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Michelle* quit her 5-figure salaried job in the spring of 2018 to pursue her entrepreneurial dream. Equipped with her finance degree and years of banking experience, she set about building her business – one process at a time. She reached out to Neet, her friend who runs an accounting firm - to understand how she should handle her numbers. She wanted to keep costs low at the start of building her business, so she decided not to hire a book-keeper right away. Neither was she in favour of keeping numbers on excel. So where should she start? Here’s the real-life* conversation that ensued. 1. A Software – The Gate Keeper N: “Before you employ your first book-keeper, be ready to invest in a quality software that captures your numbers” M: Define quality software? N: They should be: easy to setup and use accessible, be safe and have the ability to produce basic financial records. Something like Xero could be a great fit. It ticks all the boxes! Side note: For many people, the software is either recommended by accountants or other entrepreneurs they have met. So, the implementation of the software is often parallel to having a numbers person handy. If you are Michelle and have a Neet, go on and use her. Why a software before a person? Because it does not allow transactions to be lost in transit. Rely on a bunch of receipts and in a matter of time, most people struggle to find them. Rely on your memory and you’ll lose out expenses that could get you a lower tax bill. 2. The Bookkeeper – Keeper of Transactions M: Ok I get that. But given the business is going to need my attention, should I be spending time putting transactions together? N: It depends really, I’d rather you hired a book-keeper. You are great in terms of process, but not so good with paperwork and organisation. Having someone use tools and set-up a working system would be very useful. In a virtual finance department, the process is guided by less or no paper. M: What’s the value-add though, I use tools and then Xero let’s say, why should I have a person do the numbers? N: LOL!! As much as we love to think of a paperless and completely automated finance function, it’s never that easy or perfect. There would always be missing documents, unchecked balances or statements that do not tally. You worked at a large organisation where a lot of these things never come to the surface. I doubt you’d have the time to handle it all. Side note: Transactional accounting, is all about the fundamental “debits and credits”. Without this function being robust, you can only “estimate” what are the business numbers. Unless you get this right, there is no way to know whether the numbers in your head can actually match the reality of money in the bank. 3. The Controller – the creator of partnerships M: Is it worthwhile if I hire you right away? I mean you have a team and is Senior and stuff, how does that play out. I need someone to talk the strategic numbers with. N: Sure, we just need to understand whether you need me to start with… A Financial Controller in a start-up or an SME world is often compared to a glorified bookkeeper - someone who keeps and is responsible for transactions. While there is some truth in this, it might be worthwhile remembering that the control function is responsible for delivery of a robust finance department – be in virtual or in-house. You’ll definitely need me when it gets more “sophisticated” - such as you need specific monthly reporting, a robust debtor and creditor function or a need for consolidation due to expansions, among others. Side note: For a small business, often the controller doubles up as the CFO / Finance Director. The controller not only should take over the brunt of managing the numbers, but also be available as a bridge between the management stakeholders and the administrative team. 4. The CFO – the Grand Poobah N: Before you ask me, here’s my take on when you need a CFO It’s quite rare that an SME wouldn’t know when they need the ultimate numbers person. If you have an exit, an IPO or a major business growth event on the horizon, bring on the big guy, the CFO. Some cues to think about this role: A seat at the table that is missed during strategic meetings, usually involving investors or stakeholders You have employees and productivity has to be a prime driver of business efficiency The need for a sophisticated IR function Multiple locations and the need for an overall business view on a near real-time basis A quote from ‘Today’s CFO: Which profile best suits your company?/ from Mckinsey sums up the role succinctly. The selection of a CFO cannot be made in isolation; companies must consider the strengths of the rest of the top team, paying specific attention to its blind spots and missing capabilities The final word Like individuals, businesses differ. Whether you need strong coffee or fine wine depends on the stage you are at and what you need the role to accomplish. Be clear of your goals for the “role” and you can find the person to fit. Unable to figure out who you need to support your finance function? We can help and no! we don’t charge to have a conversation. Go on tell us what your number worries are and we will do one of the following: Send some ideas to tackle them Help you ourselves Guide you to a place / person that we think can help *Names and circumstances of the conversation is changed to protect privacy of persons involved

We did this interesting exercise - we collated the most popular questions we get when we discuss cash flows with clients and normal business people. Without further ado... 1. Should VAT be part of your cash flow planning/ forecasts? We say Yes, VAT payments on a quarterly basis can be killing for a business if not planned and put away in advance. As a norm, we always advise clients to consistently run a VAT report if your software allows it (Xero does) - at the least monthly. We also advise that you squirrel away this money to a separate bank account where it remains untouched. When it's time to pay your VAT bill, remember and move it over. Modern banking should make this easy enough. A few clicks and your money is back in your main business banking account. 2. What is the easiest way to remember committed spend for a business? The first rule here would be to familiarise your business cash position. This is not just for your Accountant / CFO, it's primarily important for business founders to have a pulse on business cash availability. Download your business banking onto your phone and make it a habit to login (should be 2 clicks max) and check cash daily. What this allows is for you to "sense-check" numbers quickly - what's coming in, what's going out? - Make it a point to review all paid subscriptions used for the business monthly. This is a must It's quite easy for businesses to sign up to various software they usually think they would use. It's also easily forgotten! These are easy saves if you remember to shut them off. It could be for domain names you don't use anymore, project management software you signed up for thinking you'll use the 30 days free trial and then switch it off. The most frequent one we've seen - Amazon Prime. 