Flexible solutions for SMEs to avoid cash flow crisis

Brought to you by Wesleyan Bank

Being paid on time is essential for any business’ cash flow. When customers miss payments, businesses start seeing a cash flow reduction, which can affect their ability to pay invoices and meet regular obligations such as staff salaries, tax, PAYE and VAT payments. 

Reduce overdue late payments

More than 30% of SMEs receive late payments, according to a Federation of Small Business survey, with 37% of those being paid late suffering cash flow difficulties. 

To tackle the late payments issue, the government has launched the Office of the Small Business Commissioner, which will also make recommendations in payment disputes between SMEs and larger businesses. 

SMEs can also prevent payment problems by choosing accountancy software that reduces the administrative burden. With the right tools, businesses can have access to useful real-time financial information, including due and overdue payments and generate reminders to minimise the opportunities for customers to miss payment dates.

Using these tools helps to maintain a strong cash flow and allow you to focus on developing the business. 

VAT payments from unpaid bills

One of the key regular payments that SMEs need to make is their quarterly VAT return, with HMRC's strict payment dates. Subsequently, the need to cover VAT bills from invoices raised but not paid, can mean short-term cash flow issues and it can be tempting to miss the due payment. However, making these payments is necessary, as HMRC has the power necessary to disqualify directors and even start winding-up proceedings. 

The government recently stated that it is renewing its focus to ensure it receives all monies due and has already netted an extra 5% taking VAT receipts to £124bn a year.

Flexible solutions to manage cash flow

Flexible financial solutions from Wesleyan Bank and other specialist providers can ease the pressure of VAT payments and other bills.

With a flexible solution, payments can be spread over 3-12 months without any impact on your existing banking provisions. This can give you a greater understanding of the overall financial position of the business, allowing you to continue investing in and growing your business.

Find out more about VAT funding here or contact Wesleyan Bank's experts to find a solution tailored to your requirements.