We have just completed our 6^th month of working remotely. In terms of the service we deliver to our clients, this has been brilliant and our business model has proven we can function 100% without an office. We have such an amazing team, everyone has really pushed through during this strange time. The biggest problem arising from remote working can be the lack of communication and the impact on company culture. We are keen to not let these become a negative for our staff at The Cashroom.

So what about your company culture?

In an office it is easy with everyone in one place to talk about values and have them on posters all over the walls but how do you motivate staff who are not only all working remotely but who are also living through a pandemic?!?

Before you think “pah! I have enough to worry about right now without adding my business culture to the list”, please remember company culture is vital. According to a Glassdoor survey, 56% of employees find a good workplace culture to be more important than salary.

Values

Having a clear set of values can really help direct the culture in your business. Think about what is important, what are the principles you want to drive your business – teamwork, trust, fun and innovation are popular themes in company values. We already have company values but we are taking this time to look at them again – does everyone understand them? How do we communicate them more effectively? How do we integrate our values into part of our everyday work?

Peer to peer recognition is important. We have value awards where staff nominate those they feel have demonstrated our values through their work. We celebrate this quarterly as a whole company. It feels good being recognised, and we make all nominations public so even those who don’t win see that someone has nominated them. These are a great morale boost and are a time to all come together.

Communication and Values

You need to document your culture and publish it. If you are bringing in new team members during this time (some businesses are actually growing at the moment!) then it is really hard for a new employee to understand a company’s culture. The document should be clear about expectations, how performance is measured, how you assess employees for cultural fit, and the like. No detail is too small. Look up any successful business and you will see their values visible in everything they do, Netflix, Air B n B and I can’t leave out Google. Check out Mills & Reeve who came top for culture with a score of 94% in RollOnFriday Firm of the Year survey.

Take your culture public. You can put a culture deck together and publish it on your website. Have your values on email footers and social media. This is a perfect way to attract the right candidates to your business.

Staff interaction

Always encourage open communication, make everyone comfortable with video calling. The more open and transparent you are then the more your team will be with you too. You want to encourage an environment where everybody is contributing, not just the loud extroverts amongst your team.

Take time to learn about everyone. In an office you get a sense of who people are, without even trying. This is hard remotely as you aren’t sitting chatting in the kitchen or at the printer. Something we are doing is sending short virtual surveys out to staff with a few short questions, favourite tv programme, do they do sports, role in the company and we’re publishing these. We hope these generate some conversation which will really help grow a positive company culture.

A tool such as Slack or Teams is useful too. It can act like your office coffee station, where the random chats happen, there can be some banter, jokes and chat about the news – people love adding GIF’s and memes here too.

I’m going to say it again – KEEP COMMUNICATING!

It all boils down to this, culture will fail or thrive purely on communication. We set aside time every week to dedicate purely to a culture group. 30 minutes will suffice and include as many team members as possible.

Measure it. Send an employee survey every month or quarter to see how you are doing and gauge how staff are feeling.

Keep going!

Company culture should be constantly reassessed as you grow or change as well. Don’t just spend copious time on it, and then shelve it somewhere inaccessible to everyone. In order to grow a positive company culture with a remote team, you need to continue to monitor your culture and values, and never stop.

Go create something positive from 2020 and have fun with it!

Emma O’Day, Head of Marketing and Communications 

The Cashroom Ltd

Today I dropped my daughter off at the local train station. We live in a smallish town within commuting distance of Edinburgh. “Normally” the station carparks are chaos, with all spaces full, and people resorting to leaving their cars on the grass verge. This morning (at about 0830), it was empty … well not empty, but there were far, far fewer cars.

It really brought it home to me how things have changed. It’s been noted elsewhere, but the world of office work has changed fundamentally.

A recent survey by Morgan Stanley, reported that, in August this year, only around 50% of people in five large European countries spend 5 days a week in the office. In the UK the number was only around 30%, with over 40% spending 5 days a week at home.

The jury is still out on how that will impact productivity, creativity and company culture (for example, Jack Dorsey, the boss at Twitter has said his employees can work at home “forever”, while Reed Hastings at Netflix thinks working from home is a “pure negative”. Most people tell you they are more productive at home, but that creative output, or “collaboration” is more difficult, and benefits from face to face meetings.  There is some evidence of increased efficiency, but interestingly, less evidence that centrally positioned, densely populated spaces (i.e. offices) help with the generation of ideas.