3. When I bill a client £500 and pay someone £250 to get the work done, I should be making a £250 profit. Why doesn't my bank reflect this? It's easy for a business founder to think this way - it's classic Profit and Loss thinking. What you make on paper and what you make "in cash" is always (always) different. Some examples where you'd be using cash but it does not get reflected on a P/Loss - Director / Founder taking money out of the business apart from salaries/ paying for personal expenses from a business account - Capital expenditure, things like laptops, IPADS and the like that does not make it's way to the P/Loss account The concept of being cash rich is different from an "I make this - I pay this" - The business as a whole has a lot of expenses, even when you are a single person making and spending all the money. Think about the rent, insurance payments, marketing spend and the like. Whatever money you spend would usually come from sales or directors loaning money. The expenditure you have would all have a "pro-rated" claim on your incoming amounts. E.g. - in the question, the reason why £250 does not translate immediately to cash is because you are also paying other expenses from that money. If you pay a rent of £600 pcm, a portion of that comes from your £250 4. I completely messed up the payment terms with this client, how can we tide over this? This is not an exact question - more a derivation from long pending debtor issues we see a lot. If there is a "non-payment" issue, first look inwards. Sometimes it's late to correct a standing position with an existing client - but it's no excuse for punishing your business. Have a conversation, give them plenty of notice and change payment terms. Have stats to hand - how many payments have been missed, how that affects your business and how business like that is simply unsustainable. It helps to have an "independent party" speak about cash and payments other than the people doing the work. When you see the client and speak with glee about the work and turn around and send them a payment reminder, it feels awkward. Very important - if there is a specific project that was a cash disaster, study it. It's painful but have to be done. That would tell you more about what payment terms you should fix based on "real time to pay" than standard credit terms. 5. Q4 is a slow-burn for us, sales don't grow and cash is always a problem - how do we manage? The concept of working capital management is so so important for a business. When you know that the business has seasonal ups and downs, plan way ahead. Save money up - try to think of it as a 30-60-90 rule. You start with saving a 30 day expense total and then built upto 60 and 90 days. If that doesn't work out, proactively research and apply for overdrafts from your business bank. Simple experiment we did internally, we always see that our business is pre-approved for an overdraft at £4,250 whenever our business bank balance is below £3,000. The minute the balance goes above £4,000, we are pre-approved for £9,000. Is this an indication that financial institutes favour a healthy balance while rolling out credit facilities? We think so. So work that out when the business is on a steady green.. Ultimately the adage "Cash is king" remains a vital business truth, so guard it, save it and enjoy it. Worried about cash flows in your business? Email us your queries confidentially.

"A bad strategy will fail no matter how good your information is, and lame execution will stymie a good strategy. If you do enough things poorly, you will go out of business - Bill Gates Knowing your numbers is good. Knowing a good numbers person is even better. Much has been said about the cloud and how digital finance rules the roost.Just interested in sharing a few snippets from my own observations CFOing....in a digital age. Fair warning, this is not a typical tech-stack article. If you need that, read this article from Deloitte. Blurry Lines In SMEs a lot of times the lines between a CFO and a Controller is blurred. CEO's/Owner-Founders would expect you to be the big picture person but also have a handle on day-to-day. So yes roll up your sleeves and get the cash forecasts ready, at the same time know the pulse of the industry You should know your numbers! No surprises there. When you are at the top of the numbers food-chain, there is no way you "can't" know your numbers. And knowing your numbers means, really knowing them. The relationships between numbers can be complex. You can't be anywhere near a CFO type role if you don't have knowledge (off the top of your head!) of the numbers that make or break your business. Lesson learnt... On consolidating a group company, one of our companies based in the US had a balance sheet item which should have been expensed. On a consolidated level that meant I got a south-ward hit of 36K on my EBITDA. There are many reasons why it got lost, until we were 1-hour away from our shareholder briefing for the FYE. Save yourself the time and largely embarrassment - critically question your numbers time and time again until you know "off the top of your head" that your numbers are sitting right. The IR function I have never come across an SME in my experience that has a dedicated IR team (Investor Relations management guys). That function would fall to the top management, presumably the CEO and CFO. The function by nature need inputs from both the CEO in terms of the vision and strategy and the CFO + accounting team in terms of financials. For smaller companies, this could be as simple as a shareholder brief you sent out to shareholders at FYE. Here is an infograph we did a year back that captures what I mean here. Knowing the right words This was a key learning for me when I first started on a strategic finance role. Knowing the right commercial terms of the industry that you belong to became crucial. So terms like Corporate FP&A or churn or dividend yield should be second nature- if your role demands it. There are resources galore on what industry level metrics are key necessities. That is great, but double-down on your basics. If you don't understand the difference between share capital and share premium, that will show when you present financials. Be a person You can have every technical skill under your radar, but if you are not authentic, there won't be much respect attached to your role. A CFO's role centres around the numbers - undoubtedly. But ultimately any business is about it's people. You have to find a common footing with the CEO and the core team members. There might be times you have to take blame to save face. You have to be a facilitator. If there are things you don't know, own up, find someone who can, negotiate and move on. Crawling when the company needs you to sprint, won't help anyone. Understand the culture in the company - try to work in tandem. To conclude I want to leave this thought from Leeny Oberg, CFO of Marriott International. To me this embodies the right spirit in a CFO. I mystery shop at our competitors, and our competitors are good. I let employees know how well we are doing but that there are other luxury hotel companies out there doing well, too. I come back from a competitor and talk about my experience at our Line-up meetings. What stands out to me is how we deliver service. My favourite word in The Ritz-Carlton Credo is “genuine.” To me, when you provide service that is genuine versus service that is laissez-faire, that’s a huge differentiation. We can’t overplay the need for our service to be delivered sincerely. Attributions All pictures used in the article are from pexels.com or allowed by Wix.com for commercial purposes, except for the infograph Oberg's quote was featured in this article

