Came across an interesting article -> that can be accessed from the following link

http://www.adviceguide.org.uk/index/whats_new_oct08_how_to_survive_the_credit_crunch.htm

Credit Crunch can be effectively handled by the following ways

1. Don’t bury your head in the sand

Ignoring your debt problems will only make them worse. Don’t ignore calls or letters from the people you owe money to (your creditors).

Contact them to explain why you’re having problems. The sooner you do this, the more options you’ll have for solving your financial problems.

2. Get advice

There are many organisations which offer free and independent money advice such as Citizens Advice, Shelter, National Debtline, and the Consumer Credit Counselling Service. Their debt advisers can assess your situation and work out the best course of action for you. For details of organisations which can help, go to the bottom of this page.

3. Pay your priority debts first

There are some debts you need to pay first before others, because the consequences of not paying them can be much more serious. For example, mortgage or rent debts are a priority as if you don’t pay these you could lose your home. Debt advisers can help you plan your budget and pay your priority debts first.

4. Pay what you can each month

Work out how much money you’ve got coming in and going out of your household on essential expenses like food and bills. Then work how much you’ve got left over to pay your creditors. If you can’t afford to pay back all the money you owe, work out how much you can afford and offer to pay this. A debt adviser can help you do this.

5. Maximise your income

Are you getting all the money you’re entitled to?

There may be benefits or tax credits you can get such as Pension Credit or Disability Living Allowance which you haven’t claimed. Working Tax Credit is an in-work benefit which is not just available to people with children. You might be able to get it if you work enough hours and are disabled or your income is low enough, even if you don’t have children. You may be able to get Council Tax Benefit or Housing Benefit to help you pay your council tax and rent. You don’t necessarily have to be out of work to get these benefits. You may be able to get help with your health costs such as prescription charges and dental costs. You may be able to claim help with education costs such as school meals and clothing.

You may be able to get a grant to help you pay for things like fitting home insulation and improving energy efficiency. This can help cut down the fuel bills.

Your gas and electricity supplier may be able to help you if you have fuel debts.

To find out if you can get help, visit the British Gas Energy Trust website at: www.britishgasenergytrust.org.uk or the EDF Energy Trust website at: www.edfenergytrust.org.uk.

There are also some charities which give grants to people to help pay their bills or buy essential items. You can find a list of these charities on the Turn 2 Us website at: www.turn2us.org.uk.

An adviser can help you maximise your income. For details of organisations which can help, go to the bottom of this page.

6. Make savings on your household expenses

Look carefully at your spending and see if there is anything you are able to cut down on. For example, you could shop around for a cheaper gas or electricity provider, or look at cheaper mortgage or insurance providers.

You can find more information about changing your gas and electricity suppliers from the website of the consumer watchdog, Consumer Focus at: www.consumerfocus.org.uk.

To find out more about how to save money on financial products such as mortgages and insurance, go to the website of financial watchdog the Financial Services Authority at: www.moneymadeclear.fsa.gov.uk.

7. Think twice about taking out a loan to pay off all your debts

You may end up paying back a lot more than you borrowed and at very high interest rates. You may not be able to afford the repayments and the loan may be secured against your home which you could then lose.

8. Facing possession proceedings? Don’t panic

Always attend the court hearings yourself. Court proceedings do not mean that you will automatically lose your home. The court process acts as a final check to make sure repossession is the last resort. Some courts have advice desks which can provide last minute assistance.

9. Take care with “mortgage rescue schemes”

Selling your home and renting it back might seem like a quick fix to your debt problems. But, many of these schemes offer very little security. You could end up paying very high rent or even being evicted. These schemes are also not regulated so you will not have access to the same protections as a mortgage holder.

10. Don’t abandon your property

If you are struggling with mortgage repayments you may be tempted to send the keys to your lender or abandon your property. Don’t do this without advice. You could still be responsible for the debt on the property and may be pursued for it years later.

In today’s time of credit crunch it is important that we have our expenses under control and also setup budgets to keep a regular watch of things. You can use the sage line 50 to keep an eye on a range of business costs. Budgets can be set up for:

Nominal codes

You can use the standard budgeting, a basic budgeting feature you can use to view your budget, actuals and previous years figures.

