Spot on, fionamcke !
Spot on, fionamcke !
Royal Mail are an effective monopoly unless you are sending tens of thousands of items a year (TNT won't even speak to you untill you are sending 100+ a day, every day).
I posed a question to Damian Collins MP, recently appointed Conservative small business champion for the South East, about Royal Mail. His response (sans politician fluff) was that if you don't like them, use a competitor. I've subsequently written asking him to tell me a competitor willing to handle letters and small packets rather than parcels. I haven't heard back yet....
So they're selling us something we already own...
Royal Mail used to be a public service, now it's a business trying to make a profit by whatever means possible. This year's healthy profits were made on the back of prices which have been virtually doubled for parcels & international post - I doubt that'll be sustainable in future, although I'm sure they'll find ways to give dividends to the shareholders.
It's a bit of a shame there's been no public consultation; I've seen two surveys of small businesses which show strong disapproval of the move.
I wonder how long it'll be before Royal Mail domiciles itself in Luxembourg to avoid Corporation Tax ?
Wouldn't it be lovely if, when HMRC owed money, they were forced to follow the same over-enthusiatic interest and penalties regime taxpayers have inflicted on them !
As others have rightly said, once in it's hard to get out, and it can be a big slice of the profitability if margins are tight.
For short-term finance I struggle to see it being useful when it can be so expensive to escape from - in such a case, if the business is fundamentally sound I'm sure short term finance could be raised by other means if the banks aren't brave enough to take the risk.
For long term finance, it just represents a drain on profitability.
I'd love to see cost comparisons for a couple of different business models and sizes. My suspicion is that for a good number of companies with long term finance needs, it would be cheaper to employ a really good credit controller, enforce their credit terms, and build the credit terms into the sales cycle rather than it being an afterthought. Paying the sales staff commissions based on profit rather than revenue and at the point where payment is received rather than invoices raised wouldn't hurt, as well !
This customer of yours sounds so sharp they could cut themselves ! I wonder if it's just the VAT information they are after ? I suspect you'd find that if you'd just rolled over and given them the invoices, the next call you'd get would be "we've bought a laptop, can you come and configure it for us, we'll give you £25 for the job".
Unless their business is a really significant part of your profit, I would get any money they owe you (if neccessary going through a formal debt collection process if they are unco-operative), and then send them a letter thanking them for their past business and suggesting they find an alternative supplier in future.
If they then demand copies of the invoices, just tell them to get a court order if they can find any piece of legislation which requires it (which I somehow doubt...).
Lean Six Sigma provides a very useful set of tools, and I've noticed that people with an accounting background usually find the statistical methodology quite a natural fit to their existing skill-sets. Whether you need to go as far as black belt probably depends on how extensively you intend to use it. Are you already a green belt, and have clients expressed a preference for working with (and paying for !) a black belt ?
I've been deeply involved in a number of Lean Six Sigma projects, although I've by no means scaled the dizzy heights of becoming a black belt myself. My experience has been that each project was a full-time experience lasting between three and six months.
I must admit I would be somewhat wary of any training organisation which offers a Black Belt qualification without that kind of previous experience and commitment. It's worth looking at the details of the course they are offering to ensure it is in enough depth and includes enough practical experience to mean you come out of it a true black belt rather than just someone with a piece of paper saying you are.
Perhaps ask each client as part of the engagement process whether, when queries arise (as they inevitably will), they prefer one email per item, or a single large email with a numbered list of queries. Maybe ask if email is even the right medium; not everyone checks their emails obsessively ! It shows responsiveness to their preferences, and might help give them a clue that all the queries really should be responded to.
I always make a point saying how many attachments a recipient should expect to find with an email and a brief idea of what is in each. It's partly a check in case I do something daft like forgetting to attach one of them, and partly lets them know how many to expect and whether they are anything more than background reading.
Be aware that (at least with Outlook 2007), Microsoft use that "ribbon" idea with attachments, showing about 3 rows. I had a thoroughly embarassing situation a couple of weeks ago where I was sent an email with a whole bunch of attachments but not list in the body of the email. Being in a rush, I didn't spot the microscopic scroll bar in the rather small attachment window. There was only one more attachment when I did finally scroll down; it was the invoice I was supposed to pay by return !
With one of my "hats" I run
With one of my "hats" I run an E-Commerce business, and have actually just dropped Magento; we found it really works best for larger companies with a bigger budget than we had and an in-house IT team to keep on top of the regular glitches it was throwing up.
We moved to BigCommerce, which is just one one of several hosted E-Commerce solutions out there. Others include Core Commerce and Shopify; each has it's good points and it's limitations, and which one works best depends on how much you want to spend (not just initially - look at the cost of ownership over the whole lifetime), what you need the software to do and integrate with, whether you have an internal IT department to look after it, etc etc.
Most of the hosted solutions have some kind of CRM and stock control function, some basic, some less so. In the case of BigCommerce, the stock control is middling-basic, but if you need something more advanced it'll integrate with Linnworks which can also handle post/courier labels etc.
Although all of the E-Commerce solutions on the market integrate with an accounts package of one type or another, I have yet to see one that integrates with any Sage product other than SagePay. Partly this might be because many of the solutions are from US companies, but it makes me wonder if there are also issues getting non-sage software to talk to Sage products.
The secret I found (after making a suitable number of hideous mistakes....) is to put together a really detailed and precise specification covering all you need the software to do, and use it as a checklist. IT software vendors have their own special language, just as accountants do, and it pays not to just assume each small and supposedly obvious but vital piece of functionality will be there !
Preparation for the big price rise ?
I'm just guessing, but if they are recent labels they could well be zero rated in preparation for the big changes being implemented by Royal Mail on Monday 2nd April.
On that date, post in most sevices purchased by business account holders (e.g. Packetpost, Packetsort etc) all becomes standard rated for VAT, i.e. the already large price increase has another 20% lumped on top of it.
Royal Mail haven't yet published their proposals for non-account postage rates apart from a few leaked hints at the headline 1st & 2nd class stamp prices, but one would assume that they will increase by enough to keep the price slightly over what account customers pay. The proposals for business look like keeping the headline price increase to "only" around 15%, but a 100g packet through Packetpost gets a whopping 200% increase due to a merging of all the lower weight bands into the 750g one.
The rules Royal Mail are subject to are in flux at present, as they become more of a profit-making commercial operation and less of a public service. But each year, more services become subject to VAT, and it may be that they've been instructed to make some zero rated rather than exempt if they add VAT for businesses but not (yet) consumers.
For ordinary sales from the UK, yes, it's just a standard VAT invoice. Although my experience so far has been that e-commerce software and services are either written in America and don't understand or handle VAT very well (eBay are a prime example !), or are written in the UK and don't get that you can sell things outside the EU !
Although I've looked at Amazon Fulfilment, I've only done it from a UK perspective, so I have to hold my hands up and say that I don't know enough about it to be sure of the correct VAT treatment of using warehouses in multiple countries. Hopefully he's done the maths to compare the saving in postage costs and potential competitive advantage with the cost of holding multiple sets of inventory and moving stock to the relevant fulfilment centre. With luck someone else with a deeper knowledge of cross-border VAT rules will be able to help !