Post Lockdown – Cash Is King
The first half of 2020 was all about lockdown and social distancing; this had a massive economic effect for many small businesses. The remainder of the year is going to be about opening up for business and rebuilding companies back to their pre-lockdown successes and beyond.
Although the rebuilding phase is excellent news and always an exciting time, it is, however, the time when businesses will experience maximum strain on their cashflow. Growing companies are almost always cashflow negative during the times of maximum growth. Costs go up in advance of revenues as the business buys stock, pays wages and invests in sales and marketing. During 2020 the cashflow issues faced by small businesses are going to be made worse by: –
• The cost of additional Coronavirus measures that will need to be put in place prior to reopening.
• The fact that many businesses won’t be allowed to operate at full capacity initially due to social distancing rules.
The successful businesses will be taking action NOW to maximise their cash flow position, and we’ve put together a list of SIX cashflow generating actions that every business should consider.
Bounce Back Loan
Bounce Back Loans of up to £50,000 are available to most businesses in the United Kingdom that have been adversely affected by Coronavirus. These loans are simple to apply for, you just need to complete a two-page self-certification to show you meet the criteria and the money will be in your account in a few days. The criteria are straightforward: –
• Your business has been affected by Coronavirus.
• Your business was healthy prior to Coronavirus.
• The loan amount is less than 25% of your turnover.
There is no credit scoring and assessment, so its quick and easy.
The loan is over six years, but you can repay some or all of it without penalty at any time. There are no repayments for 12 months, and the Government pays the interest for the first 12 months. The loan is backed by the Government so low risk to you and your business.
You should apply for the loan now regardless, if after the first 12 months you haven’t needed it then you can repay in full at no cost to your business.
Action: Check your banks website about how to apply for a Bounce Back Loan.
R & D Tax Credits
There are two important facts you need to know about R & D Tax Credits: –
• HMRC estimates that only 10% of eligible business have claimed so there is a good chance you haven’t.
• The average cash benefit to the companies we advise is £39,000 and that could be in your bank within 90 days.
Research and Development (R&D) tax relief is awarded to businesses that invest in innovation. This innovation can be in the form of developing new systems, processes, products, materials, devices, or any changes to the way your business works.
In our experience, most businesses that are Limited Companies, turnover more than £500k per annum and employ more than five members of staff have some innovation in their business and therefore can claim R & D Tax Credits.
Please don’t risk on missing out on this valuable boost the cashflow just because you don’t think you qualify. We have put together a panel of experts to provide FREE online consultations so you can find out for sure if you are eligible and how much you might receive.
Action: Complete our R & D Fact Find to book your FREE consultation and learn how much you might receive – https://www.excitingfutures.net/existing-business/cashflow/r-d-tax-credits/fact-finder1/
Merchant Services Finance
Do you take most of your payments by credit and debit cards?
Merchant Services Finance is a little know way of borrowing money against your future takings through your card machine. It’s unsecured, and you pay back a small percentage of your card income each day, so it’s always affordable – if your income drops, so do your loan repayments.
The loans are quick and easy to arrange as lenders can see your average daily card receipts over time.
The loan repayment is deducted at source, so this type of finance does run on autopilot and is worry-free.
We have put together a panel of experts in this area who will advise you more fully on how Merchant Services Finance can help your business during a FREE consultation.
Action: Complete our Merchant Services Finance Fact Find to book your FREE consultation to see if this type of finance will work for your business – https://www.excitingfutures.net/existing-business/cashflow/merchant-service-finance/fact-finder1/
In simple terms, this is a way for businesses large and small, to fund cash flow by selling their outstanding or unpaid invoices to a third party at a discounted price. Invoice factoring can be provided by independent finance providers, or by banks. The factoring company buys the invoices for a percentage of their total value and then takes responsibility for collecting payment.
Invoice factoring works well for business owners that need money quickly, have reliable customers that have a history of paying invoices on time and can afford the fees that come with selling invoices to a third party.
In the past Invoice Factoring was only for larger businesses but now even small local cleaning companies factor their invoices.
The advantage of Factoring is that the amount you can borrow grows with your business.
We have put together a panel of experts in this area who will advise you more fully on how Invoice Factoring can help your business during a FREE consultation.
Action: Complete our Invoice Factoring Fact Find to book your FREE consultation to see if this type of finance will work for your business https://www.excitingfutures.net/existing-business/cashflow/invoice-factoring/fact-finder1/
This valuable tax rebate only applies to Businesses, or individuals, who own Commercial Property.
HMRC doesn’t allow you to claim depreciation or capital allowances against the property because property generally increases in price over time. If you bought a £1 Million Commercial Property, then that is £1 Million that you can’t claim any allowances against.
However, if you paid £840,000 for the land and building and £160,000 for the fixtures and fittings, then you can claim capital allowances on the £160,000. The £160,000 can include things like Lifts, Electrics, CCTV, Fire Alarm Systems, Heating and Kitchens.
The good news is that even if you already own Commercial Property, then it isn’t too late to conduct this exercise and claim Capital Allowances – Our average client receives a cash benefit of over £50,000 in 16-20 weeks.
We have put together a panel of experts in this area who will advise you more fully on how Capital Allowances can help your business during a FREE consultation.
Action: Complete our Capital Allowances Fact Find to book your FREE consultation to see if you can claim https://www.excitingfutures.net/existing-business/cashflow/capital-allowances/fact-finder1/
The six areas outlined in this article aren’t the only ways to boost your businesses cash flow, you may know of others. I’ve simply suggested some that aren’t always well know that you may have overlooked.
What is important is that you take measures now to ensure your business has sufficient cash reserves to finance the growth that will be required to return to normal levels of trading.