But the rights and wrongs of it are somewhat academic (!) – the fact is, it’s happening.

Three things stopped it happening before, first was that until it was forced on us, nobody was quite sure it would work … well, it does! Second, we were worried about what our clients and our employees would think. Well, because it was compulsory, nobody cares about that anymore! Finally, there was some investment involved (e.g. laptops), but because of lockdown, we were simply forced to make it.

But will it last? Will people continue to want to work from home, even when we don’t need to?

At the Cashroom, the biggest downside is our staff miss the social interaction of the office. They miss the chat, and they miss their friends. The biggest challenge for us (and I would suggest all firms contemplating long term working from home, or a blend of home and office), is how do we address that?

I would love to hear your thoughts on this in the comments.

But, looking longer term, IF working from home is a long-term trend, it will change the face of the country. Arguably the whole point of cities was to bring people together so they can work more closely, both in the sense of working more collaboratively, and within physical proximity. It all started with the development of the steam engine, consolidating people into factories, and grew into the need to have people close to the paper that, until relatively recently, was the life blood of bureaucracy.

Without that driver, will people still want to live in cities, or commute into them for work? I doubt it, or at the very least, far fewer will.

Apparently around 900,000 people commute into London every day. That’s 900,000 fewer who might buy a sandwich at lunch time, a beer after work, or nip out to the shops in their lunch hour. I suspect city centres will change dramatically.

But those people aren’t dead! The still need lunch, a beer, and will still shop. They just won’t do it in cities. Perhaps we’ll see the rise of smaller towns, “commuter towns” that until now only “thrived” at the weekend.  Will entrepreneurs create new business to service the needs of the home worker, now freed from their commute and prepared to spend more time (and money) where they live? Will we see the resurgences of local culture and “society”, fuelled by home worker with more time and energy to participate more fully in their local communities? Will the search for the lost office social interaction, actually encourage people to speak to their neighbours….!

I have no idea! But what I do know is that when large scale change happens quickly, and when people and business need to adapt, there is opportunity.

If people are moving out of the city, there are houses to buy and sell, if business are setting up in commuter towns, there are leases to negotiate, and if people are spending more time with their neighbours …… there will be neighbourhood disputes to mediate…!

People will always need lawyers.

David Calder, Managing Director

The Cashroom Ltd

There’s no doubt that the pandemic has forced fundamental change within society, technology and business. As many have said, some of those changes have been difficult to manage but have frequently brought about worthwhile evolution.

Law firms need to seize the opportunities presented by this time, and in particular in the following main areas-

Embracing technology and efficiency advances- surely those firms who have stuck with paper based processes have seen that there is another, better way? Aside from saving space (and the planet!) going paperless is a key element of any sensible approach to remote working. The use of appropriate technology, which these days is far cheaper and easier to adopt, is the enabler. The final piece of that particular jigsaw is a detailed understanding of the processes the firm operates, so that people and tech can work in synergy rather than at odds.

Security and risk management- a collateral benefit of sorting out technology and process should be an improved approach to cyber and internal fraud. It isn’t as easy as simply sending people home with a laptop. As part of enforced modernisation, addressing cyber risk through technology will improve a firm’s risk profile at a time when insurers are looking very carefully at PII premiums.

Communications technology – whether remote working or back (safely) in the office, one thing that all lawyers will have experienced is the need for reliable telephony, broadband and video calling. Addressing issues such as weak signal, clarity of audio, and appropriate cameras would have been very low on the priority list at the beginning of 2020. Right now, they are all crucial elements to delivering a professional service.

Communicating with customers and clients- how are firms connecting with their market now? The old methods still have their place – local reputation and network development for example. But surely an obvious extension of the price transparency regulation is that firms need to be aware of the potential of online marketing. They need to blow their own trumpet with glowing reviews from customers. Case studies on their websites. And a website which is user friendly and informative. Up to date. Firms also need to consider how they communicate with actual clients- many case management systems now enable SMS updates. There are superb app providers out there who can create branded apps via which updating clients becomes easy and automated.

