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Glasgow Chamber 11.05.11

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Slides for presentation at BigSmall Business Event hosted by Glasgow Chamber of Commerce in May 2011

Slides for presentation at BigSmall Business Event hosted by Glasgow Chamber of Commerce in May 2011


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  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • More opportunities from our existing client bank to work on one off opportunites.
  • Transcript

    • 1. Glasgow Chamber of Commerce BigSmall Business Event How to approach your bank for funding / get the tax structure correct 11 th May 2011 Simon Murrison / Bruce Wilson
    • 2. The Firm - Our Philosophy
      • Our client base consists predominantly of owner managed businesses with challenging demands and changing requirements . We are committed to providing all our clients with the best professional and commercial services.
    • 3. About me!
        • Qualified as CA in 1997
        • Joined a 3 partner firm in 1999 & became partner in 2005
        • Joined a multi-national firm in 2009 as partner
        • Returned to smaller sized firm in Jan 2011
        • Entire career spent dealing with start up to medium sized entities
    • 4. How to Approach the bank for funding
    • 5. How to Approach the bank for funding
        • Be prepared before you approach the bank
    • 6. How to Approach the bank for funding
        • Be prepared before you approach the bank
          • Get your management accounts uptodate – need to demonstrate your trading history / understand trends.
          • Prepare profit and loss, balance sheet & cashflow projections for a minumum of 3 years ahead
          • Profit & loss / cashflow is not the same thing – key differences are timing & VAT
          • Have sound assumptions that your projection pack is based upon
    • 7. How to Approach the bank for funding
        • Be prepared before you approach the bank
          • Include commentary on
            • your business
            • your expertise in the product / market
            • industry sector
            • your current market place
            • target market place
            • SWOT analysis
          • Ensure you approach the correct bank for your sector
        • All key points that your Accountant should be helping with.
    • 8.  
    • 9.  
    • 10.  
    • 11. How to Approach the bank for funding
        • Test the numbers – the bank will
          • Include sensitivity analysis
          • Consider seasonal fluctuations
          • Think about effect of changing the assumptions
          • Do the numbers stack up
    • 12. How to Approach the bank for funding
        • Understand ‘bank talk’
          • Bank covenants – devil is in the detail (who reads them)?
          • EBITDA – Earnings Before Interest Tax Depreciation & Amortisation
          • Underlying cash generation of business before servicing of debt, tax & fixed asset write off
          • Measured against the cost of servicing the debt – interest cover
          • Allows bank to calculate head room for movement in interest rates
          • Not just financial measures
          • Reporting deadlines
            • Year end
            • Management accounts – 30 days after quarter end (EFG)
          • Debt serviceability – how is it going to be repaid?
    • 13. How to Approach the bank for funding
        • Understand ‘bank talk’
          • Security
            • Property - max (65%)
            • Cash cover – residential 190%, commercial 160%
            • Rental yield needs to be good to build headroom if base rate goes up
            • Value of debtor book
            • Personal guarantee
            • Floating charge – very hard to get as difficult for the bank to recover their losses (past bad experiences)
          • Identify the funding gap & think through the type of funding most appropriate
            • Standard Overdrafts – thing of the past
            • Invoice finance
            • Asset finance
    • 14. How to Approach the bank for funding
        • Understand why the bank might say no
          • Why do you want to borrow the money?
          • Banks generally will not fund HMRC!
          • Your business plan & accounts
          • Your business cashflow, profitability and existing commitments
          • Any personal financial commitments that affect the business
          • How you have handled your finances in the past
          • Information held by credit agencies
          • Any security provided
    • 15. How to Approach the bank for funding
        • Future reporting requirements
          • Comparison of actual to forecasts
          • Progress on existing / new contracts
          • Revised cashflow forecasts
          • Major capital spending proposals
          • Yearly accounts & management accounts
          • Debtors & creditors information
        • Ensure you address it before you proceed
    • 16. How to Approach the bank for funding
        • Show confidence
          • If you don’t believe in your request then why should the bank fund it
          • Be prepared to show your commitment – if you are not prepare to then the bank will not do so either
          • Think about getting your accountant to present the numbers
          • When the client meets the bank the numbers should already have been in principle agreed
          • Client will in general then only talk about their product rather than finances
          • Client in comfort zone
    • 17. How to Approach the bank for funding
    • 18. Over to Bruce .....
    • 19. Correct Vehicle for tax
      • Don’t let the tax tail wag the commercial dog
      • Traditional structures:
          • Sole Trader
          • Partnership
          • Limited Liability partnership
          • Limited company
    • 20. Analysis of Tax effects
      • Sole trader, partnership and LLP all treated the same
      • Individual pays tax at
        • 20% on the first £35K (PY £37.4K)
        • 40% up to £150K
        • 50% thereafter
        • Remember NIC!
    • 21. Analysis of Tax effects
      • Limited company pays tax at 20% up to £300K
      • Extraction leads to possible double taxation
      • Use Dividends – No NIC, watch reserves!
      • Husband & Wife situations
      • Settlements
      • IR35 – disguised employment
    • 22. Benefits and Pitfalls
      • Incorporation can benefit individual from Goodwill at 10%, live free of personal taxation?
      • Stop advance tax payments and reduce tax with overlap relief
      • Full Incorporation is a change, bank, PAYE customers, creditors etc
      • National Minimum Wage
      • Increased compliance costs
    • 23. Email – simon@gillilandca.com - bruce.wilson@gillilandca.com – (email for copy of slides!!) Tel - 0141 226 8484 / 0141 226 8484 Linkedin – Simon Murrison / Bruce Wilson Twitter - @simonmurrison Check out our affinity scheme at – www.glasgowchamberofcommerce.com