Lack of sick pay leaves manufacturing employees on financial cliff edge

Two in three workers are at risk of financial shock if they fall ill, according to a nationwide report published by health and wellbeing provider BHSF.

The report, titled ‘A high wire with no safety net’, details the perilous state of employees’ finances, with many unable to pay their household bills for more than six to eight weeks in the event of illness.

Over two thirds (67 percent) of those in the manufacturing industry worry about their financial security in the event of illness, while 38 percent said they had lost sleep over concerns. Worse still, a third (34 percent) admit that financial stress was impacting on their job performance.

Despite this, only half (50 percent) of those in the manufacturing sector have access to sick pay insurance.

The situation is exacerbated by their high levels of debt, averaging circa £2,337 (above the UK average of £1,910). However, those in the manufacturing industry came out as top savers, with an average of £5,578 (above the average £3,762) – but despite these savings, the report also highlights that employees are overly optimistic about their ability to withstand financial shock – with employees within the manufacturing industry under the pretence they could last for more than six months on statutory sick pay.

Brian Hall, Managing Director of BHSF Employee Benefits, said: “The combination of a lack of savings and debt, allied to zero sick pay provision other than the statutory minimum of £89.35 per week, leaves many employees walking a high wire with no safety net. By the time mortgages, car repayments, Council Tax and weekly shops are taken into account, the vast majority of the UK’s workforce will find themselves in dire financial straits in a very short period of time. Many will be forced back to work when they are not fit to return.

“It is very worrying that employees appear to be in a state of denial over how precarious their financial situation is in reality. All it takes is one short bout of ill health to leave two thirds of the entire UK workforce in serious financial straits that could take many years to recover from.”

It is those who are most relied upon that are most at risk – the UK’s ‘sandwich generation’. The 30-44 age group was found to be the least resilient when it came to financial problems, with more than average unsecured debt. In fact, debt levels have increased for this group over the last five years. This means that this age group, while supporting elderly parents and children, are being stretched to breaking point – with no safety net should they be unable to work due to ill health.

Mr Hall said that employers could do more to help employees become more financially resilient – by organising sick pay insurance schemes that can provide a safety net at low cost to the employee and no cost to the employer. At present, the report suggests that just 30 percent of employees in the UK benefit from an employer-organised scheme.

“There are low cost insurance schemes available that can provide a safety net, but it needs employers to act as the catalyst in the workplace,” added Mr Hall. “If employees truly are the most valuable asset, it is incumbent upon employers to be brave and to help educate their workforce about financial issues such as sick pay. All too often the subject is swept under the carpet or not adequately addressed, with a negative impact on employee wellbeing and mental health.”

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SME manufacturers in the UK are more confident around revenue growth, despite Brexit uncertainties, skills shortages and production cost rises

  • 69% of manufacturers reported revenue growth over last 12 months – up 10 percentage points from last year.
  • 78% of manufacturing businesses predicting revenue growth over the next 12 months.
  • 94% expect further increase in production costs and growing number of businesses see these being passed to customers.
  • Brexit uncertainty is a significant barrier to growth.
  • 20% of respondents stated that they have lost staff or are at risk of losing staff from the EU because of Brexit.
  • Three quarters of manufacturers say they cannot recruit appropriately skilled staff and call for government action to expand skills training at all levels of education.
  • Manufacturers recognising Industry 4.0 opportunities and are looking to government for more tax breaks to accelerate investment.

The sixth annual MHA Manufacturing and Engineering report, compiled by MHA, the UK-wide group of accountancy and business advisory firms, supported by Lloyds Bank Commercial Banking and in association with the Institution of Mechanical Engineers, reveals an industry delivering revenue growth and with increased optimism this will continue in the coming year. However, UK manufacturers are facing barriers to growth driven by Brexit, increasing production costs and recruiting skilled staff.

Despite continuing uncertainty around the impact of Brexit, UK manufacturers have reported another year of revenue growth. 69% of respondents said they had experienced an increase in revenue of the last year, a 10-percentage point increase compared to the previous year. In terms of the level of growth, over a quarter (26%) of the respondents reported revenue increases of over 10%. Optimism that this would continue was high with 78% of respondents saying they expected growth over the coming year.

Business confidence for the next 12 to 36 months is increasing. 59% of respondents said confidence was high or above average for the next 12 months and this increased to 64% when looking ahead 36 months. Just 12% of respondents ranked confidence as below average over both periods.

