How Accountants Can Help Clients To Boost Their Cash Flow

29th Nov 2019
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With the Christmas holiday season fast approaching, many firms are preparing to take on extra temporary staff and ordering additional stock. But whilst it often makes good business sense to do this, it can also mean businesses overstretching themselves financially. Unless managed properly, cash flow can all too easily run dry.

Accountants can be vital in detecting when such cash flow problems are likely to arise and coming up with solutions promptly. This could involve the use of various finance options (three of which we look at below), as well as making sure all tax reliefs and government help are utilised effectively.

So what are these cash flow boosting options and how can good accountants ease the pressure? Here we take a look.

Invoice finance

If your client invoices businesses regularly, invoice finance could be a good source of short-term funding for overcoming cash flow hurdles. So that companies can access owed money more quickly, invoice finance lenders will typically advance 80-90% of the invoice value. It sounds good - and often is - but it only works for firms that are sitting on commercial invoices. If a company mainly works with consumers, this avenue won’t be open to them.

Unsecured business loans

Most business loans - especially those spanning the longest terms - are normally secured against either personal or commercial assets. Ones that aren’t generally necessitate a personal guarantee from another business owner, which has been the case for a long time. However, there are some lenders that will now offer a fully unsecured short-term loan to profitable, well-established organisations, without needing a personal guarantee.

Credit cards and overdrafts

Many businesses will hold a business credit card or have access to an arranged overdraft on their business account. Both of these can be incredibly handy when it comes to meeting seasonal trends and dealing with short-term cash flow problems. The biggest benefit of these is that any outstanding balances can be paid back once the interest-free period is up. That said, there is often the chance to stretch overdraft and credit card limits for longer where required, offering a good level of flexibility.

An accountant's key roles

Understanding your key roles and knowing them like the back of your hand will form the basis of the advice you give. Spotting a client’s cash flow problem early is essential in working out the most effective solution. Once you’ve ascertained how much money is required, a funding stream can hopefully be obtained. However, one thing is obvious: the role of the accountant is constantly evolving. By adapting to the changing landscape and staying abreast of current developments, such knowledgeable, dynamic accountancy practices will remain competitive. Ultimately, they will be able to more effectively help their existing clients, attract new ones and improve their service.

Why accountants need to stay ahead

Although it’s tempting to bypass having an accountant in order to free up cash, this is likely to be a poor choice longer term. A highly skilled accountant can make a massive and very positive difference in that they can:

Save time - Clients need to dedicate every minute possible to developing and selling their products and services. Having an accountant on hand to check they’ve filled their forms in correctly, offer financial advice and help with important tax deadlines mean business owners can concentrate on what they do best.

Reduce stress - The financial side of things can be daunting for businesses. After all, much of the paperwork and terminology could be very unfamiliar and there’s plenty to keep people awake at night. Running a business is complex, but good accountants can reduce this burden by offering all the necessary reassurance and guidance.

Help to grow - An effective accountant should always be willing to listen, and you should spend time getting to know your client’s business as well as they do. Objective input from someone who thoroughly understands a company’s financial affairs, but without the emotional attachment, is extremely valuable. It can give a business the impetus to grow plus the chance to fix problems before they become a massive financial headache.

Save money - Failing to take on board new legislation or incorrectly completing forms could result in your client receiving a fine, which they won’t exactly be happy about. As a skilled accountant you need to stay ahead of the game on your client’s behalf. You also need to know where they can legally minimise their tax bill, and take advantage of any tax reliefs. Many small businesses will be looking to grow and innovate which could make them eligible for government help, like R&D Tax Credits for example.

R&D Tax Credits - a quick rundown

R&D Tax Credits are a relief offered by the UK government to help with the costs of growth and innovation. SMEs that have untaken an eligible R&D project can claim as much as 230% tax back on the amount they’ve spent on applicable R&D expenditure. It’s claimed as a rebate on a company’s Corporation Tax bill, or as a cash payment if a company has made a loss. Larger companies using the RDEC branch of the scheme can claim a 10% “above the line” tax credit towards their R&D expenditure instead.

Who is eligible?

It’s a common misconception that R&D Tax Credits can only be claimed by companies working in the fields of science of technology. However, this isn’t actually the case. There’s in fact a huge range of industries who can reap the benefits from R&D tax relief, and it’s open to any company that has:

  • Sought to advance their knowledge
  • Created a new product or service
  • Improved a specific product or service already in existence
  • Solved a technological or scientific uncertainty in the process of its R&D work

The project doesn’t have to be unique, as long as a solution isn’t readily available - it doesn’t even need to have been successful either.

How Myriad Associates can help

At Myriad Associates we deal with R&D Tax Credit claims day in, day out. It's all we do.

However, claiming the relief isn't easy. Thanks to our many years’ experience, we know where the pitfalls lie and can work alongside you in helping your client make the highest quality application possible.

Call us on 0207 118 6045 or use our contact form today and see what we can do.