Wellbeing of staff – in all the rush to modernise, don’t forget the staff. They’re the driving force of a business. The present circumstances and no doubt the months to come have brought stress, loneliness and fatigue. Firms must embrace new ways of thinking and engage with their staff even more. Communicate plans. Be open about the business performance and goals. Get everyone on the same page, and listen out for those who are struggling.

This is not an exhaustive list of sensible moves. But wouldn’t it be a start to consider them? After all, the times they are a-changin’.

At the Cashroom we provide a full accounting service to the legal profession – from day to day entries, through compliance, management accounts, credit control, all the way to year end and Statutory Accounts. Additionally we are regularly instructed for our consultancy service to advise firms on the structure, compliance and efficiency of their finance function.

We have a unique insight into the requirements of delivering an optimised legal accounting function. Our senior team consists of Lawyers, Chartered Accountants, Lean Processing experts, Legal Finance Professionals and IT Professionals giving us an unparalleled breadth of knowledge from which to design and deliver the best possible solution.

If you would like any more information about The Cashroom and what we offer, then please get in touch. 

Alex Holt, Director of Business Development

Client money. Compliance. Cyber threat. Negligence. Business management. All these factors meet at the heart of the legal entity.

Many lawyers are humble people. They don’t like to shout about success. They downplay their innovations. Nowadays, that’s a weakness they need to rectify.

I had the pleasure of speaking at a Calico Legal Services webinar recently, supporting our friends at Locktons as they spoke about the PII market. My input mainly related to ways that firms can improve their risk profile by focusing on their finance function, which sits at the very centre of a firm’s risk profile, I’d say.

Firms have the regulatory headaches to manage – the regulations to adhere to. Speaking as an ex partner in a couple of large firms, I feel qualified to state that overseeing the level of compliance of a cashier’s work is not something most lawyers would want to do, let alone be capable of.

Then there’s the fact that the efficient and secure handling of client money falls squarely within that function, and again the compliant and practical operation of the process is something which the lawyers struggle to fathom.

You have to feel for the poor cashier in many law firms. If they do their job perfectly every day, swerving the cyber criminals, coping with spikes of activity on a Friday, accurately inputting the data vital to production of worthwhile MI, not a word will be said. Yet if they make a mistake, the consequences for a firm can be cataclysmic.

Brian Boehmer of Locktons spoke eloquently about the need for firms to go beyond mere form filling when seeking their PII renewal. More than ever this year every penny saved could be vital, as firms face premium increases of 30, 50 even 100%. Brian explained that the brokers need to be given the ammo with which to engage with insurers and explain why this particular firm is different and should be given a better quote than that one.

Tell your broker about training you implement on cyber risk.

Tell them about your recruitment processes which check new employees.

Tell them everything that differentiates your firm from others.

If your firm is doing something different, tell the story. If you’re a start up, do things differently from the outset.

An outsourced solution can bring ‘reflected glory’ – our clients can talk in terms of increased cyber security, increased internal fraud security, efficiency improvements, assured compliance, accurate data and MI, resilient, scalable service. If you’re using a digital dictation provider such as Documents Direct, the resilience of service and improved accuracy is something insurers will value.

There isn’t long to go before the end of September, so give detail and engage quickly, making your proposition look so attractive that the brokers will want to work with you because they will believe they can get insurance for you.

For many firms this will be a tough time for insurance, so it’s also worth considering how you can improve things for next year. Think innovatively and tell the world about it. Now is not the time to be hiding your light under a bushell.

Alex Holt, Business Development Director

The Cashroom Ltd

Alex Holt and Maria Parker discuss how Burtons Solicitors coped with the effects of lockdown. Burtons Solicitors have vast number of services which include Conveyancing, Family Law, Commercial Property and so much more.

I recently attended one of the Armstrong Watson Legal Sector Breakfast Briefings, albeit they are no longer at breakfast time! An interesting point of discussion arose, which I thought I would share. The speakers for the session were Chris Moore of Moore Legal Technology and Ally Thompson of Hey! Legal, who both provided some insightful thoughts and tips for marketing your law firm.  But the point I wanted to discuss arose from a comment made by Stephen Vallance of HM connect.

