False details given – e.g. application form To make redundancy the organisation must: Must consult with trade unions The job must have disappeared Period of notice must be given and redundancy payments must be offered National Minimum Wage Regulations 1999 The national minimum wage sets minimum hourly rates that employers must pay their workers. It covers almost all workers in the UK. There are three aged based rates and an apprentice rate. Data Protection Act 1988 and 2003 When businesses or organisations keep information about people on computer systems they need to make sure that they follow the Eight Principles of Data Protection It must be collected and used fairly and inside the law. It must only be held and used for the reasons to the Information Commissioner. It can only be used for registered purposes and only be disclosed to those people mentioned in the register entry. You cannot give it away or sell it unless you said you would to begin with. The information held must be adequate, relevant and not excessive when compared with the purpose stated in the register. So you must have enough detail but not too much for the job that you are doing with the data. It must be accurate and be kept up to date. There is a duty to keep it up to date, for example to change an address when people move. It must not be kept longer than is necessary for the registered purpose. It is alright to keep information for certain lengths of time but not indefinitely. This rule means that it would be wrong to keep information about past customers longer than a few years at most. The information must be kept safe and secure. This includes keeping the information backed up and away from any unauthorised access. It would be wrong to leave personal data open to be viewed by just anyone. The files may not be transferred outside of the European Economic Area (that's the EU plus some small European countries) unless the country that the data is being sent to has a suitable data protection law. This part of theDPA has led to some countries passing similar laws to allow computer data centres to be located in their area Freedom of Information Act (Scotland) Act 2002 The Freedom of Information Act gives you the right to ask any public sector organisation for all the recorded information they have on any subject. Anyone can make a request for information – there are no restrictions on your age, nationality or where you live. Organisations must provide it to you within 20 working days unless it falls into an expemption category. Computer Misuse Act 1990
trade payables) to a factoring company. a percentage of amount due. Can save time/ chasing unpaid invoices. invoice. Factors only want to buy large value invoices/large quantity of invoices. Grants received from the government/EU/ enterprise agencies for a specific purpose. Does not need to be paid back. Usually has conditions attached. Can take time to get as requires many forms to be completed. Medium Term Sources of Finance SOURCE DESCRIPTION ADVANTAGES DISADVANTAGES Loan from family and friends (ST & Ptshp) Borrowing money from family and friends which is repaid over a period of time. No interest to pay back. Flexibility in repayment of loan. Arguments over borrowed money may occur. Bank loan Borrowing money from a bank (for a specific purpose) which is repaid over a period of time. Repaid in fixed instalments. Helps organisation to budget and plan. Interest is paid back on top of equity borrowed. Interest rate may be high for new/high risk businesses. Hire Purchase Deposit paid for item and the rest paid for in instalments. Can receive item immediately without paying in full. Cost of item is spread may make it more affordable. Item is by organisation after final instalment is paid. Interest could make the item expensive. Item is not owned until all payments made. Leasing Renting vehicles or equipment for a period of time. Cheaper than purchasing outright in the short term. Equipment is replaced when outdated. May include a service Expensive in the long term as organisation is continually paying leasing charge. Organisation will never own the asset.
contract where maintenance is included. Long Term Sources of Finance SOURCE DESCRIPTION ADVANTAGES DISADVANTAGES Owner(s) savings Additional funds (equity ) invested from the personal finances. Reduces amount to be borrowed from other sources. Control is maintained. Owner(s) may find it difficult to withdraw investment. Investment is at risk if business fails (unlimited liability). Mortgage A special type of loan used to purchase property and land. Can be taken out over very long periods eg 25 years. Lower rate of interest than other bank loans. If interest rates change repayments might increase. Share issue Selling shares (a small part of the organisation). Owners of shares are known as shareholders. Very sums of money can be raised. Money invested through share issue is not repaid. Shareholders have limited liability and receive dividends. Cost of issuing shares can be expensive. Deciding on share price can be difficult. Debentures Loans received from private individuals or other organisations. Interest is paid over the debenture period and original value of loan paid at end of debenture period. Very large sums of money can be raised. Organisation pays interest on the loan over the debenture period – giving them time to raise the value of the loan before it is due. Interest will require to be paid even if organisation is making a loss. If organisation is unable to repay interest/loan the debenture-holders can sell assets to recover what is owed. Venture capital Venture capitalists provide to organisations that are deemed too risky by banks. Allows finance to be raised for risky ventures. Venture capitalist will often provide advice to ensure their investment is successful. Venture capitalists are generally only interested in loans. Fees/interest rates can be very high. Often want share of business in exchange for finance. May want to be involved in decision
==== ==== ==== Notes on the Cash Budget: Opening Balance - The money that the organisation has at the start of the time period Receipts - Both cash sales and credit sales are recorded Receipts – Opening balance minus receipts Payments - All individual expenses involving the movements of cash are recorded Payments - The estimated total amount that will be spent during the month Closing Balance - total income for the period minus total expenses for the period leaving a surplus or deficit. The closing balance of one time period becomes the opening balance for the next time period. Reasons for poor cash flow Spending too much on inventory that has not sold. Giving customers too long to pay money that they owe. Not receiving enough money from the sale of goods and/or services. Not having enough time to pay bills from their suppliers. Owners taking too much money out of the business for personal use (drawings). Bad management decisions eg high marketing spend that doesn’t generate sales. Solutions to improve cash flow Reconsider expenses – can anything be cut back? Eg are all employees required, find a cheaper supplier/supplier who will give a discount. Spread cost of equity purchases by purchasing through hire purchase or by leasing equipment. Increase sales revenue by increasing selling price or carrying out additional advertising to increase amount sold. Inform the bank of any shortage and organise an overdraft in advance. Offer discounts to customers who pay on time as this will encourage them to pay more quickly. Sell equipment or machinery no longer needed as this will in cash to be used to fund other areas of the business. Obtain additional finance eg a loan. Obtain trade credit from supplier. Reduce level of trade credit given to customers. Raise extra equity by investing retained profits or issuing new shares.