Alternatively, you can choose to use Advanced budgeting, which includes up to five years historical figures and is designed to improve budget set up.

Departments

This is part of the advanced budgeting feature. You can choose to analyse the department budget by nominal categories such as Sales, Purchases or Overheads. Or you can analyse the budget against a nominal code.

Products (Accounts Plus and Accounts Professional only)

You can view your budget, actuals and previous year figures at the same time. The actuals are automatically updated for you when  invoices, sales orders or credit notes are generated.

Projects
(Accounts Plus and Accounts Professional only)

A budget can be set up for a project on the project record. As costs are applied to the project you can track project costs including spend against budget.

Hi, I have been hearing the Key Words “Credit Crunch” and “Terrorsism” over the last few days more than i have heard anything else.

I will talk only about Credit Crunch here and not Terrorism as that is not what we talk about here.  I have been brought up in a conservative indian family where credit or Loan is considered as a Curse and making expenditure or expanding business on credit is a complete NO NO.  Possibly I argued  with the elders in our family number of times against this topic.

I open this Post for a discussion and expect readers like you to post your comments on what do you think about

1. Credit Crunch Vs Liquidity Crunch ?
2. Is Credit crunch  a Myth or a Reality ?
3. Is Liquidity crunch a spill over of Confidense and Sentiments ?

The Credit Crunch Crisis has badly hit most of the UK companies. In these tough times, businesses are looking for ways and means to conserve cash.

Cutting down unnecessary cost, tight control of expenses and regular monitoring of inventory items are some of the important measures that organisations can adopt to remain in business during these tough times.

Of course, this requires the availability of key accounting information in a timely manner, for the decision makers to act accordingly.

To better equip the Sage 50 Accounts customers to address these issues, Microsap, (www.microsap.co.uk) a leading software services company and a Sage development partner, has launched a unique and effective solution – The Credit Crunch Module for Sage.

The Credit Crunch Module sits on top of Sage 50 Accounts software and uses the already available data to provide a thorough and meaningful analysis of expenses and possibly locked-up inventory assets.

The Credit Crunch Module, at present, provides two functions:

Expense Analysis

Expense Analysis uses the categorized headings already defined in Sage 50 Accounts to provide a thorough analysis of all the expenses. The various options for comparison include

• Current Month v/s Last Month
• Current Quarter v/s Previous Quarter
• Current Half Year v/s Previous Half Year
• Current Half Year v/s Previous Year same Period
• Current Year to Date v/s Previous Year to Date

The advantages of the Expense Analysis include:

• On Demand availability for real-time comparison of Expenses
• Accounting system being the primary source, data integrity and correctness is ensured
• Graphical representation for quick analysis

ABC Analysis

ABC analysis is the method of classifying items involved in a decision situation on the basis of their relative importance. The classification may be on the basis of monetary value, availability of resources, variations in lead-time, part criticality to the running of a facility, new customer parts unique to that product, and others

• “A” – items are the highest priority, the tightest control, frequent deliveries, close follow-up, and accurate records. Planning and Scheduling these parts utilize MRP (Material Requirements Planning), DRP (Distribution Requirements Planning, or EOQ (Economic Order Quantity) or other lot sizing techniques such as Lot for Lot. 10 % of the “A” items volume accounts for 70% of the total inventory value
• “B” – items are the priority when low or out of stock. Normal control is used and good records are maintained. EOQ and other lot sizing methods can be used effectively with these items. “B” items account for 20% of the total inventory value, and 20% of the inventory volume.
• “C” – items are the lowest priority, simplest method of control. Min/Max used for ordering. These parts are usually expensed, as there are no records for them. These parts represent 10% of the total value, and 70% of the volume

The advantages include

• The analysis can be carried out based on either the Rate, or the Value or the Quantity of inventory items
• You can define your own criteria for ABC analysis
• Choose the range for each of the type of groupings

Microsap along with its group company Winjit Technologies, have proven expertise in developing high end software solutions, especially for Finance and Accounting. The solutions developed are not only of the highest quality that add value to the customers but also have a huge cost advantage. Unlike any software technology company, Microsap has a robust global delivery centres that collaborate the best of the resources across the world in an optimum way without compromising on the quality.