As I say, the session was about marketing and sales for law firms, and Stephen used the analogy of a Wild West film. When setting about making one of the early films, a producer apparently asked the question… ‘Do you train actors to become cowboys, or cowboys to become actors? Interesting! The same conundrum, Stephen suggested, arises in law firms in relation to generating new business enquiries (marketing), and converting those enquiries into new business for the firm (sales).  Do you teach lawyers to be marketers and sales people, or do you teach marketing/sales/BD specialists to become lawyers?

I don’t know what the answer is, other than “it depends“! Probably not very helpful, I know.

But what I think is the way to approach it, is to play to peoples strengths. Where you have solicitors within your firm who enjoy and are good at marketing your services, writing blogs and article content, that are active on social media etc, encourage them to do so. If you have people who like taking new enquiry calls, are good at building rapport with people quickly, and converting them to clients, encourage them to do so too. Perhaps even allow some of their billable hours to be allocated to it!

For those who don’t have people within their firm comfortable or proficient at marketing, buy in some external assistance. It’s not expensive, and should be considered an investment in obtaining new business – the lifeblood of keeping your business afloat. And when it comes to converting those new enquiries into opened files… on the assumption you don’t have the volume to justify a specialist initial response/enquiry handling team, invest in some proper training for the key people who take incoming calls at your firm. At the very least, explain to them that each new enquiry should be treated as gold dust, and the importance of their role in bringing in business that in turn generates fees, that in turn pays everyone salaries. I think you will be pleasantly surprised at the uptick in ‘buy in’ from those people.

So, how does your firm deal with this? Actors turned cowboys, or cowboys turned actors?!

Gregor Angus, Senior Business Development Manager

The Cashroom Ltd

This week David Calder speaks to Eric Baijal from BBM Solicitors about how they coped with lockdown. BBM is a boutique law practice with offices in Edinburgh and Wick, Caithness. BBM was founded in 2010 with the goal of “doing law better”.

David Calder and Eric Baijal, BBM Solicitors

A while ago I wrote an article about why I didn’t think that Commercial Property investment (and in turn, legal work in that sector) was a sound long term “bet”.

I concluded by suggesting that the reason for its success in the past was the need for pension funds to generate secure, long term income streams. And I wondered what might replace them.

Well, I was reading something at the weekend that made me think about this again.

The curious thing is that, despite lockdown and the economic turmoil, the S&P 500 is at historic highs, and while the FTSE has a way to go to achieve that goal, it has recovered a lot of ground.

But the really interesting thing is that some of what’s driving that growth in the S&P, is the return of the IPO. Back in the good old days of the dot com boom, IPO’s were all the rage. I remember my partner pitching for a tiny investment round, and being asked if he could handle the company’s IPO ….. from a couple of guys who probably couldn’t afford the bus fare home!

But that changed, particularly in the last 5 years or so, with more companies being happier to stay private for longer, resulting in the growth of the tech “unicorn” i.e. a privately held company worth more than $1bn.

However, in 2020 so far, companies in the US have raised over $60bn through IPOs. In the whole of 2019, the total was just over $40bn. And there are more to come. On August 19^th, Airbnb filed for an IPO. Rumour has it that a number of other “unicorns” are lining up – Snowflake Computing, DoorDash, Instacart and Pallantir. Added together that comes to around $80bn.

But what has this got to do with Commercial property?

Well, I’m sure a number of factors push firms towards an IPO. However, I wonder if one of them is pure and simple supply and demand – i.e. there is a demand for investment in stocks and shares, because other traditional investments (e.g. Commercial Property, and Government Debt) are simply not providing the necessary returns.

And what has this got to do with Law Firms?

If I’m right, and there is a demand for “alternative” investments, or more simply, a lot of investors are looking for a home for their money …… are law firms a potential investment?

A while ago I was speaking to an investor, who invests in law firms. His take was that law firms were not a great investment if you were looking for capital growth. However, if you were looking for yield, i.e. a steady return on your investment, law firms were ideal, because generally they’re pretty good at generating cash. Which of course is exactly the sort of return that Commercial Property and Government Debt investors are looking for.

So, should we expect a flow of investor money into law firms?

David Calder, Managing Director

The Cashroom Ltd

Credit Control!

At the Cashroom we provide full accounting services to the legal profession – from day to day entries, through compliance, management accounts and now credit control!

