The GAAPweb blog

Pay now, avoid debt later

Personal debt. National debt. Upcoming ghost-of-Christmas-future debt. Gen Y is almost completely unfamiliar to the concept of a debt-free society, and I’m pretty sure this will perpetrate for generations to come unless something drastically changes.

Everyone seems to have an opinion on who got us here and who’s responsible for getting us out. The latest establishment offering their (somewhat more than) two-cents’ worth is the National Institute for Economic and Social Research (NIESR), whose recent report predicted that income tax might have to be increased by 7p if the UK’s economy is to stand a chance at full revival.

The report stated: “The UK faces a structural budget deficit of 6 per cent of GDP. The build-up of government debt, which may reach 93 per cent of GDP by 2015, will leave a burden for our descendants.”

A rise in income tax has never been a particularly popular option historically (particularly around election time), and it’s unlikely to be now. Nobody likes the thought of more money deducted from their payslip each month without any tangible proof of where it’s going.

Even the BBC’s highest earners are setting up their own companies to avoid paying hefty taxes on their burgeoning salaries as they take on ‘freelance engagements’. I’m not condoning this, but I do think it’s representative of the general public’s view towards income tax: if there’s a legal way we can pay less of it, we’ll take it.

So putting income tax up? Yes, it might help to alleviate national debt and result in fewer years of suffering for future generations. Will it be popular now? Er, no.

Is it time to run the United Kingdom like a business?

Even the most politically apathetic will have noticed that something has changed in the media recently. Politics has become headline news, and not just over the behaviour of our MPs. You can’t tune in to a radio talk show without debate over whether Gordon Brown’s days are numbered. David Cameron has even knocked Katie Price on to page 7. Why? Because a General Election has to take place in 2010 and the major parties are looking to impress us to win our vote. Political PR companies are in overdrive, party volunteers will be canvassing on your doorstep and national newspapers with be flying their red or blue flags.

For the first time in almost a generation, the General Election will take place on a backdrop of recession. Unemployment has risen significantly in the last two years, house prices have fallen and as a country we have a ‘structural deficit’ of £175bn. All is not rosy and we, as voters, have to decide which is the best horse to back in order to improve the situation. This seems a daunting proposition; do you believe that we should spending more on public services to keep our economic wheels turning, or do you think that we should reduce the wastage of interest payments by cutting expenditure to shrink the national debt?

Governing 61 million people is no easy task, but is it really that much different from managing the massive companies that provide essential services to our country? Politicians and their bag carriers would have you believe it’s the hardest job in the world.

Many senior managers (many of them trained accountants) in various businesses across the UK have had to face the recession full on. They’ve also had to make huge decisions affecting the same people who get to cast their votes next May. It’s interesting that our rationale as corporate managers is often very different from our rationale behind our voting principles. But are these two issues really that different? Surely the Chancellor is the country’s Finance Director – shouldn’t he or she apply the same principles?

Like any finance team in the country, sometime in the next year the new Chancellor will need to:

• Work out how much revenue will be generated from tax;
• Assess the expenditure from central spending plans;
• Calculate the difference between the two, and if it’s not a positive number one of the two above has to change;
• Understand how much money the Government owes its creditors, and ensure a plan is in place to balance the books over a sensible timeframe.

Maybe it’s a gross oversimplification, but it’s still a fairly straightforward process that every accountant has undertaken at some point.

As Finance Director of the country, the Chancellor will need to influence the assorted Operations Directors who want to spend, spend, spend in their areas of responsibility to remain popular with staff and customers. The Sales and Marketing Directors (whoever they are in Westminster!) will have to justify how they will protect the UK’s global brand, while generating the revenues needed to keep home and foreign services going. Ultimately, those plans will need to be realistic and Messrs Brown, Cameron or Clegg (as CEO of UK Inc) will then pledge these plans and strategic objectives to his stakeholders. Is that so far removed from the corporate planning processes we know?

I’m sure most of you have never had to fill a £175bn budget gap or had to squeeze a few billion pounds of savings from your plans, but surely it’s just a matter of extra zeros. Spending cuts in companies and public services have the same results; a loss of jobs that will probably impact on future sales (or taxes) in the longer term. That’s the balance that boards everywhere will need to find. It just so happens that the public gets a chance to vote on which board they want for the next 5-year plan, which might be an option you wished you had this budget season.

