Not all entrepreneurs are good with numbers and keeping records, which is why it’s so crucial that they have a solid plan in place for money matters. Whether you’re thinking of starting a small business or want to improve the way you handle your books, these tips can help you to achieve more control over your financial situation.

Accounting Software

If you’re still using spreadsheets to keep track of your finances, it might be time to invest in accounting software. This will help you to keep all your records secure while maintaining accurate information. There’s less room for human error thanks to the software’s ability to make calculations for you and you’ll never misplace an invoice or receipt again. What’s more, many types of accounting software will also help you to handle payroll and have better visibility over your cash flow.

Invest Your Money

When starting out it can be tempting to hold onto your money tightly, but this can often do your business more harm than good. While you need to be making a profit, it’s important that you reinvest your money in your business. This is crucial for future growth and will help you to increase your profits in the long term. Whether you’re thinking of hiring a marketing agency, upgrading your website or building an app, take some time to improve the services you’re offering to your customers to see your revenue increase.

Be Aware Of Tax

Everyone knows they have to pay tax, but are you planning for it throughout the year? Many business owners only start thinking about tax as their deadline approaches, but this can put you in a tricky financial situation if your payment is bigger than you expected. Make sure you’re calculating tax as you go and setting aside funds that you know aren’t really yours. This way you can avoid any disasters at the end of the tax year that could potentially see your business folding before it’s even had a chance to grow.

Choose Loans Carefully

People have different attitudes to loans, with some refusing them completely and others taking out too many. Loans aren’t all bad but you do have to choose them carefully. If you need an injection of cash to get your business off the ground, a loan could be well worth your time. But taking out loans with high interest rates could hurt you in the long run, especially if you’re not investing the money as wisely as you should.

Insurance

Finally, insurance might be an extra expense in the short term, but it can save you thousands further down the line. Make sure you thoroughly research the types of insurance your business can benefit from to give yourself complete coverage. You want to be fully protected from potential lawsuits as well as natural disasters like floods and fires. 

When you are running a business, you will be doing many different things at once which can make you feel a bit distracted and draw your attention away from important things. For instance, you might start to put things off and before you know it, you have a lot to catch up on.

It can be especially easy to neglect your finances, and this can lead to further issues. To help you with this, we have put together some tips on how you can get on top of your finances.

Set Some Time Aside to Go Over Your Finances

One of the easiest ways that you can keep on top of your finances is by making sure that you set aside some time out of your day to go over them. It is important that you make the time to go over your business finances because this way you will know what payments need to be made and when. When you know what you need to pay, you will be able to look at your budget and make sure you have the funds to keep stable.

Stick to Payment Deadlines

The next way that you can get on top of your finances is by making sure that you stick to payment deadlines that need to be met. It is important that you do this in your business because if you miss dates you will have to pay more back in a lump sum, and be affected by even larger interest rates. If you can’t stick to payments when they are due, it can cause a lot of other problems as it can get in the way of business agreements and can lead to problematic debt.

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Consider an Investor

If you just can’t get in enough money to keep your finances stable, you still have other options to try. One of the other options that you can consider is getting in touch with an investor. Not only can an investor give you the funds that you need, but they can also give you advice and point you in the right direction when it comes to your business.

There are many different investors that you can consider getting in touch with such as Tej Kohli, Jeff Pulver or even your bank. Make sure you have a look so you can find the best option for your business.

Make Sure You Keep This Article in Mind

There are many different ways for you to keep up with your finances and in this article, we discussed some of the different options that you can consider. As long as you are able to stay on top of your finances, you should be able to get your business operating at its full potential.

Situations where we find ourselves falling behind in our payments, not enough money to put into our savings, or a lack of spending money at the end of each week or month is a tough situation to find ourselves in. It can make us feel trapped in a cycle where we do not feel we’re able to get out.

Thankfully, this could not be further from the truth. Financial slumps are stressful, but they aren’t the end of the world. There are many ways to help yourself overcome tough times related to money. I will help you with tips on saving, job related financial support and other helpful advice so you can reach financial independence and feel unburdened by money.