Production costs will continue to rise with most respondents (94%) saying they expected increases in the coming year, this was up one percentage point from 2016. The main factor behind the increase was cited as the costs of raw material with 77% saying they expected these to rise, an increase of 12% from 2016. Rising wage costs and the price of components continue to be a factor. Volatility in energy pricing saw a 6% increase from last year with 42% of respondents saying they were worried about the impact on production costs.

In the face of increased production costs, the survey indicates a potential shift towards higher prices for customers. 38% of respondents said they were considering price increases compared to 29% in the previous year. For others, the focus would be on improvements in productivity and business efficiency (44%) to address cost increases.

Investment in research and development (R&D) remained static with 88% of respondents saying they were investing in developing new and improving existing products and procedures. Awareness of the relevance and benefits of R&D tax credits still needs to be increased. Despite the high level of firms investing in R&D, 43% of respondents indicated they had not claimed the tax credits available to them meaning they are potentially missing out on significant savings on R&D costs. The survey also shows that there is a continuing appetite for capital investment with half of the respondents saying they would be increasing levels, up six percentage points from last year.

The sector is making great strides in recognising the opportunities that Industry 4.0 developments can bring. In 2016, 74% of respondents said they did not understand the principles underlying the developments in automation and data exchange in manufacturing technologies. Jump forward just 12 months and 92% of respondents to this year’s survey see the Internet of Things, use of robots and automation as providing a real opportunity to the manufacturing sector. To support this, respondents want government to provide more tax incentives around investment in automation.

The ability to find and recruit suitably skilled staff was identified as the main barrier to achieving business growth over the next 12 months, a problem compounded by staff losses as a result of Brexit. This factor sat above more general concerns and uncertainty around Brexit and its impact on the future trading environment and, more broadly, global economic conditions.

Over half the respondents (57%) indicated they expected to see an increase in staff over the next 12 months, an increase of 10 percentage points for last year, with a majority (64%) focused on production staff. However, three quarters of those responding said they have problems finding staff, particularly skilled machinists and experienced engineers. The lack of applicants with relevant skills was the primary problem faced by the sector (62% of respondents) when it comes to increasing the workforce.

The national picture on staff retention in the wake of the Brexit vote shows how uncertainty over future EU workers’ rights and currency issues are having a direct impact on manufacturers; 20% of respondents said they had lost staff or are at risk of losing them as a direct consequence of Brexit but this level hides massive regional variances with the percentage for London and the South East standing much higher at 35%.

Supporting the industry in addressing skills gaps was seen as a priority for government. Respondents said they wanted to see the government move to expand skills training in secondary schools and further and higher education colleges.

While nearly 60% of firms indicated they are planning to take on apprentices, a significant proportion (80%) revealed they had no strategy to access Apprenticeship Levy funding.

Chris Coopey, Head of the Manufacturing Group at MHA, said: “The resilience and optimism of manufacturers and engineers, highlighted by our survey, is a massive positive for the UK in this most uncertain world. Despite the challenges they face, such as skills shortages and the impact of the large drop in the value of the pound increasing raw materials and components costs, the sector remains buoyant.

“The skills shortage is already being exacerbated by the loss of both skilled and unskilled staff from the EU. Though apprenticeships are becoming more popular, they will not match demand so there is a need to make more using less labour by utilising technology. The fact that the principles around Industry 4.0 are beginning to figure in the sector’s thinking is very good news. Investment seems to be the key to the conundrum of skills shortages and rising costs.

“By providing the right incentives, government has a key role to play in supporting and promoting the investment in automation, innovation and skills development that we need. With the finance sector in London at real risk post Brexit, the manufacturing and engineering sector should be front and centre of the government’s thinking if the UK’s economy is to thrive and grow. It’s, therefore, no surprise that businesses are keen to see a serious effort by Westminster to really commit to driving an ambitious Industrial Strategy forward.”

The MHA Manufacturing and Engineering annual report is supported by Lloyds Bank Commercial Banking. Dave Atkinson, UK head of manufacturing at Lloyds Bank Commercial Banking and sponsor of the report, said: “The latest survey shows a more upbeat industry with renewed revenue growth and optimism which is encouraging to see. However, manufacturers are still facing a number of challenges including an ongoing skills shortage and rising production costs compounded by the uncertainty following the Brexit vote.

“Manufacturing has never been more important to the growth of the economy and closing the skills gap is an integral part of the solution to sustain the long-term success of the industry. We are actively supporting the development of new apprentices at the Lloyds Bank Advanced Manufacturing Training Centre in Coventry as well as working closely with the industry to improve productivity and grow the nation’s exports. Together we will continue to build on the UK’s reputation for world-class, quality manufacturing.”