When I eventually get my time in the polling booth I’m going to dismiss the zeros and spin and think, “Which Finance Director do I back for the next 5 years?” Are you?

Colin qualified with Arthur Andersen in 2000, eventually leaving in 2002. After a brief stay at Centrica, he joined Carphone Warehouse and worked in assorted roles with Talk Talk and Geek Squad as Finance Director. After working with friends at Mint Digital, a social media agency, Colin is now looking for a new challenge.

GAAPweb 'highly commended' at industry awards

One of the nice things about working for a long-established company like GAAPweb is that you get invited to the occasional industry event. I had the pleasure of attending an awards ceremony hosted by the IFA (The Institute of Financial Accountants) earlier this week.

The nominations for our category came from IFA members and GAAPweb was up for an award in the recruitment agency category … despite the fact that GAAPweb isn’t a ‘recruiter’ in the traditional sense.

However, the fact that we’re recognised as one is an indication of the increased synergy between agencies and job boards. The latter is actually a go-between for the recruitment consultant (who posts their jobs) and the candidate (who finds these jobs and applies).

GAAPweb scooped a special recognition ‘highly commended’ award, and was praised as having a significantly positive impact on the jobseeking process.

GAAPweb was in good company; other winners included Dragon’s Den tycoon Theo Paphitis, who won the ‘Contributing to UK Enterprise’ award for his continuing support of SMEs and start-up companies.

The IFA said: “Following an intensive day of interviewing, the judging panel of professionals and academics from the business and finance sectors selected 18 top people and companies in accountancy and financial management for demonstrating personal achievement and success in business”.

Duncan Hood is Marketing Manager for GAAPweb and has been in the industry for just under two years. He worked on a variety of brands including TheGraduate and HotRecruit before joining GAAPweb. His broad industry experience and knowledge stretches from SMEs to the NHS.

Banks on board … but is it a bonus?

The decidedly chillier onslaught of October brings with it the somewhat warmer news that, at last, five of the UK’s largest banks are setting the standard by agreeing to rein in excessive bonus payouts.

Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered have signed up to the proposals, following pressure from Chancellor Alistair Darling and suggested reforms at the G20 meeting in Pittsburgh.

The Financial Services Authority (FSA) has been keen on remuneration reforms for some time, but with five key banks on board, surely it’s only a matter of time before the others follow suit. I’m just not holding my breath that any of this will happen before Christmas.

Neither, it seems, are bankers, who are monumentally unconcerned that it will affect this year’s payouts, but who agreed that pay needed to come down. Opinion in the city is still divided as to whether these reforms will have any real impact.

Unsurprisingly, the Treasury is yet to persuade Goldman Sachs and JP Morgan to cap bonuses. And since the FSA’s planned code of practice for January 2010 is not compulsory, it could still be quite some time before we see a balanced and unified bonus culture on a national, let alone a global scale. The only logical way forward from here is compulsory legislation that holds all banks and other financial institutions to accountability.

It’s impossible to say whether or not financial stability really can be achieved through these measures. However, with the backing of the banks and cooperation from financial institutions at all levels, it’s one more step in the right direction … or at least it will be from 2010.

Don’t let any of this put you off pursuing a financial career; you’re still like to earn a healthy living, just without the wild compensation that was once available.

GAAPweb scoops nominations for two awards events

If you needed further proof that you’ve been looking for your next finance and accounting role in the right place, here it is.

This year’s National Online Recruitment Awards nominees have been announced, and it’s with great pleasure that I can reveal that GAAPweb has been shortlisted in the Best Specialist (Niche) Job Board category.

NORAs defines this category as: ‘A purely online job board, advertising vacancies within a defined range of disciplines. These sites must operate independently of recruitment firms or publications’. If you’re familiar with GAAPweb (which I’m sure you are if you’re reading this), you’ll know that we’ve been the UK’s leading specialist accounting and finance jobsite for over 11 years.

On a shortlist of eight contenders, GAAPweb is the only finance and accounting niche site nominated. Overall, there were 654 contenders for the Awards, resulting in 25,000 nominations.

As further testament to the success of GAAPweb over the past year, the IFA (The Institute of Financial Accountants) has also nominated GAAPweb in their recruitment category as part of their Achievement Awards.

Industry recognition and accolades are undoubtedly nice to have, but here at GAAPweb we’re more interested in giving you the latest news, highest quality jobs and access to the best recruiters.