Do you need to raise money for the continuation and growth of your business?
If so, no longer is traditional bank finance simply the only option. However, many business owners do not consider other options available to them if they are unable to raise money with their bank.
The banks are open to lending money, and we have seen many examples of this over recent months, but here are some of the most common ways business owners are raising finance for their business at this time:
Well the most obvious is that 'cash is king' and if it is safely in your bank account, then you have the choices rather than being the lender to your customers who have taken the liberty of extended credit.
We recently met a prospective client who, due to a possible bad debt, had much more to lose than just the cash. His turnover was £780,000 with a net profit of £30,000. His own income was made up from dividends each year based on the annual profits of the business. He had a low volume of customers, but with an average value of £25,000. However, without implementing credit limits, due to the desire to sell more, he had allowed one of his clients to build up a balance owed as £44,000. He claims his advisors had not highlighted the aged debt to him. So, when he noticed the level, he made the effort to collect the debt, only to find the customer could not pay, had exhausted credit lines and was simply avoiding him as it was likely they would have to go into liquidation. So the deeper impact was on the viability of the business, the risk to the staff he employs, but also the ability for him to draw his own income from the business as both profits and expected cashflow were at risk. Worrying times.
Our customers are sometimes surprised that we can help with credit control, as bookkeepers are 'number crunchers'! But we try to approach our support in a different way and keep our eyes open for our clients and help them understand their business financials, profits, assets and liabilities.
Our other credit control tips are:
Not everything documented in a profit and loss account of a trade, profession or vocation is an allowable deduction for tax purposes. A taxpayer may not deduct expenditure in computing their profits unless it is incurred wholly and exclusively for the purposes of their trade.
Here are some of the allowable business expenses you could claim, whether paid directly by the business or paid personally and reclaimed from the business:
This is not a conclusive list due to the UK's complex tax legislation, so if you are in any doubt about what you can claim, then please contact me.