A recent conversation I had with a prospect was quite an interesting one. This is really a one-man band and has a side gig consulting business. It's common in today's world for someone to have a successful side-gig while working full or part-time on a regular job. So arguably this question is fair. Forgetting the requirements under the law, does a small business really need financial statements? I would say "yes" with a slight qualification Small businesses need financial information to take informed decisions - just like large companies We need to demarcate between the financial information one produces for HMRC and the numbers that can drive decisions. There has to be some means by which you can measure the changes in cash, receivables, revenue and costs on a monthly basis. Perhaps you can start doing that on google sheets, but you will quickly outgrow that, The Timing factor In most jurisdictions around the world, financial reporting for taxes is an annual exercise. You scramble and find your receipts, pick out lines from the bank statements that relate to your business and quickly run to an Accountant to put them into acceptable formats. But does that really help financial decisions? By the time your reports are collated, the time to make changes within your business is long past. Whether you keep records on a software or not, you need numbers in a consistent format to make spot decisions. They needn't be massive decisions, simple things like, 1. Do I have the leeway to purchase an additional software subscription to make my life easier? 2.Should I drive or use a cab every time I visit a client? Should I add costs + reimbursements to my contract? Having the numbers to hand is important to take the right call for such. Should numbers influence decisions? So it feels a bit like we only need to worry about numbers and keeping them handy if you want to base decisions off them. Sometimes people start businesses out of passion or simply to kill time. It is an enviable position to be in - so congrats to you. In the traditional sense, you may not need numbers to help you make decisions. We have come across instances where people start something for fun and it turns out to be valuable business proposition. Again we are not talking about funding rounds and millions in turnover. But something that pays for additional holidays while keeping you engaged. You might also need your numbers in hand for the following. - In case of an HMRC audit, you'd need your back up numbers for the revenue and costs you declare. - If you want to put a formal structure around your hobby and want to include other people, they'd want to know where the financials stand. - How about other resources you are spending on the business - such as time. How much time are you spending Vs how much more / less time you will need in the future should you choose to pursue the idea full-time? So we would conclude that yes, small businesses do need their numbers - but keep it in a format that you can understand easily. If having a software is too expensive to begin with, keep it in google sheets. When you need a more streamlined approach, look at the options available. About us Evalua8 works with small and medium sized businesses in SAAS, marketing (agencies) and professional services. We are often called in when companies have operations in more than one location and you need someone to break down jargons like cross-border tax implications or corporate structuring. We talk in human terms so please don't hesitate to ask if you have a question.

A recent series of conversations on Twitter led us to understand that many common people misconstrue a No-deal Brexit to mean that there won't be a Brexit at all! Shocking as it may seem, there are many small-businesses that may not have a full awareness of how they could be affected in in a no-deal scenario with respect to their operations. We have pooled together these notes to clarify some of the main issues surrounding the VAT scenario under a no-deal Brexit. We should add here that our experience dealing with multi-jurisdictional businesses has helped in understanding how to manoeuvre such scenarios should there be complex reporting required. EORI Number If you import and export goods, you probably already have this sorted. With a no-deal, the impact of free movement of goods across borders would be impacted. An Economic Operator and Registration Identification / popularly referred to as the EORI number, allows you to get clearance for your goods faster in case the UK becomes akin to any other regular trading nation from EU's point of view. Please access the link here to apply for a EORI - https://www.gov.uk/eori. Place of Supply This is perhaps the single most important consideration for "serviced-based" businesses. If the UK loses it's single-market status, the "place where a supply happens"becomes critical. The determination of which country has the right to tax is dependent on where the supply takes place. To further complicate matters, it depends on whether it is a B2B or a B2C supply of services. Clarification from HMRC reads, - For UK businesses supplying digital services to non-business customers (the B2C model) in the EU, the ‘place of supply’ will continue to be where the customer resides. VAT on services will be due in the EU Member State within which your customer is a resident. If you have a SAAS business for instance and the customer resides in France, the supply is completed at the customer's resident country - i.e. France. Any additional tax that a UK business have to pay in the EU could be reclaimed depending on the tax treaties that exist between that individual country and the UK - in this case between France and the UK. So the blanket EU rules that the UK followed up until 29th March, 2019 would no longer apply. Claiming Refunds So what happens should a customer levy a VAT at the point of receipt of supply? In such case, it would be possible to claim refunds from member states. The process then would be very similar to claiming refunds from a nation that does not have special treaty applications. The process can be completed online. Special rules apply to goods above £50,000 used in business. More guidance on this