Philippa Oldham, Head of Manufacturing at the Institution of Mechanical Engineers, and one of the contributors to the report, said: “Manufacturing is at the heart of a healthy UK economy, and it is encouraging to see that the findings of the survey show that there is continued optimism and confidence in the sector.

“But the results raise a cautionary flag to government that as we press ahead with Brexit, they must consult closely with the manufacturing sector to ensure concerns over R&D and skills are addressed as part of negotiations with the EU to obtain an optimum outcome.”

This report is based on data from 464 respondents from a variety of sub-sectors within manufacturing and engineering including: Aerospace, Automotive, Agriculture, Biotechnology, Chemical, Construction, Electrical and Electronic, Defence, Food and Drink, Marine, Metals, Minerals and Materials, Oil and Gas, Pharmaceuticals, Precision Engineering/Tooling, Printing, Renewables and Transport, as well as other specialist businesses. The majority of the respondents were small and medium-sized enterprises.

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How can Digital Nomads transform your Business?

Who are the digital nomads? In simple words – people, who work remotely. But recently, the term “digital nomadism” shifted from a work style to a lifestyle and more and more professionals, like programmers, marketers, and salespeople, can work and still explore the world at the same time. So, how can digital nomads transform your business?

Enhanced Communication

Because digital nomads work remotely, there’s no need for them to ask their manager questions in person every 5 minutes – it’s much more convenient and effective to send one or two e-mails. Digital nomads also feel more comfortable using messaging or video chats, which can be set up across departments.

Engaged Employees

It’s a well-known fact that restrictions limit your productivity. And it relates to your staff as well – if you force them to stay in the office, their productivity and engagement will be limited. With the freedom to choose where it’s comfortable for them to work, you will definitely see higher productivity among your employees and better results for your business.

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How to get the most out of your Microsoft Dynamics ERP

Some Microsoft Dynamics ERP users are reporting that they use less than 70% of the features in their Dynamics ERP solutions. Since ROI (Return on Investment) is calculated on the total cost and maintenance of the software that you purchased, not on what you are actually using, it is important that you get as much value out of the application as you can. How can you do that?

Reasons for lower utilization of Dynamics ERP features varies from business to business. Here are a few to think about:

  • Lack of sufficient research. Perhaps you chose an ERP solution that doesn’t meet the needs of your business processes.
  • Lack of adoption by staff. Some employees are resistant to change and would like to do things the way they have always done them.
  • Lack of training. If users don’t understand how the system works, again, they will fall back on doing things the way they always have.

The wrong solution, combined with a lack of system knowledge and a resistance to change will result in users adopting a mindset of ‘Let’s just do it the way we always have’. This results in some of the work being handled manually outside of the ERP system, resulting in inconsistencies, possible errors and reduced productivity.

Here are 5 steps to improving ERP utilization:

  • Do your research. Choose the ERP that will best automate your business processes. Always ask for a Demo so your team will know exactly what you are getting.
  • Involve key personnel. Engage those who will actually be using the system so they can see why the functionality makes sense and how it will impact their work. Some of their roles and processes may be different; by including stakeholders in the business planning, they will start to see the benefits of adapting to new methods and technology.
  •  Provide sufficient training. Don’t assume that end users know how to operate the system. Left to figure it out for themselves, they may not come up with the most efficient ways to use the features. Showing them more efficient ways to complete their tasks will result in their increased productivity.
  • Nominate an advocate for usage. Assigning a usage advocate within your company can drive improved utilization. it’s important for someone to track utilization rates and work toward continuous improvement. If no one is accountable for this effort, there is a potential for underuse of the system. Having a dedicated usage advocate will ensure that you have continued focus on the success and improvements of the system and will make the most of your investment.
  • Engage with the right partner. This final step is important. Work with a partner who will provide you with a dedicated support team focused on supporting your usage efforts. Annual strategy reviews with your account manager are key to ensure that your ERP strategy is aligned to your current business needs and your plans for growth.

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Using Excel for Revenue Recognition Tracking?

Excel spreadsheets play a big part in how many companies do business, especially in accounting and finance departments.  However, using spreadsheets for critical processes in your business can be risky. Watch this short video by Tensoft’s Customercare Manager, Anne Phan, to see some the risks you should be aware of when you use spreadsheets for important business transaction processing.

Tensoft helps companies streamline their processes and become more efficient by getting rid of Excel spreadsheets.