Cash is one of the most important things in any business. Law firms are no different. From a business perspective, you need to turn all your good work into cash as soon as possible. But getting you fee note out the door is only the first step, your client also needs to pay it, and that’s where a proper, well run credit control process is crucial.

The Cashroom can provide a sophisticated, cost effective and responsive Credit Control function, with the following key benefits:

• Certainty – our process-based approach makes things happen automatically and on time
• Flexibility – you can shape our process so that deadlines are tailored to your requirements, and it is easy for you and your fee earners to manage messaging for specific clients
• Clarity – our platform (integrated into the Cashroom’s bespoke web Portal) gives you full visibility on every matter
• Control – we can set up your process however you like, and you can have as much or as little involvement as you wish.

If you want to learn more about our Credit Control service, or any of the other services we offer then please get in touch today.

If you want to learn a little more about the service, David Calder wrote about it recently on our blog.

Statutory Accounts and Tax Returns!

As well as legal cashiers we employ several qualified accountants who can prepare:

• annual statutory accounts for submission to Companies House (where necessary) and HMRC
• for limited Companies, the annual Corporation Tax return form CT600, and supporting computations for submission to HMRC
• For partnerships and LLPs, the annual Partnership Tax return form SA800 and supporting computations for HMRC
• For individuals (whether sole traders or directors/ members/partners), the self-assessment income tax return SA100 and supporting computations for submission to HMRC.

If you also use our cashiering, payroll and management accounting services, adding in Statutory Accounts and tax returns creates an accounting function that provides everything you need to run your law firm and take care of your annual accounting and tax compliance needs.

No more time consuming and confusing “liaison” between providers, only one, fully integrated provider.

The only thing that’s not included is audit … but we think somebody else should tell you what a good job we’re doing!

If you would like to learn more about our Statutory Accounts and Tax Returns or any of the other accounting services we offer then please get in touch today.

Alex Holt, Director of Business Development

Alex.Holt@thecashroom.co.uk

www.thecashroom.co.uk

I’m old. I don’t just mean old in the way that our kids always think of us as old. I mean I’m old in a ‘seen it all before’ type of way. I was a teenager when the first Live Aid happened for heaven’s sake!

I’ve lived through a few recessions, and I’ve worked both as a lawyer within law firms, and as an external supplier to law firms during recession.

One phrase is always repeated. The perceived wisdom in every such crisis. It’s a phrase we are hearing a lot at the moment.

“The profession will be healthier afterwards.”

The theory is that the harsh realities of a recession will effectively weed out those firms which were already in a poor state. It’s a fairly brutal view and while it does have some truth to it, I’d suggest that in fact it doesn’t tell the whole story.

There’s no doubt that inefficiency and old fashioned methods can be risky, and those risks are realised when times become truly tough for businesses. If the firm has too many support staff for what it really needs. If the premises are more expensive than necessary. If credit control is a verboten phrase because ‘we don’t want to upset the clients ‘. (Even the ones who aren’t paying?!)

All of these things can and will cause problems during recessionary times. They may indeed in extreme cases bring down firms.

However, every single post recession review features comments like “We will never go back to those inefficient ways”. But weirdly, people don’t seem to truly learn. If they did then the same issues wouldn’t crop up every time. They might be slightly different in their make up, however they will absolutely relate to inefficiency.

Good times breed lazy thinking. It becomes easy to relax into the old ways. Why expend time and money on new fangled systems, or more efficient resourcing models when ‘things are on the up’?

There’s no longer a burning platform, so difficult decisions get put off, the pain of recession recedes into the distance, and things move on. Until the next time. And the next time. And….you get the point.

A definition of insanity is doing the same thing over and over and expecting a different outcome.

I’d say that these bizarre and awful times are the ideal moment to try something different. To change.

If you had to design a law firm from scratch, I suspect many firms would not design the model they in fact operate at the moment. They’d use up to date technology. They’d outsource key operational functions. They may now facilitate home working.

While they do not of course have the luxury of starting from a blank sheet of paper, that thought process can help firms to spot areas where their present model differs fundamentally from what optimal would look like. Maybe there are small shifts which are possible. Maybe a plan for change can be put in place.