Here are 10 tips to get you out of that financial slump:

Live modestly

One of the biggest problems that people have when trying to save money or get out of a financial hole is that they live beyond their means. Eating out at restaurants or ordering takeout often, buying gifts or other products that they simply do not need, and just generally spending more than they can keep up with. Living lavishly when you should be putting down a portion of your check to savings is a good way to not get out of that slump. Try to consider what types of products you buy and start finding cheaper alternatives. No name brand groceries or hygiene products are a good start. From there you can even consider making reusable products.

Budget yourself

Budgeting yourself ties in nicely to the first tip. Make a spending plan for each week or month and try to stick to it. You might go over it every once in a while, but that is okay. It’s just important to know that you have a solid plan that is written down for you to follow. Knowing where your money is going is a good way to know how to stop spending too much.

Loans

Loans are a good way to get yourself back on your feet and give you time to sort out what you need to be caught up on financially. If your finances are hard to come by, you are looking for work without steady employment, or if you need loans for bad credit, they can help give you a new start so you can work at becoming financially stable again. Racking up debt is tough, especially on your credit score because of spending, but loans can be flexible to help any situation.

Get a side job

Finding a job that you can work on the side can help you put a little extra money in your pocket, and your savings. Many side jobs are easy compliments to our day job and can be done on flexible schedules. Delivery driving, driving with a ridesharing app, freelance writing. All great options to help you!

Seek financial advice

Getting help from qualified financial advisors and professionals is a good place to seek out some assistance as well. If you have tough questions about specific financial issues, it never hurts to ask the trained pros. They do this kind of work for a living and they have likely seen problems similar to yours, or worse. Their expertise can help you get out of that financial slump.

Enjoy the small goals

Even celebrating a small milestone like reducing your spending on a weekly limit is a good goal. These smaller goals are worth celebrating too. Sometimes we feel like if we do not see huge change right away, that nothing is getting changed at all. This isn’t true and can harm your progress when you don’t recognize the effort you’re making. Didn’t spend $5 on a snack at lunch, go ahead and celebrate. You’re building good habits with small progress.

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Give yourself time

Celebrating the little goals is important, and giving yourself time to build up to the bigger financial goals is a valuable lesson too. We sometimes want to do it all at once, but consider how long it takes to get out of debt or build up our savings. Don’t get down on yourself because you haven’t seen progress immediately. You will, it just takes time.

Freeze your spending

You can try spending less, but in some cases, a spending freeze can help. Giving yourself a deadline for not spending any money at all (except for necessities) will show you how much you waste on needless products.

Build an emergency fund

Unpredicted accidents or emergencies can derail your progress. Try to build up a little savings fund of about $1000 or more so you don’t get caught off guard by any surprise problems. Something like a car repair or home repair will throw off your progress if you aren’t prepared. An emergency fund is a good way to avoid that problem as it is a small enough savings goal to reach that won’t feel like more obligations.

Photo by Alexander Mils on Unsplash

Be committed

Lastly, nothing hurts someone’s chances of becoming financially independent more than their own lack of willingness to commit to it. Going into the process of getting yourself out of a financial slump requires time, persistence, perseverance, goal making, and the understanding that it is not an easy task. This isn’t meant to scare you off either, it is entirely possible, but you need to know that it will take some serious mental willpower.

Getting out a financial slump is a tough place to be, but it is doable. Using some of these tips, like budgeting, making a plan, reducing your spending habits, or getting help through a loan or financial professional can help you make it to where you want to be. The goal is financial independence, and it will take some time and effort, but stay committed and you will be living a life free of monetary burden soon enough.

If you are hitting your fifties now, and you don’t have a pension pot or any savings, you’ll be pleased to hear it’s not too late to do something about it.

In fact, it is never too late to start saving for old age. Obviously, the sooner you get started the better, so why not make that now?

