Gender pay gap: a comparison

By 4 April 2018, all UK firms with over 250 employees were required to publish details of their gender pay gap.

Although we don’t fit this description and so were not legally required to submit a report, we decided to conduct our own analysis to help us understand our own pay gap patterns and identify ways in which we could make changes for the better.

We are pleased to report that PM+M has a mean gender pay gap of only 2.9 per cent, comparable to the top 20 accountancy practices in the UK which average a 16.8 per cent gap. When looking at the median gender pay gap, PM+M posted a -14.6 per cent gap, which compares to a 12.1 per cent national average and a Lancashire average of 7.6 per cent.

Our minimal pay gap is reflective of our strong belief in a diverse workplace, inclusive culture and flexibility for our people, and we are really proud to be so far ahead of our peers in this area.

With PM+M having a female managing partner and four of our thirteen partners being female, we truly understand the importance of gender diversity in the workplace and equal opportunities for all. Our focus on gender equality as a priority area confirms our commitment to closing the gender pay gap altogether to ensure that diversity and inclusion is maintained at PM+M in the years to come.

EMI share options lose tax relief

The very generous tax reliefs available to employees who are granted share options under the Enterprise Management Incentives scheme (EMI) are classed as an EU State Aid.

This expired on 6 April and, unexpectedly, has not been renewed. We expect that this will be resolved in due course, but anyone who is currently in the process of setting up new EMI share options should pause because, as it stands, there will be no tax reliefs available for those new options.

Existing options granted before 6 April 2018 are unaffected and will continue to benefit from the generous tax reliefs.

For further advice on this or any other tax matters, please do not hesitate to contact Jane Parry on 01254 679131 or via email at jane.parry@pmm.co.uk.

The ‘who’ and ‘how’ of succession

Helen Clayton, Partner, takes a look at one of the main questions of succession planning, who is going to allow you to retire and how is it going to happen?

To make succession effective, including minimal disruption on your firm, your teams and your clients, I cannot emphasise enough the importance of thinking ahead.  This isn’t reserved for those considering retirement; it’s also for those in the firm (or outside of the firm) who are considering, or champing at the bit, to be the future leaders.

Understanding who might be coming through the ranks and who might be attracted to joining, or indeed who you would like to join the business, is critical in ensuring it is they who are equipped with the appropriate skills to lead and manage in the future. Time investment is important to ensure you really know these people. What drives them? What are their ambitions? What do they need to be able to create a seamless succession plan?

Below are some of the areas that you will need to understand:

  • Age group and corresponding generic attributes
  • Ambitions and goals, including timeframes
  • Strengths and areas for development
  • Experience (and ability) in managing and leading
  • Do they take people with them?
  • Are they open to change and personal development?
  • Attitude to risk
  • Is your firm in the right place for these individuals to take it forward?

Mentoring and coaching will be a key element of developing people into future leaders. In an era of increasing competition, regulatory change and ongoing challenges and opportunities, future leaders will need to be business owners, role models, great with people, business developers, and not to mention great lawyers. It may be that one individual does not need to be first class in all of these areas; it may be that as a partner group these skills are spread across everyone and therefore as a team, it’s as powerful as it can be. In fact, it’s probably preferable that these skills are spread throughout a team, with overlap. After all, we’re not meant to be clones, are we? We’re individuals with our own strengths.

There is a key word in all of this however that I have not yet mentioned: experience. Without experience, how is anyone expected to become the future leader of a business? As my mum has always said: you only learn by your own mistakes. Any mistakes made cannot be catastrophic and with the right role models, mentoring and guidance in place, none should be. Therefore, what is there to lose?

If you’re in the position where you’re considering succession in your firm, make it about the people. If you don’t already really know them as individuals, make that time investment. It’s your business and your success that you’re handing over, so why not make it the best it can be to the best people?

For advice and guidance on succession planning, please do not hesitate to get in touch with a member of our team on 01254 679 131.

