times made this comment on the situation:

It has been said that the Stock Market is the only one where customers flee when there is a sale, only to rush back when they can pay full price. Bull markets draw a crowd after all and, after a two-thirds mark up from last March’s low, equities easily meet that definition.

In simple terms, you may be too late!

Paris graffiti has its own website as does New York but I can never see Kendal graffiti achieving this because of its poor artistic quality and content. At best it will be a variation on

Daz s****ed Sharon here 24/6/99

Recently, however, some graffiti has appeared by the river which appears to have been written by someone with a brain

A better class of vandal perhaps?

Last week’s the Sunday Times published a story about HMRC’s IT Chief leaving his job and being “re-employed” as a contractor through his own limited company.

Contracteye has the details which it describes as “IR35 irony”.

HMRC’s guidance on IR35 tells us why IR35 was introduced

Intermediaries such as service companies can be set up to provide the services of a single worker to a client in circumstances where, if it were not for the service company, the worker would be an employee of the client. The use of service companies in this way allows the client to make payments to the company rather than the individual, without deducting PAYE or NICs.

Any further comment seems unnecessary.

Yesterday’s Lex Column in the  FT had an interesting article about retailers and VAT which said that the increase in VAT next January would appear to present them with “a lose-lose decision: absorb it and hurt margins, or pass it on and hit consumer demand”.

Lex then commented “This underestimates the dark art of retailing”.

German retailers faced a similar prospect four years ago. According to a Bundesbank study, many raised prices in advance and enjoyed healthier margins as the public brought forward purchases to avoid the rise. So when VAT changed only 10% of prices changed and in the following few months there were more and bigger price reductions than was typical

A warning, however, if you supply retailers – the long notice period before the VAT increase gave them the time and the excuse to squeeze their suppliers.