Recession Business Finance
Improving Your Financial Position
With The Bank of England predicting the UK’s economic recovery will be slow and protracted the current recession is certainly proving to be a difficult time for the UK's businesses.
One of the biggest mistakes businesses can make at the moment is to fail to get a firm grip on their finances.
Now is the time to make sure your financial records are up-to-date so that you know exactly where the business is financially.
Only by having accurate records will you know if you have a real cash flow issue plus with proper records it become much easier to create business budgeting plans.
Recession & Business Finance
BENEFITS:
- Clear understanding of your financial position
- Eliminate unnecessary spending & save money
- Increase cash flow & ability to secure funding
ACTIONS:
- Update financial records & create rolling predictions
- Reduce business spending and late payments
- Create a strong case for securing future funding
Using your updated records you can then make rolling three month financial predictions which can be used to plot your businesses progress and highlight any financial issues that need attention before they get out of hand.
Reduce spending
You must cut any unnecessary spending especially on business projects that don’t directly generate revenue. Review all your business spending to see where savings can be made, but don’t be too ruthless the aim is to cut unnecessary spending not all spending.
Reduce late payers
Late payments are always an issue for any business, but during recession they can become a real problem. The reality is it’s all about timing and priority, people tend to pay by priority order and when money is available so if you’re business isn’t near the top of the list or invoices are received when funds are low it’s likely you’ll be paid late.
By offering incentives for prompt payment plus flexible payment options you stand a much better chance of having a higher payment priority and hitting good customer cash flow periods.
If you are a small to medium size business then the government has recently launched a new initiative called the Prompt Payment Code. The idea is that companies who sign up to the code pledge to pay their small suppliers on time. The code is also offering clear guidance on payment and complaint procedures.
Getting a loan
Sadly UK banks seem to be less than willing to lend, however, things may be starting to improve due to a new government scheme. The Enterprise Finance Guarantee Scheme will support up to £1.3bn of new lending by banks and is aimed mainly at small businesses.
The scheme is designed to enable firms to secure loans of between £1,000 and £1m, repayable over 10 years. The government guarantees 75% of the loan, with the banks covering the remaining 25%.
Most businesses are eligible for the scheme except for those in the agriculture, coal and steel industries.
As with any loan businesses will still need to make a good case for themselves, explaining why they need the funds, and showing that they will be able to pay it back.
Even if a business doesn’t require a loan it’s always worth keeping a good relationship with the bank as the situation could always change.
Tax
Businesses with temporary financial problem due to the recession can apply to HM Revenue & Customs (HMRC) to delay their tax payments. Tax payments that can be delayed include VAT, national insurance and staff income tax.
There are no penalty fees or surcharges; however, an interest payment will have to be paid for each month of delay. The interest payments vary, but a typical level is 4.5%.
The Business Payment Support Service programme, has a dedicated telephone support line - 0845 302 1435. Most callers will get a decision within 10 minutes; however, some may have to wait up to three or four working days.
Get help to improve your businesses financial position
For extra help in reviewing your financial situation and creating new recession cash flow strategies businesses can secure the services of a good business finance consultant like Hedley Basford.
Hedley Basford business finance consultants are helping companies today to improve their cash flow and beat the recession and we could help you too. For more information including a free half hour consultation contact us today.