can be found via this link. It would seem like a lot of changes are coming at the same time in terms of Making Tax Digital as well as possible changes that may impact under a no-deal Brexit. In the midst of all this, we should also remember that the personal tax year comes to an end on the 5th April 2019. Updated Sep 29th A foreign currency account - Consider opening a USD or Euro account if you have EU clients who might not prefer to pay you in GBP after the 31st of October. Moneycorp might be a good option to consider if your local UK bank does not offer foreign currency accounts. Credits 1. No-deal Brexit guidance: VAT - https://www.lawsociety.org.uk/support-services/advice/articles/no-deal-brexit-vat/ 2. All pictures used in the article are allowed for commercial use and sourced from pexels.com 3. https://www.gov.uk/government/publications/vat-for-businesses-if-theres-no-brexit-deal/vat-for-businesses-if-theres-no-brexit-deal 4. Some of the comments (e.g - that of twitter) are based on our individual experiences and speaking with British nationals (the common folk). The views in the article are purely based on our assessment and understanding and for the purposes of the business blog - this does not represent a political view. In case you have a specific query for your business, please feel free to reach out via our Contact page. #article #Startups #UKcompany #MTD #MakingTaxDigital #VAT #nodealBrexit

A small business is rife with concerns on a daily basis — I know since I run one myself. I would be kidding if I said I wasn’t inclined to write this post after I saw this news piece about KPMG closing its’ small business accounting service in the UK. I’ve seen in the past 3 or 4 days many “other” small businesses commenting about this on social media and how this does not come as a surprise. I am fairly surprised with it myself and can only attribute it to being a sensible commercial decision from the behemoth firm. Having worked for a big firm at the start of my career and then having interactions with them in later stages of work, I have a lot of respect for their work processes. As a 23 year old freshly qualified Accountant, this often felt cumbersome and somewhat stifling. But as a 34 year old business owner, I have a lot of appreciation for what a well laid out work-flow can achieve. So what really makes small business accounting so different? Here’s my humble take on it, Reducing stress on the person Small businesses are so much about the people that run it. When thinking about a quintessential small business, one gets visions of founder led entities that has a fairly simple business model. This maybe true — but today’s small businesses can also very well be subsidiaries of overseas parent companies that would initially be set up and run by a local Director in the place of incorporation. Usually they have a “set-up” mandate that can range from achieving a certain amount of sales to hiring the first team members. They are not bothered about how a number should be represented on a financial statement. So my job as their book-keeper/ accountant / financial advisor person is to reduce their stress. That would be not asking questions that are obvious, automating as much of the work-flow as possible and giving them the gift of time and space. If the person who deals with you doesn’t like you, that relationship is not going to last — irrespective of your size and offering. Being the facilitator When I first started my business, I rather naively thought clients would get disappointed if I didn’t know every answer to every technical question there is. A vast majority of growing businesses, popularly referred to as “scale-ups” are looking for facilitators. People and entities that can hear them out and find them answers. I realised this when one of my clients had a tax issue I didn’t have an answer to. But I found someone who did — be solution oriented, it’s not rocket science. But many of us simply turn away good business as we don’t have the energy or time to go out and look for the right fit. I admit I have done this in other scenarios, and regretted it later. Napolean Hill in his book for the centuries “Think and Grow Rich”, narrates the story of how Henry Ford silenced a lawyer who questioned his “education”. Ford knew the answers he needed was on his finger-tips — through other people who were experts in those fields. Be a facilitator, everyone loves someone who can find the right answers — fast! Cash flow endorsements Most of the small businesses I have worked with have cash flow issues. The main reason why they have me on board is to help them improve it . If you can — you don’t need another recommendation. A few pounds you save a client would make a world of difference than 10 recommendations on Linkedin. Not that this would hurt, but the other is practical and hands-on and they will understand you mean business. Real life example — a contact had to file annual returns and used a subscription service to do it. I hadn’t handled this for them — when they told me about it I offered to put their filing through my corporate membership. Long story short, they saved £110. It’s not a lot of money — but for a small business that would be 3 months of Hubspot or 2 client dinners, tickets to networking events or similar. You get the drift… They referred me to another company who did become a client. Win-win! I agree it’s not always easy when you have companies that turn up with a lot of debt on their books. In such scenarios, one would have to get really imaginative. They matter… This is something that comes naturally to big businesses — something I have seen many big firms do really well. Letting clients know they matter. It’s not always about the swag, it’s about a deeper connection. When you want to let a client / well-wisher know they are valued, you should take an effort to understand what would make them feel that way. One of my long-term contacts loves a good roast dinner. And I have taken her for many… mainly because I appreciate her support. She has referred me more clients that any single contact. When she calls me up for a quick question, I do it willingly — long term relationships matter in personal businesses. Another client of mine prefers a discount if I want to give them a “gift”. They work and live many miles away from me, so something other than flowers and wine add more value. Adding Value Continuing from my earlier point, I would add this to the mix. You really need to add value to the people behind the business. A lot of times this can be very tricky. Look out for tax breaks and have a “saving” mentality at all times. If you find having a flexi-work arrangement would be better in terms of costs for a client, voice that opinion. Don’t feel too bad if they don’t act on it, people can have very different motivations. If you hear about grants, tell them about it and see if you can help them put an application together to get that in place. I think it’s possible to be innovative around how small business pay for services. I have tried service swaps before and it has worked fairly decently for some of my time and expertise. To conclude, I believe having a people first mentality would go a long way in servicing a small business. For big companies, you might be interacting with a person in a position — that can change if people change jobs. I realise a lot of this is equally applicable for bigger entities, would welcome thoughts from people who do have experience similar to mine. Note - 1. The article was first posted on Medium.com 2. The images used in the post are from pexels.com and those allowed by Wix for free use. They are allowed for commercial use, to the best of our knowledge and ability. #article #Startups #SingaporeCFO #SMECFO #outsourcedCFO #XeroCFO

