The Shipyard & The Contractor

29 May 2015

There was once a shipyard. A great big shipyard. It built great big ships and it had a great big workforce. Times were good. Lots of ships were being built. Then it changed. One day they launched a ship and had no work left for their skilled workforce. They didn’t have sufficient reserves to keep them on the books and pay-offs were inevitable. Sound familiar?

Your contractor company is no different to any other company. You are running a business. All businesses need to plan ahead for every eventuality. For a contractor company, one of the most important eventualities to consider is the prospect that one day you might find yourself out of contract.

It’s safe to say that a contractor who has withdrawn every penny their company has earned won’t be as secure just now as a contractor who has planned ahead for being out of contract. It’s also safe to say that the contractor who has planned ahead will have paid a lot less tax as they will have left sufficient reserves within their company to cover the lean times.

Falling oil prices inevitably mean a reduction in investment. Such reductions inevitably mean the shedding of human resource. With no employee rights, contractors will usually be amongst the first to be shown the door or, as we’ve seen, have their contracted rates cut.

Many of your end clients will likely have significant cash reserves to maintain the status quo, but the need to shed resource and cut rates is driven by the need to cut costs in order to keep shareholders happy. It’s the classic short-term solution, lacking in long-term foresight.

So without short-term investment less oil and gas will be produced. Reduced supplies usually eventually result in prices going up and without the investment now the industry will be less ready to meet the demand.

We’ve seen before that this will inherently drive the price of a barrel up as well as once again creating demand for human resource. But how ready are you for the potential of oil to get back up to $110/barrel and beyond?

Our Source 5 plan can help you be prepared by ensuring you are compliant, helping you plan your remuneration tax efficiently, planning for your retirement and by helping you protect you and your family from unforeseen circumstances.

What’s more, we’ve cut our rates too. For just £85+VAT per month you can enjoy our premium service delivered by a qualified accountant and backed up by a qualified financial adviser (additional fees may be payable for financial products such as pensions and life assurance).

We’re therefore less expensive than Pipeline Accounts, FW Accounting, Lime Blue Accountancy, Insight Accountancy, 4M and Fyfe Moir. What’s more we are certified Freeagent/IRIS Openbooks Friendly and we’re also Xero Advisers, so for a small extra monthly fee we can help plan your future in the cloud. Do yourself a favour and get in touch with us today.

Do you want to know more about out Source 5 Plan?

Follow this link to contact the team at Source Accounting to find out more