One of the most telling changes we have seen as a business is an increased demand for our Process Review team. Firms of all shapes and sizes, and increasingly bigger firms, have approached us to help them design their operating model for their finance function. It may or may not involve outsourcing the function in whole or in part, but it will always result in an improved way of working. Improved efficiency. Cost savings. Better, more accurate data with which to manage the business.

It’s a relatively small step, but at least they are looking to do things differently. To change. To evolve.

I’d say that more than ever, with on and off lockdowns and restrictions likely for quite some time to come, the ability to change and adapt will become a defining factor in the likelihood of a firm’s survival.

Alex Holt, Director of Business Development 

The Cashroom Ltd

As we all breath sigh of relief, and acknowledge that the world has not in fact spun off its axis, there is an uneasy consensus forming that, while we may have jumped out of the pandemic frying pan, we have landed in the fire of a global recession.

For law firms, one of the more pressing issues arising out of that recission looms in the new year.

For a number of reasons (explored in detail here https://calicolegalgroup.co.uk/way-to-recovery/) many firms are storing up a cash crunch for the first quarter of next year. Largely because most of the government support schemes will have come to an end and/or payments that were deferred (VAT and tax) will have all come home to roost.

To emphasises the point, this survey finds that 68% of firms have deferred their VAT bills until the first quarter of next year, and 31% have sought time to pay their July Tax bills, which will also fall due then (along with the “normal” January payments).

That’s a lot of cash “out the door” in the first quarter of 2021!

So, the question is – will you generate enough cash in the next 6 months to pay all the bills falling due in the first quarter of next year?

We want to help as much as we can.

First, we can help with forecasting. All firms (and I mean ALL firms) need cashflow forecasts. I was the Managing Partner of a law firm during the last recession and, in my (not an accountant’s) opinion the cashflow forecast is one of the most critical management tool a firm has. While profit and loss accounts are important, and balance sheets are interesting in a somewhat academic way (!)  …. your cashflow forecast is the thing that tells you whether you can pay the salary bill at the end of the month.

The problem is, it’s a continually moving target and, to be truly useful, needs to be constantly updated. In the survey referenced above, 54% of firms plan to review their forecasts weekly, and 28% will review them daily!

You can’t ignore your cashflow forecast!

However, the forecast only tells you when you’ll run out of cash. It doesn’t generate cash! To do that you need to fee your WIP and collect your fees. But we can help with that too.

We have recently released an update to our web Portal that automates your credit control function.

The most important part of a credit control process is consistency. Every bill needs to be chased at regular intervals, with increasing levels of “severity” until paid. Each one. Every month. No exceptions.

However, it’s a labour intensive, administrative task that often falls off the edge of a busy desks. The Cashroom’s credit control service is designed to automate you credit control process, allowing you to get back to your clients. It’s a simple, add on module to our Web Portal, that we set up to suit you, and your firm. Find out more about it here.

“We’ve been using the Cashroom’s Credit Control module for 4 months now, and it’s wonderful. As we come out of lockdown, cashflow will be critical, and the starting point is credit control. The Cashroom’s module automates the process, which makes keeping on top of chasing payments simple and efficient. It’s allowed our staff to focus on delivering our service as opposed to chasing for payments.  Fundamentally, it has automated the process of cash recovery and my company relies on it.”

Billy Smith, Complete Clarity Solicitors

If you want to find out more about the service contact

David Calder

Managing Director
E: David.Calder@thecashroom.co.uk T: 07876 236578

Alex Holt

Director of Business Development (based in England) E: Alex.Holt@thecashroom.co.uk
T: 07817 420 466

What will happen to Commercial Property?

In my last post I mentioned we were beginning to see some Green Shoots, particularly in Family Law, and Private Client law. This time I want to be a little more controversial and talk about one sector that I just don’t see coming back strong – Commercial Property.

The lockdown’s impact will affect business unevenly. We all know that hospitality and tourism/travel will be badly affected. Sadly, many businesses will go bust, and others may need to radically rethink their business model. However, if you were to make a long-term bet on those business coming back, your money would probably be pretty safe.  People will always want to “socialise with friends” (accordingly to every other CV I read it’s most people’s only interest outside work!). People will still want to go on holiday.

However, if there is one sector, I wouldn’t put money on, it would be Commercial Property. I just don’t see it getting back to any sort of normal, any time soon.