Perpetuity. What is perpetuity? A dictionary meaning would read “the state or quality of lasting forever”. Why is this applicable here? Because, once a Company is formed (registered with a unique identity number of its own) – its intended to last forever, until it is wound up (closed down). Every entrepreneur dreams of his/ her company to be active and running and giving great returns from the first day of launch. But, in the life cycle of a Company – there may be a lull phase, which maybe be a result of a strategic business decision (to introspect and re-focus maybe). But during this slow phase, there is a running cost to keep the Company alive. When a Company’s normal business functions are suspended or slowed down for a period of time, it is said to be a ‘Dormant company’. As a business owner, you may tend to neglect the related compliance matters. But this may cost you – as regulatory authorities expect annual filings to be completed on time. Unless this is done, they would take corrective actions of varying measures – even to the extent of closing an inactive company. Here, we explore the basic compliance for a ‘Dormant Company’ in Singapore: 1. Preparation of Financial Statements? For an active Company, where there is constant inflow and outflow of funds, there is a valid reason to track these movements and capture them in a financial statement. But for a Dormant Company, there are no active transactions in the Company and preparing this Financial Statement will only add to the financial strain. Accounting and Corporate Regulatory Authority (ACRA) of Singapore, has provided an update on the amended Companies Act (New Section 201A). The gist of the exemption reads: Previously, a dormant company was exempted from the statutory audit requirements. With the introduction of the new provisions via Section 201A, the new exemption from preparation reduces regulatory costs for dormant companies which have lower public impact. A Dormant Company is exempt from preparing the Financial Statements, if it fulfils the following conditions: (a) the company fulfils the substantial assets test*; and (b) the company has been dormant from the time of formation or since the end of the previous financial year. *The substantial assets test is that the total assets of the company at any time within the financial year must not exceed S$500,000. For a parent company, the consolidated total assets of group at any time within the financial year must not exceed S$500,000. Dormant listed companies and their subsidiaries as well as dormant unlisted companies which do not fulfill the substantial asset test must prepare financial statements but are exempt from audit. This remains unchanged from the current position. 2. Annual compliance: Each company, whether active or dormant is required to file the Annual return with ACRA indicating the change (if any) / status quo in the Company’s structure (the Directors, shareholders, share capital etc). You Company Secretary should advise you on this important annual compliance each year. To summarise, to keep a Dormant Company active in Singapore, the following compliance need to be completed: Hold an Annual General Meeting (AGM) or apply for Exemption From Holding AGMs for Private Companies with Financial Year End (FYE) ending on or after 31 Aug 2018 (s175A Companies Act) A Dormant Company may be exempt from preparing the Financial Statements for a particular financial year – if it satisfies the exempt condition File the Annual return with ACRA to be compliant. Please reach out to us in case you have further queries regarding this. We are a boutique company secretarial and accounting firm that help companies meet their compliance requirements as well as advice on required documentation while scaling up – if you are thinking of your next funding round, please feel free to reach out to us to discuss how to prepare your compliance registers and books of accounts. Credits 1.More information about company closures and management can be found on ACRA's website 2. All pictures used in the article are from pexels.com and are allowed for commercial use. #compliance #Singapore #Dormant #singaporecompanyformation #seriesA #SMECFO #SingaporeCFO

You’ve made it through the first year of business. Kudos! Now, ensure that all your year-end compliance is up to date. We list 5 important compliance processes to prepare for: 1.Accounting books: Close your accounting books to see how your business translates in terms of numbers. Why is this important? There is a legal requirement for the company to circulate the financial statements to the shareholders and informing them about how the initial investment (Share capital) has been utilised. It’s important to ensure that the books are closed prior to the 1st year anniversary of the Company – for corporate tax planning. What documents will you need to close the books? The historic records of all the income received, and expenses during the year should be recorded with relevant copies of receipts and invoices. To briefly list the documents that will help with accounting records, you will need to ensure you have: (i) Company’s bank statements reflecting the income and expenses (ii) Expenses Receipts (iii) Invoices 2. Dividend declaration? Once you have finalised the accounting numbers for the financial year of the Company, when your business is making profits, you may consider a dividend pay-out. But its important to consult your accountants and company secretary who will advise you on the maximum allowed limit for this. 3.Corporate changes? The initial years of a business are the toughest – it takes time to get the flight going. This may mean, your company is expecting a few corporate changes (appointing new Directors/ Resignation of existing Directors; incoming and outgoing shareholders etc). As part of the year end compliance, the Company is legally required to file notification of the changes that has occurred in the Company in the last year. Hence, it’s important to keep track and ensure appropriate record keeping for these changes. 