Join In No. 34

We hope you've enjoyed the pagentry of the Royal Wedding this morning – don't forget we have issued guidance on paying your staff for this bank holiday (log in to view).  In this edition of Join In, we have a big focus on securing payment, hearing from both the Lead Member for Finance and from the BWF's insurance broker. We also focus on members' day as an opportunity to train your staff, and we have our usual helpline slots focussing on Parl L 2013 and scaffolding health & safety.  Members' Day is just 34 days away. Make sure you've booked your place for this unmissable event on 19th May in Loughborough.  

Regards,  Richard Lambert Chief Executive
 

Poor Payment Performance Hits Hard

Paul Bailey, BWF Hon Treasurer and Lead Member for Finance

Winston Churchill was prone to bouts of depression, which he described as his “black dog”.  My black dog is not a faithful family pet, but late paying customers, and its bite is really starting to grip. 

The average payment time for settling bills has risen to around 23 days after the due date.  I’m sure we can all match each other with the myriad of excuses we’ve heard, and these wonderful bank holidays only add to the misery.  It’s becoming so easy to avoid payment during this period. 

The past 12 to 18 months have been tough for most small businesses, and although some report a glimmer of hope on the horizon, I look at the forecasts for the construction industry and think we still have to prepare for the worst.   Firms across the UK, in all sectors, are finding life difficult, and with news of liquidations and creditors’ voluntary arrangements every day in the trade press, it’s difficult to predict who’s next.

The advice from the BWF is to be tough, but fair.  You need to be in the front of the queue if a payment is to be released with your name on it.  You therefore need to make sure you have all your ‘I’s’ dotted and ‘T’s’ crossed: your payment terms clear and unmistakeable, make sure all your invoices are backed with Proofs of Delivery (PODs) and statements are presented on time and accurately.

You might be pleased to get a new customer, but there’s no point exposing yourself to the risk of them not paying.  Have you used the free credit checking service (log in to view) on the BWF website?  Log in, enter the company details and you’ve got a credit report straight away.  I know some members who swear they wouldn’t be without it.  If you want to go further, there’s an option to set up a monitoring service which will keep you informed of the trading position and credit worthiness of any company you deal with, and alert you to a problem as soon as it arises.

It’s a constant juggling act, one that we are all too familiar with.  But with little or no support from the banks, that means that small business owners have a difficult time ahead and have to look after themselves.  The knock-on effect of not collecting what you are owed in good time is paying your own suppliers late, which in turn reduces your own credit worthiness. 

If you have any concerns, the BWF is here to help – pick up the phone anytime.  We can offer free advice and support on any matter concerning debt collection and credit insurance.  As the lead member for finance, and having faced the problems in my own business, I’d be willing to offer personal guidance and help, if it would help you to talk your problems through on a confidential basis.  Sometimes just having someone on the end of a phone to bounce ideas around with is enough.  Just remember the BWF is here to help.

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BWF Members’ Day As An Opportunity To Train

Sharon Gorf, WITForum Board Member and Director of Parker & Highland Joinery Ltd

The BWF will be holding its next Members’ Day on 19th May, and as an owner of a joinery company, I found the day last year to be extremely valuable. I will be booking my place again this year, even though times are still hard.

While in a recession, as I’m not convinced we’re completely out of the “woods of economic woe” just yet, there is always the temptation to cut the training budget. But in fact, it’s the best time to train your staff while you have the capacity to spare them from their duties and prepare your business to be efficient as possible for when things are better. This includes those at the top of the business, as well as those on the shop floor!

BWF Members’ Day itself is a fantastic training day, and myself and my husband Jon, whom I own my business with, always ensure we attend. Concise and valuable workshops will give you expert knowledge that every joinery business needs.

This year’s theme is ‘preparing for the changes to come’, and believe me, there are significant changes that joinery firms are going to have to start implementing now if they are to be prepared. These are regulatory changes, such as the introduction of compulsory CE marketing; employment changes, such as auto-enrolment pension schemes and equality legislation. Then there are changes in health & safety, the way we market our products, resource efficiency, and training, qualifications and funding. 

I’ll be attending the training-orientated workshop, as the BWF/WITForum are working extremely hard with the overhaul and writing of new qualifications. I’m keen to find out about the new courses I’ll be sending my apprentices on in the next 1-2 years, and also having quality provision for my more experienced staff to grow.

With the stringent spending regime of the new government, I’ll also want to find out what funding is available for training, and how to exploit the different, while sparse, pots of money available. Of course, I’ll also want to be sure I’m getting every penny I can out of the ConstructionSkills grant system to help support training.

It’s a jam-packed day of workshops, speakers, exhibitors, and networking, but it definitely provides the most comprehensive and relevant set of knowledge that you won’t find anywhere else this year. It’s well worth the day out of your business, and I hope to see all of you there.

BWF Members’ Day is to be held at Loughborough University on 19th May 2011 and is only £90+VAT. More information about the day, workshops and details of how to book can be found by clicking here.  

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Prompt Payment Equals Profits And Cashflow

Sally Swan, Towergate Risk Solutions Ltd

The accurate and timely billing of goods and services to your customers is a critical requirement of a successful business. You can have a huge turnover, but if you are not making profit on your sales, not getting paid on time or worse still incurring too many bad debts, your cash flow will suffer and either you will have too much of a reliance on your bank overdraft or go bust!

The secret to success lies in the following critical areas of business operations:

Letter of engagement– This must clearly set out what you will provide, when you invoice and when you expect to be paid. These are your terms and conditions and should clearly set out your terms of business. It is wise to get these checked by a lawyer to ensure they will be enforceable.

