We are all aware that Christmas is an expensive time of the year for most individuals, with lots of presents and food to buy and then there are the Christmas parties and functions to attend. If you don’t budget for this additional expenditure, it may take a couple of months to get your finances straight again.
Cash flow suffers from a reduction in business in the lead up to Christmas
The same principle applies in business where small businesses rely on cash flow. A significant number of businesses see a reduction of work in the lead up to Christmas and into the New Year. If business owners do not plan and prepare cash flow forecasts then there is a real chance that the business will experience cash flow problems.
A reduction in sales could mean that your employees are not being utilised to their maximum capacity, however, they will still need to be paid their normal salaries. Business overheads still need to be paid, which may include the quarterly rent which is due on 25th December (Happy Christmas!). Also, the monthly or quarterly VAT will be looming and suppliers will still expect you to pay on your normal payment terms.
The key issues are to plan early and ensure that cashlow forecasts are prepared and monitored. There is no point in preparing cashflow forecasts if you do not monitor the movement of income and expenditure i.e. if your forecasts shows that income in a particular month is estimated at £50k and you are not chasing payment from your customers, the actual income that you receive could be much less. Without the required income, you will not have sufficient funds to pay your outgoings.
Solutions to cash flow problems
What options are available to business owners should an unexpected event happen and the business does not have sufficient cash to meet its liabilities? At Cashsolv, we are always able to find solutions for viable businesses that are experiencing cashflow difficulties, for example:-
- A short term loan (typically one to three months) or a long term loan (up to twelve months). We have provided a number of loans to companies where cashflow has been an issue as a result of late payments from their customers which has meant that the business did not have the cash to pay the rent, employees’ wages, suppliers and VAT and PAYE. The loans that we provided resulted in the companies being able to pay these debts on time and allowed the directors the breathing space that they needed to concentrate on running their businesses rather than worrying about accruing liabilities.
- We are able to assist in agreeing a Time to Pay arrangement with HM Revenue & Customs where the company has accrued PAYE, NIC, VAT or corporation tax debts. We have a good working relationship with HM Revenue & Customs and have been successful in agreeing a number of Time to Pay arrangements, varying from debts of £15,000 to £350,000.
- If your customers/clients are late in paying, our commercial debt recovery company Debtcol, can assist in converting your debts into cash.
For more information, please contact us.
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