At the moment cashflow can be a big problem, so here are some options you can consider to help you improve the cashflow position of your business.
1. Cashflow Forecast – Firstly you need to see how big your cashflow challenge is, so prepare a cashflow forecast. If you’re not comfortable with this, get your accountant to help you. Make sure it’s telling the truth and that you are being realistic.
2. CBILS and Bounceback Loans – If you need more than £50,000 you could apply for a Coronavirus Business Interruption Scheme loan (CBILS). Applications for CBILS are due to close on 31 March 2021, if you have a CBILS loan already you may be able to get a top up. Full details about CBILS can be found here. There are a number of lenders that are not banks that participate in the scheme and it is sometimes easier to get the help of a finance specialist whose fees will be met by the government. If you need £50,000 or less a Bounceback Loan may be appropriate and is easier to obtain than a CBILS loan and usually from your bank. Details about Bounceback Loans can be found here.
3. The new VAT deferment scheme – HM Revenue and Customs (HMRC) will shortly be introducing a new scheme to help VAT registered businesses pay the VAT that they deferred (that was due between 20 March and 30 June 2020) by instalments. Instead of paying the full amount by the end of March 2021, you can make up to 11 smaller monthly instalments, interest free. All instalments must be paid by the end of March 2022. More information can be found in our blog New VAT payment scheme to help your cashflow.
4. Apply for a time to pay arrangement for your corporation tax – If your company is have difficulty in paying its corporation tax, you can apply for a ‘Time to Pay’ arrangement. To be able to do this your company tax return and accounts must have been submitted to HMRC so they can see what you owe. If you have a 31 March 2020 year end and don’t submit your accounts until 31 March 2021 (taking advantage of the extended submission deadline with Companies House) you may miss the chance to get a time to pay arrangement in place for the due date of 1 January 2021.
You can discuss a ‘Time to Pay’ arrangement with HMRC by calling the HMRC Payment Support Service on 0300 200 3835. Have to hand your company’s corporation tax reference number, the amount of tax due, an idea of a plan that you think your company can manage and your bank details to set up a direct debit.
5. Self assessment tax – Many business owners use funds from the business to pay personal tax bills, which hurts business cashflow. Have a look at our blog Are you ready for the January tax cashflow hit? to look at the options of ‘Time to Pay’ arrangements with HMRC and reducing your payments on account, to help reduce the burden of personal tax on your business.
6. Make changes in your business – A more long term option, is to make improvements to your business. Making changes to improve profitability, along with possible changes to the way you handle your businesses finances, will make for a better more sustainable long term way to improve cashflow. You can ask us about profitability and business processes to help you achieve better cashflow.
If you would like some help to improve your cashflow, please call Andrew Price on 01803 296678.