In this article, I’ll be looking at some of the pension and saving options for late starters. Whether you’ve just hit the big five-oh milestone, or you are creeping towards retirement, there are still ways to build a savings pot and make your money work better for you,whether that’s through a pension, learn from an investment blog or otherwise.

First up let’s take a brief look at the State Pension.

What pension will you get from the State?

The State Pension is a regular payment from the Government you can claim when you reach State Pension age. The amount you get is based on how much you have paid in National Insurance contributions.

The State Pension age has undergone radical change in recent years. Women used to be able to get the State Pension at age 60, and men at 65. From November 2018, both men and women have to be 65, but this is gradually increasing, depending on when you were born. The State Pension age will reach 67 for both men and women by 2028. It could change again in the future.

The full amount of the current State Pension is currently £168.60 per week. Check how much State Pension you could get here.

A pension is actually a tax-efficient way of saving money

Independent Financial Adviser (IFA) and pensions specialist Adam Reeves, says “No matter how old you are it is never too late to think about financially planning for your retirement and paying into a pension scheme. It is actually a tax-efficient way of saving money.”

If you are a UK taxpayer, you will can get tax relief on pension contributions of up to 100 per cent of your earnings or £40,000 annual allowance (whichever is lower).

Pension tax relief is paid at the highest rate of income tax you pay, so for basic-rate taxpayers it is 20 per cent, for higher-rate taxpayers it is 40 per cent and for additional-rate taxpayers it is 45 per cent.

What does this mean? If you are a basic-rate taxpayer if you contribute £100 from your salary into your pension it will only cost you £80 – the government pays £20 (the tax you would have paid on the £100 of your salary). Higher-rate taxpayers benefit more.

See more about tax relief on pension contributions here. As you can see, the tax relief available on pensions is particularly attractive to higher earners and additional rate taxpayers.

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What is a private pension?

Sometimes called a personal pension, and commonly referred to as a ‘Self Invested Personal Pension’ (SIPP), a private pension is a type of investment scheme. You make monthly or one-off payments into a pension plan. Your pension scheme provider adds tax relief to that. The money you put in to the pension plan is invested in a range of assets, such as bonds, shares, property and cash.

How much you get from your pension plan will depend on how much you save, how it is invested and the type of pension plan you have.

It is important to seek independent advice when considering any pension scheme or other form of investment as there are risks. The return on your investment can go down as well as up.

Workplace pension schemes

If you are working in the UK, are aged 22 or over, are under the State Pension age and earning more than £10,000 a year, then you are likely already signed up to a workplace pension scheme (unless you have opted out).

Many workers are now covered by pensions auto-enrolment. This is a government scheme to help people save for later life.

Since 1^st February 2018, all eligible workers in the UK must be enrolled in a workplace pension scheme. The amount you and your employer contribute has been increasing since the scheme was introduced. From 6^th April 2019 your employer pays 3 per cent of your qualifying earnings and you pay 4 per cent of your qualifying earnings.

If you have previously opted out, you can rejoin, but your employer only has to action one request from each member every twelve months. See more about rejoining your auto-enrolment workplace pension scheme here.

What are the alternatives?

As well as considering a private pension, there are lots of other money-saving tips for over-50s. Now is the perfect time to give yourself a money makeover. Any savings you can make in your expenditure now can be saved for your retirement.

ISAs are another tax-efficient way of saving money. The term ISA stands for Individual Savings Account. It essentially allows you to save money tax-free. See if an ISA could be right for you here.

According to EveryCloud, cybercriminals netted $445 billion last year alone. What’s even more sobering is that 43% of cybercrimes target small businesses and their finances.

This is a worrying statistic for small businesses. All businesses take a hit if their data is breached, but larger businesses usually have a recovery plan in place. It can be a lot more difficult for smaller businesses to recover because of the costs associated with recovery.

That brings us to the point of this post – how you can protect your business from an attack.

