Cashflow is a major challenge for small businesses in any climate, not least of all at the height of a pandemic.
Grants, loans and furlough payments have helped plug the gap and ease the strain at key moments this year, but in the longer term it’s important to have strategies in place to help you cope.
As the support from Government is gradually scaled back, we face arguably the toughest economic period yet in the months ahead.
For these reasons, managing cashflow effectively should be a key priority for any business, regardless of size, ambitions and industry.
Here, we will examine some of the key aspects of managing cash flow.
Millions of UK workers have received support from the UK furlough scheme, but with payments set to end in the weeks ahead, finding the cash to meet wages will be a significant challenge for many. It’s important to plan ahead and think carefully about how you will meet the burden of staffing costs when central support ends.
Generally speaking, companies can expect to pay corporation tax around the start of October or at the beginning of the calendar year. When you pay depends on your own payment schedule, but either way it can be difficult to meet these costs, so make sure you are aware of the flexibility available. HMRC offers ‘time to pay’ arrangements, while businesses with major concerns have the opportunity to discuss payment plans to help manage cashflow.
Various VAT payments have been deferred in recent months to help manage cashflow, and these opportunities are still available to businesses, with a deadline of 31 March 2021 to apply. If you have chosen not to defer VAT payments then managing short-term is crucial, and you may wish to consider using R&D Tax Credits. This can help a business generate thousands of pounds in a matter of weeks.
The festive period
Planning for trade in the lead-up to Christmas is tricky in any year, but those challenges will be particularly significant this time around. This time of year naturally impacts cashflow, with delays in receiving payments a major issue for some businesses. Put contingency plans in place for the final month of the year to help you overcome any potential obstacles.
The unpredictable nature of the Coronavirus pandemic makes planning for the long-term extremely tough, but it’s important to prepare for all scenarios. Be as well prepared as you can, make the most of the incentives available, and put yourself in the best position to thrive once more when the economy recovers.
Do you need help managing your cashflow? Cooper Accounting can help.
Get in touch for an informal chat.