4. Annual General Meeting (AGM) and related Annual return (AR) filing The Companies Act (Chapter 50), governs the holding of the Annual General meeting for Singapore Companies. One of the requirement is for the company to ideally hold an Annual General meeting within 6 months from the close of the financial year of the Company. This simply means that the once the Financial Statements are finalised, they need to be circulated (brought to the attention of the shareholders). The annual return is the yearly declaration that needs to be filed with the Registrar (ACRA – in Singapore). It contains the details of all the corporate changes (if any – eg: change in directors/ incoming or outgoing shareholders etc) apart from the copy of the financial statements that needs to be filed as well. You may consult your accountant and company secretary to guide you in complying with these up-to-date requirements and to meet the necessary deadlines (without incurring any late filing fee). 5. Tax filing Every company requires to file the corporate tax with their respective Inland Revenue Authority. This compliance is met once the financial statement is finalised, signed, circulated to shareholders by filling out the appropriate tax forms and submitting the form online/ offline as per the instructions given by the relevant tax authority. Apart from the highs and lows of a start-up journey and the abundance experience the first year business anniversary brings, its important to see how the numbers translate – so you can prepare yourself better and aim for the biggest. Closing the books of accounts is the first step to getting to comply with the year-end compliance. From our experience, the delay in closing the books usually has a ripple effect causing delays in related year end processes like – holding AGM and subsequent AR filing, sometimes it may lead to delayed filing and added late filing fees. Always consult your accountants and company secretary to help meet the year end compliance and aim to get a good standing certificate after completion. #singaporecompanyformation #Singaporeincorporation #SMECFO #documentation #article

“Go big or get beaten!” the mantra for every business idea. But did you know - You may end up packing your bags (while aiming big) when things are just at step 1? From experience, we want to highlight some important things people don’t consider before jumping the incorporation (registering a company) bandwagon. Note that this has been written from a corporate compliance perspective and is a technical read. 1. Issued and Paid up capital Apart from the usual checklist revolving around incorporating (registering) a Company – eg: Choosing Company Name, registered office, Directors etc – a very important component is the Capital. Share capital / Capital is the actual money/ value that will be pumped into the Company at the time of registration. What you should not do: Don’t declare a high issued capital. For eg: $100,000 issued share capital when you intend to pump in only 10,000 which is technically referred to as paid up capital It is good compliance practice to declare the true and fair value for the Company at all times. That said, its best to register the Company with 10,000 that you actually intend to pay in and later when the Company has investments coming in, the share capital can be increased. Interesting Tit bit: Share premium is termed as the price paid over and above the face value of shares. Singapore has done away with the concept of “Share Premium”. So the capital invested will be treated as “paid up capital” (no sub category of capital paid in). 2. Shareholders When registering the Company – you need to declare the initial shareholders (usually details of the owners) of the Company. These are people who will be actually investing into the company (whether in cash or in kind) and in return hold a share in the Company. So, for all practical reasons – its best to keep the shareholding simple at the time of registering the company. What you should not do: Include details of friends, family or even acquaintances who have no idea whatsoever about your company or that they will be legally liable to invest into the Company – without first having a formal agreement (preferably) in writing eg: Shareholders agreement etc. Consider this: For eg: “A” intends to register the company with 10,000 paid up capital and wants to include his friend “B” in a 50-50 shareholding.“B” has no idea that he will be legally liable to contribute to 5,000 as part of the deal. It’s best not to include individuals who have not promised/ agreed to investment (especially in cash) into your company at the time of registering the company. Simply because legally – a shareholder in the company will be called upon to pay for the shares where cash consideration is applicable. You don’t want to ruin your relationships based on a financial commitment people did not know they had. 3. Shareholding percentage If you intend to declare 2 (two) shareholders at the time of registering the Company (limited by shares) – the shareholding percentage should be clearly defined in shareholders’ agreement / constitution document etc. What you should not do: Declare a clean 50-50 shareholding between the 2 shareholders in the Company. Consider this: For eg: “A” and “B” are intended to be the 2 shareholders in the Company with a 10,000 paid share capital with a 50-50 shareholding (i.e they pay 5,000 each for their share in the share capital and they participate 50-50 in terms of the profits of the Company). When there is a dispute in the Company – a 50-50 shareholding will only create a deadlock for the company (and its decision). A Company once registered will be a perpetual entity (independent of its shareholders/ owners). So it’s important to formulate what the terms of disagreement and preferably have a 51%-49% break up or even a higher % shareholding to the main controlling party/decision maker. 4. Your company’s constitution (charter) document Constitution document is the charter document of the company. I would consider this document to be the DNA of the company – simply because the bylaws can be defined intricately for each company. What you should not do: Opt for the standard (default) Constitution document. Consider this: For eg: “A” is a single shareholding individual who opts for the default constitution document. The default constitution document may not give you the flexibility to pass a resolution by circulation or to e-sign documents. If you feel the need to have a greater flexibility/ tighten certain clauses in the constitution; opt for a bespoke constitution document. 5. Choosing your service provider When you want to register your business entity – it’s better to ensure you have got it right the first time rather than face issues / bear the consequences of a wrong declaration. That’s why choosing a service provider to help you register the company is a very important decision. What you should not do: You may intend to save costs at the time of registration, but may end up compromising on the quality of service. Consider this: For eg: “A” incorporated the Company with the issued capital of 100,000. But he could only pay 10,000 towards the paid up capital. The consequences of such an action is not explained at the time of set up. ​ In this instance – it is dangerous for the Shareholders to be in – because once the capital is declared in the company (especially at the time of registration) – the shareholders will be liable to pay that at some point. An experienced service provider will be able to guide you and help you navigate around the compliance requirements – so you can actually aim to go big with your idea (and not end up in the dead lock)! About us Our Chartered Secretarial and compliance team comes with over a decade plus of work experience handling incorporation, ongoing compliance including funding rounds for growing businesses including funded start-ups. The thoughts collated here are from real life experiences. We have even seen instances of companies losing out potential investment due to decisions that were made without thinking forward. We are here if you’d like to chat more, feel free to drop us a line to chat more. #article #fundingrounds #Singaporeincorporation #compliance #singaporecompanyformation #companysecretary #seriesA #SeriesB #Seedfund