Spring Statement 2018

Jane Parry, Tax Partner, comments on today’s Spring Statement announcements…

As expected, the Spring Statement was a bit of a non event which was refreshing as I know many businesses didn’t want another ‘mini budget’. They’re tired of hearing new policy announcements along with additional tax and spending measures; they simply want to focus their time and effort on growing despite the ever present uncertainty of Brexit and things like the Making Tax Digital regime and the looming shadow of GDPR.

The news around consultations on tackling the issue of single-use plastics and the taxation of the profits of digital giants like Facebook and Google is all well and good, but action is what’s needed not more consultations.

On a positive note, it was good to learn that tax receipts are covering day-to-day government spending for the first time since the 2008 financial crisis, that borrowing is £4.7bn lower than expected and that growth is slightly higher than forecast last year. However, we’ve still got one of the slowest growth rates in the G7 and public debt as a percentage of national income remains well above 80%.

The consultations on productivity improvement and tackling late payment are both good news for local businesses, as is the additional funding to help smaller businesses take on apprentices.

What I want to see from the Government over the next few months is simple: more clarity around Brexit and how it plans to help businesses grow by closing the skills gap and helping them to improve productivity. These are the real issues that need to be addressed, everything else comes second.

If you would like to discuss any of today’s announcements with the PM+M team, please call 01254 679131.

What could you achieve with cloud accounting?

Advancements in technology are constantly changing the world as we know it. One particular software development within the accountancy sector has altered the market completely, succes­sfully streamlining processes for business owners in new ways, allowing them to gain better control of cash flow and increase profitability.

We are of course, talking about cloud accounting, a type of software which enables you to access your finances in the ‘cloud’, from anywhere, at any time. In recent years, cloud accounting has proven to be an increasingly compelling choice for thousands of people looking to manage their finances, but with so many different options available, you might find yourself asking “where do I even start?”

Here at PM+M, we believe that the best way to prepare is to find an adviser who understands your business, your current financial operations and your objectives. From here, your adviser can guide you towards a cloud package based on what you want to achieve, and what will work best for you.

It is also wise to consider the benefits of adopting a cloud accounting package in comparison to your current processes.

Alongside helping you to make better decisions, save time and boost profits, cloud accounting software can also act as a flexible, low maintenance, cost effective alternative to traditional accounting software, putting you in control of your cash management and allowing you to gain real-time insights into your finances.

We understand that the move to the cloud might be daunting at first, so here at PM+M, we stay by your side at all times. Our team of dedicated advisers are always on hand to guide you through the process, and answer any questions you may have about your cloud package.

Whilst we are more than happy to manage the software on your behalf, we can teach you to use the software yourself so that you can better understand what we do, and take control of your software, should you wish to do so.

Our team have a wide range of experience in the operation of various cloud accounting platforms, allowing us to recommend a software package that will work best for you. Our chosen software providers are Xero and QuickBooks, both leaders in the field, and widely regarded to be some of the most technologically advanced cloud accounting software providers in existence.

Whether you are managing a start-up business, a growing SME or a large scale enterprise, we can guide you towards a cloud solution that will give you a clear insight into your cash, drive your profits and change your business for the better.

If you believe that cloud accounting might be for you, or want to learn more about our available software packages, get in touch with Jill Morris today on 01254 679 131, or via email at jill.morris@pmm.co.uk.

Could an MBO be the best exit for you?

Congratulations to all you SME owners out there!

According to Government Statistics, 99% of all private sector businesses at the start of 2017 were SMEs, accounting for 60% of private sector employment and 51% of private sector turnover. SMEs account for 99.5% of businesses in every main industry sector.

But let’s not fall into the trap of thinking that these are all tiny businesses. The definition of a medium sized enterprise is a headcount of up to 250, a turnover of up to 50 million euros and a balance sheet value of up to 43 million euros. In my book, a business at the top end of that range doesn’t feel quite so small.

As regional corporate finance advisers, we are often asked to advise businesses at the lower end of the range, let’s say those with a turnover in the region of £5 million. You know the type – great businesses that make healthy profits and have provided their owners with a comfortable lifestyle. On paper, they look to have a high potential value and quite often, the owner believes that a large trade buyer will sail over the horizon and snap them up. But how often does that really happen?