About Microsap UK (www.microsap.co.uk)

Microsap Limited is a global software consulting and software services company established to offer services to Software Product companies (ISVs) and End-user organizations, primarily in small and medium size sector. Working closely with its customers, Microsap delivers technology solutions tailored to meet their business challenges. Microsap operates ISO certified development centres in India with its group company Winjit Technologies (www.winjit.com).  Over the past few years, it has successfully executed a number of engagements with customers in the UK , Europe, Africa and Australia .

Leveraging its technology expertise and its knowledge of business processes, Microsap has enabled its customers to create far greater value out of their investment in ERP software. With its excellent knowledge of Accounting and Finance processes and good understanding of SAGE and SAGE family products, Microsap has devised a number of innovative solutions for SAGE users. Microsap has become a Sage Development Partner in 2006 to help this cause.

Always keen on building long-term partnerships, we work closely with our customers and help them to:

• Stay ahead of the competition by early deployment of their software
• Retain all important business knowledge
• Reduce the impact of changes through process driven approach
• Create a satisfied customer base through reliable, quality software
• Leverage our offshore engagement models to optimize the development budgets

Credit Crunch Module for Sage 50 Accounts can be downloaded here

For more details, contact

Microsap Limited
Asmec centre, Eagle house,
The Ring, Bracknell ,
Berkshire RG12 1HB
United Kingdom
Phone: 01344 382 060
Fax:    01344 303 192
Email: sales@microsap.co.uk

‘In a recession cash is king’. It is an old saying and not without some wisdom. For when a recession strikes then asset prices fall – shares, real estate, just about everything you can buy – and the person with cash in hand can take the advantage

1. Set a budget at least six months ahead (Budget & Plan)
   

Monitor actual results against the budget and keep revising it – things change very fast these days and you need to be ready. Make sure you know your taxes, emergencies, insurance which you have to pay to avoid any last minute surprises. Avoid any defaults during these times as could risk your credit rating in longer term.

1. Regular management accounts to monitor your cash flow (Manage & Monitor)
   

Be on the Top of your accounts rather than it being on top of you. Manage and Monitor on a regular basis, even if it requires having a part time book keeper if required. Monthly is essential, weekly is better, daily is best

1. Check bank statements regularly and reconcile them. (Check & Validate)
   

Banks are managed by humans and they do make mistakes so keep an eye on the bank statements regularly to avoid any charges on your bank and control over the bank over draft. Overdraft is a critical and useful tool in such days.

1. Negotiate longer credit terms with suppliers (Negotiate)
   

Even 7 days increases in your credit terms could affect you but be justified don’t put your suppliers out of business, and don’t jeopardize your own credit rating. Take all cash discounts if you have cash and for annual payments go in for monthly Installments instead of one time payments. .

1. Make sensible use of credit cards (Credit Card Sensibility)
   

Credit card could be a good tool to get some extended credit for purchases but use them sensibly and ensure you plan in your cash flows so you do not have the burden of excessive interest. Never get in the cycle of Credit card finance as they are very costly.

1. Stock is not cash, it’s only potential cash. (Manage Inventory)
   

Stock is not cash it is only cash when it is sold and you do not earn if you have it on your shelf or your warehouse. Manage and control Stock levels as it could be the biggest portion of your asset which you could control and reduce. Never stock if you get it cheap as the markets are well informed and networked now a days so everyone could have the information at the right time.

1. Small Retail Sales should be in cash not Credit. (Cash Sales)
   

Small retails sales keep it always in cash no credit as there is a very cost for collection. So keep all small sales in cash to avoid any collection costs.

1. Do not refuse sales to small customers. (Small Customers)
   

Small customer might just give you the ready cash and clear up your dead inventory. Never ignore the small customer could be ready cash for you as well as clearing of old inventory.

We have software / services and simple tools which will help you analyze your data and point you in the right direction.