Picture this: A promising Start-up bags a big investment. What follows is heaps of paperwork and tight deadlines to be met (pre-Investment and post Investment) before money hits your bank account. Year 2010 – Scene at the legal/ paralegal/ chartered secretaries’ office? The whole team crunch hours into drafting>> reviewing>> editing every single document to support the pre-funding/ post funding requirements. Let’s translate this into some numbers, Company (mostly the start-up) needs to cough up a portion of the investment to meet the higher time cost of professionals mostly spending time on documenting the process. Fast-forward >> Year 2018 Investor requirements for the funding rounds remaining the same, The drafting>> reviewing>> editing every single document to support the pre-funding/ post funding requirements is now largely automated. This reduces the time cost involved in drafting/ preparing the paperwork. This also means – the team of specialists can now focus on providing core consulting rather than worrying about the mundane “crunch-work “that’s unproductive. Using the right technology, the team streamlines paperwork and core focus shifts to completion. The numbers? Yes, you’ll incur the costs of subscription, but there is considerable savings on ancillary cost associated with drafting documents from there on. Being a Chartered Secretary with over a decade of work experience handling funding rounds for various start-ups, I can share my pain points with conviction. The drafting of papers for pre-investment / post investment for a start-up is the most time consuming/ heavy duty work to execute. Why do I say this? Because the entire paperwork just doesn’t end with the first draft – each document goes through many cycles of Draft >> Review >> Edit >> Correct >> Re-Review >> Finalise before it’s ready to be executed in full. What’s the most difficult part? Revisiting each document to make a small amendment. Eg: Correcting the Name of the Shareholder which was misspent in one document. With automation and the advent of machine learning, we expect such small amends to take all but a few seconds. So, here are my top 5 reasons to support the automation of paperwork (not just for legal but apply it equally for accounting / bookkeeping): 1. The Cloud is the future Cloud is an everyday reality now. When you have an option to have access to all the documents/ details/ numbers useful for your company’s next investment; all available in a single portal/ platform – things get wrapped fast. It’s easier to work remotely for your team of specialists and not be bound by a specific work location either. This flexibility to access the data you need in just a few clicks allows for better and faster business decisions to be taken. 2. Saves time and cost With automation, we know time and cost is saved. This means, the team can now focus on core competencies and provide better and improved consulting. The savings in terms of time-cost is a significant advantage - people simply do not have the time on hand to go through complex paperwork, print them out, sign them and scan it / worse still post it back to their compliance team. They want to wrap things quickly once the main decisions are taken. Now imagine having to change the entire paperwork for a small change such as a mis-spelt shareholder name, stuff of nightmares! 3. Version Control Anyone who has worked in a big organisation would know all about version controls. Small amendments are easily done via the right software. Remember the example we gave – a misspelt Shareholder name above? Things like that does not require an army of people pouring over page after page of documents created to make changes. 4. Improves the quality of service With reduced time cost and resulting savings for the Company, it is only natural for the entire team/ company to focus on improving the quality of service/ output and in return aim to yield higher returns. This is our company’s core objective – a good service, reasonably priced. Imagine companies like Zegal and Seedlegals , they have taken actual pain points for people going through their funding rounds and simplified the most onerous of the tasks. 5. Its environment friendly This for me personally, this is the most important reason. We have done enough harm to the environment cutting down trees for papers. If we can save a single tree with reduced paper work from just one resolution, imagine the trees we save automating one pre-investment round; now multiply that with each investment round for about 100 clients – we almost save an entire forest Let’s Conclude in Year 2030…. Blockchain (or something similar) would enable funding rounds to be concluded within days if not hours. Information exchange happens within secure platforms with the human element supporting the more crucial requirements in the event – such as negotiations. And yes, the funds should reach your secure platform (whether that would be a bank account, we don’t know) much sooner than we expect now. Evalua8 offers growth advisory and funding round documentation support, drop us a line with your requirements and we will write to you with our thoughts. Kirtiayush@evalua8.com #article #startups #fundingrounds #compliance #companysecretary #Singaporeincorporation #companyformation #legal #documentation