Start with a Recovery Plan

It might seem as though we’re putting the cart in front of the horse here. That said, it’s better to plan ahead with something like this. Have a solid plan in place:

•         You want to ensure every device your employees use is protected – especially if they use their personal devices to access your system.
•         Consider using a cloud-based solution to keep your system safe. These programs provide real-time online protection. Another advantage is that you’ll also normally have an email scanner included. This means that dodgy emails are quarantined before your employees get a chance to open them.
•         Do regular backups.
•         Consider insurance. This will ensure that you have the money to recover from an attack.
•         Work out a fast recovery strategy. Who do you contact first? How do you proceed step by step in the case of a breach?

Train Your Employees

Human error is the hacker’s best friend. They’re just waiting for you or someone on your staff to make a mistake. Security awareness training conducted on a regular basis is your best defense. This training teaches you about the different threats, how to guard against them, and gives you the best practices to follow to keep your business safe.

Final Notes

If you want to mount the best defense against cybercriminals, adopting a multi-pronged, proactive approach is the best way forward. Start by securing your systems today.

The Greek Debt Crisis was one of the more recent economic disasters that required three bailouts. While Greece is far from out of the woods, here's a brief history lesson on what happened.

Many people tend to splurge on a vacation, which is why they think that next year’s travelling will incur the same costs; this isn’t true at all. Keep in mind that we live in a cosmopolitan world where everything is available within your budget. In this article, we will guide you through five ways with which you can manage your travel budget, and keep in mind: wise spending will easily suffice for your tour when compared with spending carelessly.

1. Look for cheap flights

There's no need to travel to expensive airlines and especially on the business class. If you're traveling with your family, you can easily travel in economy. If you are well aware of the holidays in advance, you can book your flights around three to four months before the trip. Refrain from lusting over flight upgrades by giving some extra dollars. Always put a cut on your desires, especially when there's not even a need to fulfill them. Compare different airlines and choose one that easily fits within your budget.

2. Public transport instead of renting expensive cars

Keep in mind that the ethos behind a vacation or an international trip is to go on a social detox and give yourself a healthy slice of life. Back home you already have everything that you want, so why go the extra mile by splurging on expensive cars? If you’re traveling within the country and find yourself in an accident which was somebody else’s fault, you can get in touch with Scot Accident Claims. Their team will help you in filing a lawsuit. All in all, it is better to travel with local public transport.

3. Cook your food

Are you a good cook? How long can you keep yourself away from those delicious dishes you usually have at home? Just push yourself a little bit because that will help you in saving a significant amount of money. Instead of eating from restaurants and top-notch hotels, you can easily cook your food. People who often eat in a new place tend to get stomach issues and get short of budget very quickly.

4. Don’t splurge on cliché shopping items

If you’re visiting a very special location for the first time, why shop for clothes again? Pull yourself back from buying traditional items that are available back home. If you want to, buy souvenirs that can be gifted to friends and family members. Every travel destination has its specialty and often its own small-scale industry. There are many simple things that can be bought from the local markets of nay new location. Refrain from overspending as the idea of an ideal vacation is to enjoy yourself and not get stuck in those busy market places.

5. Stay at a friends or relatives place

Accommodation is an important element that will consume much of your money. Do you have friends and relatives at the destination you’re heading to? That’s a brilliant idea! Stay at their place and save on accommodation. Conventional hotels and resorts charge a lot of money for tourists. So you better be careful when choosing suitable accommodation. Even if you get a cheap hotel that has the necessities, give it a go since most of your time will be spent outdoor.

Lastly!

Enjoy yourself and make the most of your trip. Not many people get the opportunity to travel. Since you have it, it’s best to make some great memories.

After all, hackers are rife on the internet and if you’re not careful then you may find yourself an unsuspecting target. If you want to help yourself then there are a few things that you can do to guarantee your own online security.

Test your Passwords

It doesn’t matter how strong or even clever you think your password is because hackers can use the finest technology to get the edge. One way for you to know for sure if you think your password is strong enough would be for you to use a password analysis site. Sometimes this will give you an estimated time they think it would take for a hacker to guess your password. They even give you hints to improve it too.