With Tensoft’s Revenue Recognition solution, RCM, you can have all your transactions and transaction history in one place.  You’ll also have full visibility with Tensoft RCM’s dashboard, as well as revenue forecasts and real-time reporting. With Tensoft RCM, you can be confident in your data, have more time for value-add activities, and enjoy greater efficiency in your revenue recognition processes.

For full story, Please click here.

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Which ERP is better? Acumatica vs SAP

With acquisitions and Tier 1 ERP Providers moving into the Cloud ERP space, Acumatica’s CEO Roskill is happy to stay “put”. Why? It is well known that, Oracle, SAP, and Workday have all recently announced midmarket cloud ERP solutions. But Roskill knows these companies are still positioned on the upper end of where Acumatica focuses. This is more evident when it comes to native multi-tenancy systems and global deployments where SAP loses because it still defaults on-premise solution.

What are well established consulting companies like Gartner & Nucleus who compare ERP companies saying?

Seth Lippincott, Analyst at Nucleus in its annual ERP Value Matrix, 2016 placed Acumatica as the leader when compared other Enterprise Resource Planning Solution provider’s including SAP (Figure 1). More specifically she stated: “Because of year to year increase in functionality in its solution, Acumatica will continue to deliver value and positive return on investment similar to what it demonstrated this year”.

erp-value-matrixFigure 1: Comparison of Acumatica with other ERP solutions.

What kind of companies have migrated from SAP to Acumatica? Why?

Here are examples of companies that preferred Acumatica over SAP.

Youngevity, San Diego, CA wanted a solution that would connect to its own Genealogy System, which manages very important client relationships. With lots of like 400 products, thousands of transactions per day, and yes over 100,000 customers. Chris Nelson CFO said “Cloud based Acumatica saves us time and money and for sure will support our double and triple digit growth rates”. He chose Acumatica over Microsoft Dynamics GP and NAV, SAP, Epicor, and Escalate.

Andrew Black, Vice President of Finance of PayWith HQ in Vancouver, BC said: “Because of growth they needed to replace Sage 50 with software that was scalable and enterprise ready,” Of all the solutions they looked at, the list was narrowed to SAP and Acumatica. SAP Business One while it was the top contender it lost to Acumatica. SAP solution was too slow. And also the system was, only pseudo-cloud based. And the API wasn’t built on modern infrastructure.”

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4 Questions to Determine Your IoT Readiness

Many companies are excited to utilize IoT capabilities for business advantages and new product opportunities. However, since IoT development is a still a new – and somewhat unknown – entity for many organizations, getting started or completing projects efficiently and cost effectively can be challenging.

Offerings that address connectivity, hardware and software, security, business continuity, and support now exist, allowing companies an affordable and quick entrance into IoT. While this is great news, there is an important question many organizations have to ask themselves: Are we ready for IoT?

Until the answer is “yes,” companies that could deploy IoT solutions as business differentiators will remain on the sidelines. Here are four important questions that should be considered prior to venturing into an IoT implementation:

  1. How well do we understand IoT? This question will offer the clearest indication of readiness. The more that is known, the easier it will be to starting thinking about how IoT can best be put to use for your organization. To take advantage of IoT and leverage the platforms that can help you do it, gather as much information as you can from a variety of resources inside your organization and outside. But don’t educate yourself in a vacuum – make sure your research applies to the uniqueness of your industry and organization.
  2. What are our goals? Successful organizations have a clear understanding of where they are now and where they want to be. This clarity can give insight as to how you can use IoT to get there. Do you want IoT to enhance your customers’ experience or are you looking to improve processes that will make your organization more efficient and cost effective? If you are far enough along in your understanding of IoT, perhaps you are in a place to think about both. The key is knowing what a win for your organization looks like, and using IoT as a springboard.
  3. What are our obstacles? Identify consistent roadblocks that prevent or at least impede progress toward your stated goals. By doing that, you can then apply potential IoT solutions to reduce or eliminate challenges. For example, do you need a high-bandwidth, wireless connectivity option to transmit large volumes of data? There is a flavor of LTE that will meet the goal. By determining this piece of the puzzle, other tasks, such as device selection, become easier.
  4. How are others in the industry using IoT? Where do other players have a competitive advantage? You will need a baseline of how similar companies are using IoT to help generate ideas that you can personalize to enhance your own unique offerings. If IoT is being used widely in your industry, it is a clear indication that you need to catch up. If it is not, why? If you are one of the first to find a creative way to put it to use, you may find yourself on the precipice of an exciting differentiator.

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