Whilst each year, we see many success stories involving trade buyers and SMEs, it doesn’t work for everyone. Trade buyers can often say “it’s just too small for us”, “it’s not as scalable as we’d like”, “there is too much reliance on a single product or customer”, or “we are looking for second-tier management”, after looking further into an opportunity. In these circumstances, an MBO deal is often a great alternative for the shareholder.

MBOs are currently very attractive, due to large amounts of available funding at historically low rates of interest. Typically, a successful MBO needs three things: a profitable and cash generative business, a competent and complete management team and a flexible seller confident enough in the new management team to be part of the funding solution.

Let’s take it as read that you have a good business. Your critical task is to develop or find a management team with the ability and experience to run the business such that you feel able to take the risk of part funding the deal.

If you are a business owner or a management team and you think that the MBO route might be the answer for you, don’t put off thinking about it because these things take time. Talk to us, and let us give you the benefit of our experience.

When Will Auto Enrolment Contributions Increase?

The minimum contributions rates for automatic enrolment are set to increase from 6 April 2018 and again from 6 April 2019. Employers will be required to increase the amount of their contributions into their employees’ automatic enrolment pension scheme. Employees’ own contributions will also increase.

 

The table below explains:

Date effective

Employer minimum contribution Employee minimum contribution

Total minimum contribution

Currently until 5 April 2018

1%

1%

2%

6 April 2018 to 5 April 2019

2%

3% 5%
6 April 2019 onwards 3% 5%

8%*

*subject to scheme set-up

Pensions Act 2008, every employer in the UK with at least one employee must put certain staff into a pension scheme and contribute towards it.

All employers that were in business prior to 30 September 2017 had a staged approach to auto-enrolment. However, since 1 October 2017, all new businesses have had to introduce a pension scheme immediately within the minimum 2% contribution level (usually split 1% employer and 1% employee).

What should you do to prepare?

Employers must act to ensure they are prepared to implement the increases correctly to all affected employees.

Employers should review contracts and pension announcements to see if the increased contributions apply automatically to their workers and employees.  If not, then employers may need to consider changes to contracts to increase member contributions which can also trigger a minimum 60-day consultation before the change can be made.

Future rises

The contribution levels will continue to rise until the employer is paying a minimum of 3% towards the pension and the total contribution reaches at least 8% – with the employee making up the rest.

Contact us

If you need advice on understanding these increases, implementing changes or help with any of your auto enrolment needs please contact our wealth management or payroll team on 01254 679131.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

Investing in our people…

At PM+M, we recognise that the foundation of us being the best North West firm of finance professionals is our people.  We need to attract, develop and retain the very best people. To do this we work really hard to create and maintain a vibrant culture where people are motivated and empowered to develop, grow and drive change.  We know that we are at our best when our people are at theirs.

We’ve just done a full team survey via Investors in People, as part of our gold accreditation, and had some amazing feedback.  Here are some of the highlights:

100% of the team agree that PM+M is a great place to work and has a bright future

98% agree that PM+M has a plan for the future to ensure our continued success

99% feel encouraged to take initiative in their role

98% feel encouraged to achieve high performance

93% feel motivated to achieve exceptional results

94% feel appreciated for the work we do

100% recognise that we are always seeking ways to improve

Jane Parry, Managing Partner at PM+M, said: “These are amazing results and I’m really proud to be leading such a great team. Maximising potential is a fundamental part of our culture and we invest heavily in it.  It’s the foundation which allows us to help our clients achieve their goals.”

If you’re interested in joining the PM+M team get in touch.  Please email: recruitment@pmm.co.uk or contact us on 01254 679131.

Calling all business owners…

When was the last time you took time out to consider where the value lies in your business? What is creating value and where is it being diminished? This is especially important if you are thinking about selling.

It matters little what flattering numbers might have been whispered in your ear, it is unlikely that a buyer will go for it if they can’t see how to create more value or if your business just has too many inherent risks?