Up until relatively recently investment in commercial property has boomed. Apparently, since 2000 the global stock of investable commercial property has increased to $32trn. It was seen as a nice safe investment, for long terms steady returns – just the thing for pension funds to invest in.

But I wonder if the pandemic, and the resulting lockdown, has changed all that.

First, tenants simply stopped paying rent.

From what I’ve read, around half of all shop and business tenants in the UK simply didn’t pay their quarter’s rent at the end of March. And it wasn’t just shops and restaurants – average hotel occupancy has dropped from 70% before the lockdown, to 15% in April. Office rentals have held up, with many tenants being able to continue to work remotely (but is that really a good thing for the landlord … more on that in a moment!). Suddenly that nice secure income stream doesn’t look quite so secure!

Secondly, and more critically, the lockdown has accelerated existing trends. Bricks and mortar retail was struggling before the lockdown, with more and more people shopping on line. Judging by the steady stream of packages being delivered to my door during lockdown (!), that trend has continued. This will continue, putting more and more pressure on traditional business models. Debenhams went into administration in April, and Intu, which owns a number of shopping centres in the UK, appointed administrators on June 23^rd. Now, it appears Debenhams will continue in some shape, but only by because it “did a deal” with its landlords (although interestingly not Intu!) ….. I suspect that means they were pressured into taking a haircut on their rent! https://www.bbc.co.uk/news/business-52979759

Second, do we really think the office market will come back? There has to be a risk that businesses continue to work remotely, or at the very least more flexibly. Some commentators see a sharp downturn in high density urban office space. (https://www.moodysanalytics.com/videos-on-demand/2020/major-disruptions-ahead-office-sector). Indeed, at the Cashroom we have decided not to renew a lease on around 40% of our office space.

But how will it all pan out.

Bluntly, I’ve no idea. However, the problem that drove investment in Commercial Property in the first place has not gone away. Pension funds and insurers need a way to generate long term, secure income streams to meet their liabilities to pensioners. In fact, as we all get older, it will become more and more pressing. Government debt is not the answer. Interest rates at historic lows, with nobody (at least nobody I’ve read) predicting that will change any time soon. And the last attempt at solving the problem (collateralised mortgage debt) didn’t end well…!

So – how are we all going to convert out pension pots into secure income streams if Commercial Property isn’t the answer?

If anybody knows …. whisper it ….. we’ll make a fortune!

David Calder, Managing Director 

The Cashroom Ltd

It’s a rather tired metaphor I’m afraid, but I’m beginning to wonder …..!

Read More

I’m considering moving house.

It’s an arduous process, and the last few months’ restrictions have (to my secret delight) put the brakes on our plans. There were always factors I could use to slow things down sneakily- packing up the house would be a nightmare, we’re too busy to go house hunting etc. But my trump card was always Stamp Duty.

“What a waste of money!” I would say.

And it was a pretty unarguable point. Yesterday’s announcement by Rishi Sunak that there will be a Stamp Duty ‘holiday’ for properties purchased up to £500,000 was a hammer blow to my delaying tactics. Scotland followed with an announcement today that the starting point for land and buildings transaction tax (LBTT) is to rise from £145,000 to £250,000.

Last evening was spent glued to Rightmove.

We were back house hunting with a vengeance. Many of the house details contain virtual tours, and with the added tools of google maps and satellite view. It’s far easier to house hunt from the sofa than it used to be. Dagnabbit!!

This morning we have had responses from a number of the estate agents with details and proposed viewing times. I do get the impression that estate agents are struggling to balance their furloughing of staff with the upturn in interest.

So I may be in my own private hell as a result of Mr Sunak’s ‘generosity’. However it seems clear that the housing market will see a boost from this announcement. Our friends in the legal sector with property sector departments will no doubt be delighted.

From The Cashroom’s point of view, we stand ready with our huge flexible resources to support our existing clients with our cashiering service. We know that our processes are particularly popular for conveyancing firms. We move money quickly and securely, and fit into a slick process of payment authorisation which our clients love. Any firms who aren’t yet clients (why aren’t you?!) we would be delighted to chat with.

So what?

What I’m secretly hoping is that we will be inundated with new enquiries and as a result I’ll be able to recycle the “too busy to move house” excuse.

So come on law firms….help a fella out!

Alex Holt, Director of Business Development