Timely invoicing– Ensure your invoices are issued on the precise date each month and that your client contact and address information is always up to date.

Speedy debt collection– As soon as an invoice is overdue you should have a system in place to follow up the payment of any invoices.

Query resolution– Ensure any payment disputes are resolved quickly, and if possible, to the customer’s full satisfaction. For instances where your customers are in default of your terms and conditions ensure you also have a process in place to deal with these bad debtors. This process could be in stages starting with a friendly phone call from you, followed by a formal letter advising that the next action will be to pass to lawyers. If payment is still not forthcoming ensure you have terms agreed with a good debt collection lawyer or agency to handle the matter on your behalf.

Often as an owner manager all of this responsibility may rest on your shoulders. Make sure you have considered outsourcing this aspect of your accounting function to a specialist provider. Another option is to take out credit insurance.

Companies like Ikara Business Solutions can provide you with specialist accounting solutions that you can access on-line to process your invoices and will act as your representative to ensure invoices are paid. The invoicing and purchase ledger payment information you enter in the software can also provide you with accurate and timely management accounts on which to make future business decisions.

Credit Insurance provides the essential commercial protection that allows many businesses to trade by protecting against the potentially disastrous effects that can occur as a result of bad debts. Credit Insurance helps to ensure that a business maintains a solid financial base even in turbulent economic conditions or in uncertain export markets.
 
Usually referred to as Credit Insurance, Bad Debt Insurance, or even Export Credit Insurance, cover falls broadly within two risk categories;
 
• Commercial Risk Insurance: Covers non payment of debts due to Insolvency (Administrative receivership, Bankruptcy, Liquidation) or Protracted Default (failure to pay for goods or services provided in accordance with a contract).

• Political Risk Insurance: Included on policies with an export component to cover situations where the actions of government cause the payment failure. Examples include; public buyer default, export restrictions, import restrictions, political events, foreign currency shortages or restrictions, inconvertibility, contract termination, ontract frustration. 

Whilst the responsibility for collecting payments and receivables due from buyers and other commercial partners will always sit with the client business, it is a big risk for many companies. Credit Insurance can protect a business against the impacts of:

– trading partner insolvency
– cash flow tightening
– liquidity issues
– protracted non-payment situations
– project stage payment delays
– slow payment procedures

Credit Insurance is available from the BWF’s recommended insurance broker, Towergate Risk Solutions. To discuss your needs please call Sally Swann on 0115 905 7000.

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From The Technical Helpline: What Needs To Be Considered For The Changes To Part L 2013?

Kevin Underwood, BWF Technical Manager

The consultation process for the 2013 changes to Part L of the Building Regulations has begun. We need input from members to determine how best to proceed to make manageable and cost effective proposals. We know that the changes in April 2013 will be a step towards the 2016 requirement for zero carbon homes. These have been defined by the Zero Carbon Hub as having “as built” emissions of:

• 10 kg CO2(eq) /m2/year for detached houses
• 11 kg CO2(eq) /m2/year for other houses
• 14 kg CO2(eq) /m2/year for low rise apartment blocks

One argument could be to propose better enforcement. We hear that many window manufacturers are still not meeting their obligation to demonstrate the thermal performance of their windows and external doorsets and may not be achieving the necessary levels. This is seen as a competitive advantage as poorer thermal performance can mean lower costs but a customer would be accepting work which did not comply with the Building Regulations and a manufacturer would be supplying a product which was not fit for purpose. Better enforcement of the Building Regulations could catch those products which do not perform to the requirements leading to a general improvement overall.

If the levels of thermal performance are to be improved, how much should this be?
 

From The General Helpline: What Are The Requirements For Setting Up Scaffolds?

Matthew Mahony, BWF Policy Executive

Within a workshop environment temporary work carried out at height should be minimal.  There may be a need to access areas at height for maintenance purposes or for access to stored materials.  A risk assessment should be carried out for each activity and the appropriate method of access selected to carry out the work safely.

When planning any work at height you must consider surrounding workers or persons to ensure that they are not put at risk by the work being carried out.

Remember these golden rules:
• Avoid work at height where possible
• Take measures to prevent falls
• Take measures to minimise the effect
• Always use collective protection (e.g. nets or air bags) before personal protection (e.g. a harness)

For temporary access the most common system used will be a ladder, mobile tower or scaffolding.  The access selected must meet certain standards and be used in a certain manner.  For scaffolds, the safe method of use is as follows:

A trained and competent person must erect any scaffolding. For scaffolds over 5m it is recommended that a competently trained and registered scaffolder is used. The scaffold must be appropriate for its intended use and must have:

• A working platform of an adequate size for the type of work being completed (usually at least 600mm wide)
• A suitable guard rail of at least 950mm in height and toe board which must be provided to prevent persons from falling
• No gap between the guard rail and toe board greater than 470mm. This is usually achieved by the use of a brick guard or intermediate guard rail

You must also ensure that materials cannot fall from the working platform.

The scaffold should be inspected before it is taken over and it is recommended that you receive a handover certificate from the person erecting it.  As the user you have an obligation to ensure it is safe for use by your employees before it is used and if the scaffold is in place for 7 days or more it must be inspected and the results of that inspection recorded.  A competent person must carry out the inspection; you may choose to employ the scaffolding company to carry out the weekly inspection on your behalf.  Scaffolds should be inspected at least every 7 days  and also after inclement weather, or if anything has occurred that could have affected its safety. Substantial alterations to the scaffold must also trigger a re-inspection.