Financial Accounts

Hackers tend to target real-money websites more than anything. This can include payment sites or even casinos. If you want to help yourself here then it is so important that you assess the site first, before you go depositing anything. If you want to sign up to an online casino, then check to make sure that the site is reputable, and that it has HTTPS as this will help to protect your data. NetBet casino games are a prime example of this, so you can always rest assured knowing that your data is safe on there. When signing up to a payment provider, check to see how well-used they are, how long they have been in business or even to see if they have any additional security measures that you can implement.

Use a Password Manager

Remembering all of your passwords can be an absolute nightmare. Writing them down is a huge security risk because if you were to be burgled then they would have access to just about anything. Using a password software can be great, as they are super secure and they give you the chance to remember just about anything you need. You will need to set a single master password to get into your account, so it’s suggested that you incorporate letters, numbers and even symbols where possible.

Sensitive Accounts

If you have an online account with any sensitive information, then you may want to double-up with an additional layer of security. This is especially the case if you bank online. Sure, this can make signing in way more frustrating but it’s well worth it if something were to happen. You also need to make sure that the most important accounts have an alternative email address too so that you can gain access to your account should you ever be locked out. This can be a real life-saver and it can also alert you if someone ever does try and hack your account. This can give you an extra level of security and you’d be surprised at how convenient it is for you to do this.

So, keeping your online data safe involves:

• Using a password manager
• Protecting your sensitive accounts
• Changing your passwords regularly
• And always choosing sites with HTTPS over HTTP

Identifying this comprehension gap, urging Millennials understand the gravity of today’s decisions on tomorrow's financial future, pensions experts, Profile Pensions, have researched average millennials spend and compared it to the government provided State Pension, revealing a concerning £1000 per month difference between the two monthly incomes.

Spending an average of £1770 a month, including living expenses, social activities and simple pleasures, the reasonable spend amount is still 142% more than what would receive if they only have the £731 State Pension to rely on.

With rent alone coming to 118% of the State Pension, even if millennials are to cut out all luxuries from their spend, such as Netflix, take away and nights out, the total spend of £1318 further raises the alarm bells that the State Pension is unsustainable.

Though, with the help of the Workplace Pensions Scheme and early intervention, little sacrifices can mean a world of difference for your future self.

The pension provider offers tips to both help slightly cut costs and take advantage of the scheme to maximise your benefit.

Take advantage of your company’s workplace pension scheme

Due to auto enrolment, you’ll be saving a minimum of 8% of your salary per month towards retirement. Comprised of a 5% deduction from your pay and a 3% employer contribution, the 3% employer contribution is money you will not otherwise receive that is added to your pension pot for your future self. The 5% you contribute provides added tax relief.

Be proactive and make sure your scheme is best for you

As with many things, the default option may not be what’s best for you. Looking at your pension plan now could make a considerable impact . Most workplace pensions

Cook for yourself, rather than take away

It’s a 101 saving tip but choosing to cook for yourself can be one of the easiest ways to cut costs. The average amount spent on groceries and takeaways together equals over £300 a month, by trading Deliveroo for Tesco, you could be putting aside as much as £110 a month towards your pension.

Enjoy nights out but be savvy about them

The average monthly amount spent on nights out is equal to 32% of the full state pension. While enjoying yourself while your young is important and this is an expense you’re likely to pay less in retirement, spending less while you’re out, considering cheaper options or just staying in a little more can cut costs in half and save you £100 a month to go towards your private pension pot.

The full study, including a full breakdown of expense, is available at Profile Pensions.

Here Finance Monthly hears from Andrew Hayden, Senior Product Marketing Manager at Winshuttle, who discusses the key accounting processes behind a successful digital transformation.

According to analyst group IDC, worldwide spend on the hardware, software and services that enable business process automation will surpass $2.1 trillion in the next four years.

Financial accounting is one business function notorious for manual and error-prone processes within Accounts Payable (AP), Accounts Receivable (AR) and General Ledger (GL). These functions are often targeted ‘low hanging fruit’ for companies to start their automation journey and prove the benefits of automation to other parts of the business.