Important questions to ask yourself might be:

  • What does my customer base look like? Am I winning customers, if so why am I winning them? Or is my customer base no different to what it was 5 or 10 years ago? What happens if I lose my largest customer?
  • What value do my products or services create for my customers? Are there better or new products on the market that can do the job? How do they compare in price? What is my profit margin per product? What is happening in my end user markets?
  • How do you compare to your competitors? Where are you better than them? Or worse? What are they up to? Are there any new kids on the block?
  • Where does the goodwill lie in my business? Intellectual property? Know how? Customer relationships? Is it secure?
  • What would happen if I wasn’t there? Would I be missed and if so how badly?
  • Where am I in the economic cycle? Is my business growing or declining relative to the sector?

Take a good look at yourself and be honest. Would you buy your business for what you think it is worth (or what someone else is telling you it is worth)?

If you need objective, independent advice on the value of your business, then get in touch and speak with our corporate finance team on 01254 679131.

Blockchain and Bitcoin – an introduction for beginners written by a beginner

I am pretty interested in finance and economics (often useful as a professional accountant) and I have worked with enough tech companies over the years to feel vaguely competent in understanding at least the business models of most technology businesses and the markets they operate in. It has however taken quite a while to get me to the point of feeling like I understand anything at all about blockchain, bitcoin, cryptocurrencies and the whole related world which seems to have become really prominent recently.

Talking to fellow professionals and business owners I realised that it wasn’t that I was a long way behind the curve on this – it was simply that this stuff has usually been really badly explained by the specialists who are all over it and generalists like me can’t keep up. I decided to try and shed some light on this whole topic and if some tech expert finds I have misunderstood it, please just correct me!

So first of all, “blockchain” – this really is a set of data “blocks” linked together in a way quite similar to a chain. Each data block is encrypted and the way the encryption works is that part of it is linked to the previous block in the chain.  Even if you can’t read the data (because you don’t have the key to the encryption) you can tell that the data in the previous block is unchanged because the link to that previous block in your current block still works – i.e. the chain is unbroken.

These data blocks are stored on a large number of independent computers linked together in a peer to peer network (no-one computer is in charge of the network) and the common feature is that they have all agreed to run the same protocol (i.e. programme). Because the computers are all linked any change to any block would be instantly highlighted – the “chain” on one computer would no longer work and would be different from the chain on every other computer from that point on.

This is therefore a very flexible and resilient way to store data transparently – and the fact that the data is encrypted and only the people with the key know what it actually means makes the process very private as well.  A really clever way of squaring the circle.

Bitcoin is a specific blockchain. An individual Bitcoin is a particular number that meets a set of criteria. There are only around 21 million numbers which meet these criteria and so there is a restricted supply of Bitcoins. Identifying numbers which meet the criteria is a very computer processing intensive exercise – this process is known as “mining bitcoins” and there are untold thousands of computers devoting processing power to it all the time. When you read that “bitcoin mining is using more power than the entire state of Mexico”, it illustrates just how much effort is being put into this computing.

So an individual number which meets the criteria is a bitcoin and forms one of the blocks. The block is encrypted but if you have the key to the encryption then you “own” it and have the capacity to transfer the key to someone else – this transfer of the key is the transfer of value and the encryption keys are therefore the real Bitcoin currency.

The potential of blockchain however goes well beyond Bitcoin. There are other cryptocurrencies (the most prominent of which is probably Ethereum) and a whole host of other applications which people are devising for using the squared circle of transparency and privacy that blockchain offers. An interesting idea I have seen is a register of all large diamonds – you can put the details into blocks in a blockchain with the physical details unencrypted and ownership and cost details attached but encrypted. This would allow much easier verification of the ownership of valuable assets.

I think the key value of blockchain is that it allows some transactions and relationships to be conducted very quickly, without needing to take the time to build trust as has previously been needed. In lots of ways, in the world we live in now, there is already a huge degree of trust and the extra admin of using blockchain is completely unnecessary. In other cases, it can be a game changer.

And if you think I am going to tell you what the future value of Bitcoin is, think again.  I am an accountant, not a prophet!