Opinion series: Kush Thakrar on managing money effectively

Money Talks: Get People Talking About Money

Biography:

Kush Thakrar is the Head of Financial Control at Pomelo Pay. He qualified as an accountant three years ago where he initially worked in audit, before moving into the fintech industry.

Kush is also overseeing the finance department in Singapore along with London. He is learning about Singapore’s rules and regulations and keeps in close communication with the Singapore team. 

What is your role at Pomelo Pay and what do you do on a daily basis?

I oversee the accounting activities and ensure that ledgers accurately reflect money coming in and out of the company. I also think about cash management and make sure that money coming in and out of the company is correctly accounted for.

At each month’s end, I also work on creating financial reports to enable our various stakeholders, CEO’s, founders and investors make financial decisions.

Being part of a growing company at Pomelo, I am also involved in project work, such as improving controls and processes and also automating them to ensure they are capable of being scaled-up.

Why does a business need a financial controller?

A financial controller plays a role in keeping the company’s financial reporting, planning, financing and budget organised.

In smaller companies, the financial controller also performs cash management roles and oversees accounts payable and accounts receivable, as well as the disbursement of cash. They can also potentially be involved in payroll and bank settlement functions.

Cash management is key to all businesses. Ensuring that you have got good cash flow means that you can start thinking about future decisions, where you want to spend money and where you build revenue in the future. 

Furthermore, there is compliance work, be it tax returns, VAT returns, financial statements, and audit. The financial controller is generally responsible for overseeing these and ensuring that they are all complete and accurate and that the processes run smoothly.

This obviously has implications with companies who have to make sure that accounts are filed accurately. Likewise at our company Pomelo Pay, we have got to ensure that we are compliant with Financial Conduct Authority (FCA) regulations too.

What are the leading indicators to successful business growth?

Sales growth: For a growing business this is a straightforward metric, but it is a vital gauge of business performance. It is critical to look at how much money you are bringing in through sales.

Gross profit: This involves looking ‘above the line’, in accounting terminology. It examines how much money you are bringing in, less costs. It adds an additional level of detail to the sales growth metric.

You should always have a positive gross profit, that metric is just making sure the gross profit margin, (gross profit divided by sales) is strong/high and that you don’t have too many costs associated with making that revenue.

Lead conversion rate: This is the proportion of qualified leads of a company that result in actual sales. The metric is critical to evaluating the performance of a company's sales funnel. The question is, in terms of every person that visits the website, how many of those people eventually become a customer.

What would you consider as the best financial tools for a business? 

Xero is one of the best pieces of accounting software for many businesses, especially for start-ups. It is a pretty flexible software that is very easy to use and enables companies to maintain their accounting records; accounts payable, accounts receivable etc.

It can also be used for VAT returns, processing expense claims and comes with a payroll function. We don’t use it here at Pomelo Pay, but a lot of companies do.

Xero also has various links with other systems, such as automatic bank fees (so you can see what transactions are happening). To add to the simplicity, they have a number of courses (online or in person) as well as the option to to complete a certification, which is great for start-up businesses. 

How have you found working in the finance team of a start-up business?

Working in the finance team of a start-up business is incredibly exciting. No two days are the same, because of the rapid growth and change of the business.

There is a lot of forward thinking required. We need to take into account if staff numbers and revenue increase rapidly and if we develop a new customer base in different locations.

With the potential for these on the horizon, we need to make sure we can continue to operate the finance function. As such, processes need to be evaluated to ensure that they can support a changing, expanding business.

I find this aspect really interesting, looking at how things might be done differently in different locations. For example Pomelo Pay have operations in Singapore and we need to make sure we are compliant with the Singaporean rules and regulations as well as global compliance regulations. 

With Talk Money Week going ahead, why do you believe talking about money is important?

Talking about money raises awareness and helps to really reduce the stigma surrounding an individual's finances.

Especially off the back of the pandemic, there is a lot of stress and anxiety around individual finances, but given the opportunity to talk about it openly, we can break down those barriers.

Talking about money can also help educate people, by having a discussion about finances, which can help people make better and less risky financial decisions. 

Investing has become so easy, with the ability to buy shares and cryptocurrency with nothing more than a card and a smartphone. Many of these investments are not too dissimilar to betting on a football match though and can be very risky.

By having discussions we can help educate people on what shares are, how the market works, what financial products can be risky, and how to invest safely.

I think by having these conversations and being open, which is what Talk Money Week does, people can make savvy and careful financial decisions.

What are your top money saving tips?

Personally, I think the number one thing to remember is every company wants to get you tied into contracts. 

Change your broadband, utilities, insurances etc. once you’ve completed the minimum period on price comparison websites. No deal is better than a new customer deal!

Price comparison websites, such as MoneySupermarket, make things incredibly straightforward. Also, changing your bank account every so often, can give you a £100-£200 cashback.

A lot of people end up on contracts they have been on for 10-15 years and don’t realise that prices have actually dropped, and they are the ones that are being disadvantaged. 

Maximise your ISA limits each year. You cannot get your ISA limit back each year, and it’s £20,000 of tax efficient savings that you can make each year, so always make the most of it. There is plenty of guidance on the UK government website and you can see how you can effectively secure £20,000 each year into an ISA. 

How would you recommend people take control of their daily finances?

Budget effectively; knowing what’s going to come into your bank account is generally pretty straightforward; you won’t be surprised one day to find one million pounds in your bank account.

It's mainly your salary, and if you buy any investment properties, then rent etc. Most people know what their income will be every month. Calculate how much money you need to spend, want to spend and what you want to save each month. 

There’s a phone app for everything, and challenger bank apps, such as Revolut, are incredibly well designed, and enable you to track spend far more effectively. The Starling app is another great example of this, especially when compared to the HSBC app.

These new apps enable you to track what you are spending each month, whether it is going on groceries, gas or electricity and that can help form your spending habits as a guide.

The advantage of these apps is that it will help predict what you will be spending on in the future and allows you to start locking away money for savings.

What has been the most significant financial advice you've ever given?

From a work point of view, having worked in previous start-ups, the most significant financial advice I have given, and worked on, is how best to use the money invested in the company from third-party investors.

Many start-ups are loss making, and spending this money effectively is the only way you can turn the company into a profit making one in the future. This is one of the most important decisions that the founders will have to make.

Start-ups intend to be loss making because they are getting investment money in, which only makes it more important that the money is used wisely.

In a start-up finance team it is really important that you look at how much money is coming in from the investors and make sure that it is spent effectively. Doing so should result in the investors funding more in the future which obviously helps keep the company running. 

Personally, one of the most significant financial decisions I’ve had to give was when discussing a will with a family member.

In what was a difficult time for them, something that people are not always aware of is that wills can only be varied or changed within 2 years after death.

This is incredibly important when minimising inheritance tax but it is relatively straightforward to do.

What are your tips on how to take charge of your financial future?

Don’t forget about pensions. Retirement age might seem like a long way away, but pensions are great, tax-efficient ways to put money away.

SIPPs are self-invested personal pensions and can be a great way to have a pension, but you can use the funds to make your own investment decisions.

There are also family pension trusts which are worth considering. Working in a similar way to SIPPs, they enable you to pull money together through people that have similar financial interests, whether that is your family or just investors that have similar views. 

Family pension trusts enable you to save in a tax efficient way and you can invest through property, funds, stock shares etc. You have the full flexibility to do that through both of these options. 

Making the most of the £20k ISA limit, it is another straightforward, tax efficient way to save!