1. Speeding up journal entries

Manually entering data through the SAP Graphical User Interface (GUI) is not only tedious and time consuming,  but it can also often lead to errors – and that means costly rework. SAP-enabled workbooks eliminate the need for manual data entry into SAP. This enables them to get their work done faster and with fewer errors and frees up more time to understand and describe anomalies or work on other high-value tasks.

2. Reduce invoicing traffic jams

At month end, AP and AR teams can usually be found with stacks of invoices on their desks, or furiously entering never-ending quantities of data into the ERP system. Creating and paying invoices is the kind of repetitive, high-volume, and time-sensitive activity that is ripe for automation.

Instead of manually entering supplier invoices or creating customer invoices via the SAP GUI, AP and AR clerks can use SAP-enabled Excel workbooks powered by Robotic Process Automation (RPA) to clear their invoicing backlogs and stay on top of incoming work. This will enable them to deal with PO and non-PO invoices more efficiently, leading to more on-time payments, fewer invoicing errors and supplier enquiries, and ultimately improved supplier relationships.

3. Improve master data accuracy

The timeliness and accuracy of financial accounting operations depend on the master data being correct. Errors or omissions in customer or supplier master records can delay invoicing or payments and lead to problems that are costly and time consuming to fix.

Automating this process enables the finance team to quickly create or update master data using SAP-enabled Excel workbooks or web forms.

4. Improve compliance across key business processes

The data entry process can be complicated if multiple people in an organisation need to supply or approve data, which can often be necessary to comply with strict business procedures. Automation can help here too. For example, it’s possible to build a capital expense request solution that routes a web form to the right approver based on the amount of the request and company code.

5. Spend less time preparing for audits

External and internal audits are a fact of life for any accounting team and preparing for them doesn’t have to be stressful or time-consuming.  An Excel-based solution can be created that can quickly extract any data from SAP that auditors may want to see—for example, invoices over £250,000. This type of automation not only reduces audit preparation time but can also reduce the time external auditors spend on site and consequently audit costs.

In addition to greater productivity and efficiency, organisations can expect greater data accuracy and improved compliance with internal and external procedures and regulations through automation.  And when staff no longer need to perform mundane, repetitive tasks and can instead focus on more strategic projects, morale improves, and more value is delivered to the business.

While there are many things that we can do to try to save money when we make purchases or try to live frugally, there are also ways to keep better track of our finances. Maybe some of what we consider to be immutable expenses are actually a lot more flexible, or perhaps we have spent money somewhere that we can claim back. By restructuring our monthly plans, we are actually able to save money with very little effort. Here are two things we may have overlooked when crunching the numbers for that budget.

Claiming Money Back

Sometimes we end up spending for something but are actually due a lot of that money back. PPI is an infamous example of the way many people ended up spending money on something they didn’t need to. Another common area where people miss their opportunity to claim money back is air travel. Flightright offers air passengers online legal advice for claiming compensation for disruption to their travel stemming from things such as bad weather, strikes, flight cancellations and flight delays. This legal advice is easy to follow, transcends complex jargon, and 99% of cases have been successfully won in court. This works with airlines such as easyJet, which is referred to by some as Britain’s most unpunctual airline. What's more, train companies in the UK such as LNER, offer delay repay, which promises to refund the price of tickets if the train or its alternative was delayed by more than 30 minutes. Claiming money back when the services we expected haven’t been up to par isn’t just part of our consumer rights but could actually make a significant difference and can change an inconvenience into a welcome relief.

Claiming money back when the services we expected haven’t been up to par isn’t just part of our consumer rights but could actually make a significant difference and can change an inconvenience into a welcome relief.