Cash, or lack thereof kills most small businesses within the first few years of starting up. Inevitably a good awareness of what you need to survive and thereafter to succeed would make a world of difference. Here are 5 tips that could make planning for working capital easier, Understanding inflows - This is not your invoice “due-date”. This is the number of days most of your customers take to pay you. Outflow patterns - Similar to the above, know your own payment cycles. How often and how much do you need to pay? If you use contractors, this is especially important as they sometimes tend to to bundle up invoices for months together before sending them out. If on regular payroll, you will need to make a payment at least every 30 days Understand and use basic forecasting. Combining the information with 1&2 above, you should be able to create a basic cash forecast. In MS-Excel you can search and utilise the form named "Small Business cash flow projection". Uploaded here for convenience.* Review the forecast every month diligently and map out exceptions. You should be able to ascertain when and what caused disruptions to planned receivables/payments.This is the main reason why SMEs fail on cash planning. Once you have a forecast, it is important to review why planned numbers are not reached. Understanding basic ratios - Though this might sound very technical, understanding some ratios in relation to your Company can help keep tabs on critical numbers. Xero's business performance dashboard allows you to track business ratios such as debt to equity, net asset position, profit margins etc. based on the numbers recorded on the platform. Once you position this on your main screen, you can constantly know what numbers are where and which areas need your attention. Once you get started, the process becomes easier and more habitual. If you need initial help, Evalua8's team is right here to hand-hold you. Feel free to contact us to talk more about your requirements today. *The format belongs to the MS-Office Suite and has been uploaded here only for convenience. The format is not owned by Evalua8. #article #startups #Bournemouthbusiness #workingcapital #cashflowforecasts #cashmanagement #managementaccounting #outsourcedCFO #XeroCFO

When it comes to a Company's accounting needs, there is sometimes a lot of internal confusion. Should we start with a DIY-Software type thing or go ahead and directly outsource it? We collated these ideas to throw light on how each of the accounting roles differ. A Software – The Gate Keeper Before you employ your first accounting professional, be ready to invest in a quality software that captures your numbers. By quality we mean the software should be easy to setup and use, accessible, be safe and have the ability to produce basic financial records. In a world full of choices, some cloud providers lead the pack – understandably so, since they provide incredible value for money for the functions they cater to. For many people the software is either recommended by accountants or other entrepreneurs they have met. So, the implementation of the software is often parallel to having a numbers person handy. From my experience, a software is most useful because it does not allow transactions to be lost in transit. Rely on a bunch of receipts and in a matter of time, most people struggle to find them. Rely on your memory and you're sure to have some misses. Remember that as a founder/CEO this is not your primary function. The bookkeeper – Keeper of Transactions A good bookkeeper is always an asset. A majority of start-up founders I have met over my career are not the best in terms of keeping their papers organised. In a virtual finance department, the process is guided by less or no paper. So, the rhetoric that I will go back and find the document when I need it won’t always work. In a world of integrated automation, what value can a bookkeeper bring? As much as we love to think of a paperless and completely automated finance function, it’s never that easy or perfect. There would always be missing documents, unchecked balances or statements that do not tally. Or simply business owners who do not have the time or experience to handle the role. Transactional accounting, is all about the fundamental “debits and credits”. Without this function being robust, you can only “estimate” what are the business numbers. There is no tangible way to know whether the numbers in your head can actually match the reality of money in the bank. The Controller – the creator of partnerships A Financial Controller in a start-up or an SME world is often compared to a glorified bookkeeper - someone who keeps and is responsible for transactions. While there is some truth in this, it might be worthwhile remembering that the control function is responsible for delivery of a robust finance department – be in virtual or in-house. For an SME, often the controller doubles up as the CFO / Finance Director. The controller is not just responsible for recording the transactions, he is also ultimately responsible for ensuring that the numbers do in fact make sense from the business owners angle. Does it create a true and fair view of the business financially? She is expected to have an overall view of the numbers and be aware of any obligations, liabilities and changes to legislation – such as the Making Tax Digital initiative. When an SME starts having sophisticated requirements such as specific monthly reporting, a robust debtor and creditor function or a need for consolidation due to expansions, it is a cue to bring on a senior level finance professional. The controller not only should take over the brunt of managing the numbers, but also be available as a bridge between the management, stakeholders and the administrative team. The CFO – the Grand Poobah It’s quite rare that an SME wouldn’t know when they need the ultimate numbers person. If you have an exit, an IPO or a major business growth event on the horizon, bring on the big guy, the CFO. You will need her, when your meetings need the broader numbers view of the business to make informed decisions – situations where you can no longer escape with “Let me get back to you with the numbers”. A seat at the table that is missed during strategic level get-togethers. In this article from Mckinsey, an explanation that – “The selection of a CFO cannot be made in isolation; companies must consider the strengths of the rest of the top team, paying specific attention to its blind spots and missing capabilities” is an important consideration. The CFO would be needed to create and keep to a financial strategy that builds into the overall organisational strategy. This is different from forecasting and budgeting. It's been able to envision the big picture in relation to the organisational changes that are expected. Every organisation would be impacted by regulatory and economic changes, relative to its size, the CFO can fashion the changes required ahead of them. Risk mitigation - putting systems in place to lessen the impact/avoid risks relative to the organisation in upcoming time period; is fundamental to the CFO's role. Apart from them the CFO builds a finance team and manages stakeholder communication from the get-go. So who do you need.... Deciding which role does your company need to fulfill desired objectives can be tricky. It's necessary to take stock of what is internally available vs what skills would most benefit the team. You can choose to keep one or more of the roles outsourced as this allows to free up resources internally. Ultimately, it would only benefit if the roles can feed into a greater and more robust finance function. #article #outsourcedCFO #SMECFO #budgeting #cashflowforecasts #riskmitigation #financialstratey #financialdesign