Comments now working properly

You should now find it easy to comment on the blog posts.

I have only just discovered that I had the blog set to only allow posts from registered users. I have now corrected this, so anyone can leave comments.

Please add any thoughts you have on reading the articles.

PBR - Can anyone see how the VAT rate cut can work?

I am struggling to see how the 2.5% VAT rate cut can stimulate the economy. If passed on across the board, it would mean a price cut of 2.1% in goods sold in the shops. I can't see how that will cause consumers to go out and buy things they weren't already going to. The stores are already running sales with 20%-25% savings in an attempt to kick start spending, 2.1% will be a drop in the ocean.

Part of the problem is that the government have created this expectation of a rate cut across the board. The retailers may be able to stimulate spending if they were to use the extra margin available to strategically target price-cuts, allowing them to show big discounts on some items. However because of the expectation built up in the consumers' minds that there will be a 2.1% price cut on everything, it will be difficult for retailers to do this.

There are also significant costs attached to the change, both to retailers and businesses selling to other businesses, who will get no direct benefit. Accounting systems across the land will need to have their rates changed, although in most cases this is hopefully quite straight-forward. Worse are all of the areas we forget about. In my small business (where all of my sales are to other businesses who claim the VAT back anyway), I have come across four today:

1. My training fliers need re-printing because although prices are quoted excluding VAT, the payment amounts stated need to be changed;
2. My expenses forms (in Excel) that calculate the VAT element for fuel need editing;
3. My Paypal account needs its rate changing for online sales of Excel training courses and videos
4. Numerous spreadsheets calculating commission payments need editing

These changes are in addition to the changes to my accounting system, and my business is tiny compared to most. I also know I will stumble across many others over the next few days.
As far as I can see, this change will introduce a significant administrative cost to virtually every business in the UK, and the benefits even to retailers (who are the only businesses who can directly benefit from this) are dubious.
I hope I am wrong, I would appreciate any comments from everyone else.

PBR - Pay your Taxes when you can?

It would appear that Alistair Darling said in his Pre-Budget report that business will be given as long as they need to pay VAT, PAYE, and Corporation Tax.

Clearly there must be limits on this, and the following page of the HMRC website gives you full details of who you need to call to discuss what is available for you.

http://www.hmrc.gov.uk/pbr2008/business-payment.htm

You can download the full Pre-Budget Report from the treasury at:

http://www.hm-treasury.gov.uk/prebud_index.htm

Good luck!

The Seven Wastes

by Andrew Nicholson of Nicholson Consultancy

Lean for the Workplace is a way of applying the principles of Lean Manufacturing to non-manufacturing processes. As in Lean Manufacturing, the ultimate aim is to eliminate waste. The following are descriptions and examples of The Seven Wastes.

Overproducing - Producing more than needed or producing too much too soon does not improve efficiency. It consumes resources and leads to other wastes. Examples include keeping paper and electronic copies of documents; producing reports, which are put in a file and never studied.

Waiting - Waiting for people, machines (printer, photocopiers etc), information. It adds no value to the service, and can be most aggravating to employees. Examples include waiting for a signature; waiting for a phone call.

Overprocessing - Having a process that's over complicated. Examples include checking someone else's work; paying by cheque instead of by direct debit, requiring multiple signatures.

Inventory - Excessive stock can take up space, and become a Health and Safety issue. Examples include a cupboard full of stationery materials; files that are no longer used. (How many post-it note pads, pens, etc do you have in your desk drawer?)

Motion - Any motion that is not necessary to the successful completion of an operation/process is waste. Examples include walking to the next room to retrieve print outs from a printer; walking to another room to pass on documents.

Defects - Producing defective work that needs to be redone. Examples include computer data entered incorrectly.

Transport - Transporting something further than is necessary. Examples include files kept in a central filing office; office supplies moved to a temporary location before being put away.


Once you start thinking about it in these terms, you can quickly begin to identify where your processes are "wasteful" or inefficient, which is the first step to making them more streamlined.

Andrew Nicholson is Managing Director of Nicholson Consultancy Limited, specialising in Business Strategy and Lean Thinking. Andrew contributes to the e-zine, “Better Today”, with information for those who are interested in making improvements in their business. If you’re interested in Lean Manufacturing, visit Andrew’s blog, Manufacturing Times.