Change Your Provider

It can often seem paralyzing: We sign up to a contract service and are forced to stay with them because shopping around and cancelling the contract seems too much hassle, or seems to incur additional fees. However, long-term contracts with necessary services such as internet providers, phone companies, energy providers and even banks may not be giving us the best deal; in fact, they may be costing us more than their competitors. How much you pay for a service depends on many factors, but shopping around and seeing what you should be paying could result in you clawing back a significant amount of your monthly budget. For instance, according to Martin Lewis at Money Saving Expert, your energy bills could be cheaper if you investigate cheaper tariffs and other methods of making payments such as a direct debit. Even threatening to cancel or swap could sometimes shock your current provider into giving you a better service or cheaper deal, so it pays to go down that route as well.

How much you pay for a service depends on many factors, but shopping around and seeing what you should be paying could result in you clawing back a significant amount of your monthly budget.

By making sure that you recoup any unnecessary payments and collecting all money owed to you, you will find that you could be making greater savings each month. Similarly, by shopping around for all your providers and being savvy about it, you could be spending less each month. As a result, your outgoings are decreased with very little effort on your part.

They deem it to be a “high risk” product and have recommended limiting P2P lending to 'sophisticated investors’ only. Below, Finance Monthly hears from Frazer Fearnhead, CEO at The House Crowd, on why we shouldn’t’ be restricting P2P lending.

This is likely off the back of the recent collapse of mini bonds provider London Capital & Finance, which persuaded customers to invest in bonds (with a ‘fixed’ 8% interest rate) that weren’t ISA eligible. Sadly, some 14,000 people have lost most of the £214 million they had collectively invested. This has, understandably, increased regulatory scrutiny of similar products marketed to retail investors.

Nonetheless, the FCA is lumping all P2P lending companies in with London Capital & Finance, which is patently unfair. The company marketed a product as an ISA, but wasn’t one at all – it was a mini bonds investment – so we’re not even talking about comparable products here. Plus, it obviously wasn’t acting in a regulated fashion and, as a result, it’s a knee-jerk reaction to lump the whole P2P industry together with it.

Democratising investment options

Peer to peer lending, including products such as IFISAs, allow everyday people to access the sorts of returns that only high-net-worth and experienced investors historically had access to. Restricting this offering (or warning people away from it unnecessarily) would deal a big blow to the P2P lending industry and defeat its key objectives – for borrowers, to democratise access to finance and for investors, support the ability to lend in return for a better rate of interest.

Why should investments with higher interest rates be reserved only for experienced investors or those who already have significant capital? It’s precisely the savers who are working to build up a nest egg for their futures who should have such opportunities, especially since lending is much easier to understand than more complex investments. If they’re only left with options like cash ISAs (which won’t necessary beat rising inflation), they won’t be able to do it.

Why should investments with higher interest rates be reserved only for experienced investors or those who already have significant capital?

The FCA said that “anyone considering investing in an IFISA should carefully consider where their money is being invested before purchasing an IFISA.” Of course, this is still true – all investments should be carefully considered before they’re undertaken. But that doesn’t mean that we should completely rule out one of the most accessible investments available on the market today.

P2P is a diverse landscape

Another issue is that, at the moment, it seems the FCA can’t (or won’t) distinguish between different types of P2P loans with different levels of security. It’s true that many providers offer unsecured loans, but there are others that do offer more security. Lending can be secured against an asset which helps to mitigate the risk of the borrower defaulting, as a legal charge over the asset can force its sale and regain investor capital. Other lenders also operate a ‘provision fund’ as an additional security measure.

The FCA has previously warned of introducing ‘appropriateness tests’ in order to restrict who P2P lenders can market their products to, but the problem with this lies in conflating products that are in fact very different from each other. Not all P2P lending products are the same – levels of security do vary by provider, but if the right due diligence is conducted and processes are put in place to mitigate risk, they can offer consistency and reliability. Similarly, we should not look to compare, for example, a stocks and shares ISA with an IFISA. They are fundamentally different – and, arguably, the IFISA can be a safer option.

Ultimately, there are risks involved in all investments, but the answer isn’t in scaremongering. Appropriate education and transparency is what we need to get people investing their money wisely in a variety of options, and we would like to see the FCA do more to support this.