It is not unusual for companies to experience cash flow difficulties from time to time. This is something that we come across and advice upon frequently. The key to resolving such issues, is to address them early by seeking our help. If your company is experiencing cash flow problems, you extra are also likely to find it hard to pay VAT revenues and meet other financial obligations. Failure to pay corporate taxes on time will raise a red flag to HMRC.
They may perform a tax inquiry and subject your business to cash flow insolvency. As a consequence, you should seek professional advice to avoid the detrimental consequences of failing to settle your tax arrears within the timeline provided by HMRC. The Insolvency Experts have helped many firms with business cash flow problems. Our insolvency practitioners are licensed and have the required expertise and experience to help come up with a robust VAT debt management plan.
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Four Key Questions on Cash Flow Problems
How do you know if a lack of cash flow is moving towards insolvency?
Cash flow problems remain one of the key indicators of possible insolvency. Lack of cash flow is characterised by:
- inability to pay VAT, PAYE and other taxes
- loss of key customers orsignificant decrease in sales
- regular outgoings exceeding your turnover
Company executives have a responsibility of knowing and understanding the financial position of the business at all times. Every business wishing to succeed should have a working and efficient cash flow management system that can help you to forecast future cash flow needs and avoid business cash flow problems.
A simple and routine cash flow assessment can help business owners to avert impending business problems like cash flow insolvency. The company directors and CEO have a responsibility review detailed cash flow and sales reports. A business moving towards insolvency is also at increased risk of losing key customers.
Here at The Insolvency Experts, we have advised thousands of businesses on how they can avert cash flow problems. If your major clients suffer financial hardships, your business cash flow will in turn also be adversely affected. We encourage businesses to focus more on increasing their customer base rather than working with one or two customers only. We can advise on a range of different methods for minimising your risk of cash flow insolvency.
What are the penalties for business cash flow problems?
Problems with cash flow in your company can impact in a range of way. For example, failure to pay corporate taxes and PAYE negatively affects the overall operation of the business. HMRC requires every business to file and settle tax arrears on time. Based on the business cash flow, you may be required to file your tax returns on monthly, quarterly or yearly basis, although this may be more strictly stipulated if you face business cash flow problems.
HMRC expects you to file tax returns and make payment within seven days after the end of your tax period. HMRC has the power to take a range of measures with businesses who fail to file and pay their VAT within the stipulated timeline:
- If it is your first time to default, you will receive notification but nofinancial penalty
- If your business continues to pay VAT late, it will receive a surcharge each time
Unfortunately, the financial penalties applied by HMRC may further complicate the cash flow problems being experienced by your business. It is worth noting that regardless of the circumstances of your cash flow insolvency, however unforeseen or out of your control the situation may be, these HMRC penalties will still apply.
In terms of other risks related to business cash flow problems, most companies have a range of creditors and suppliers who are owed varying degrees of money at any given time. If you have an ongoing debt with one or several of them due to cash flow insolvency, they may be entitled to bring a winding up petition against you.
What solutions are available to cash flow problems?
Here at The Insolvency Experts, we are ready to help you deal with any business cash flow problems that can result in your business being declared bankrupt by HMRC. We have the necessary expertise and experience to help you identify the main causes of cash flow issues in your company and help you come up measures to seek to resolve the problem.
There are a number of ways that you can fix cash flow problems, including making savings through debt repayments plans with creditors. We are here to help to get your business back on the right path. Fixing cash flow issues as soon as possible will help ensure your business manages its debts efficiently and avoids insolvency action from creditors.
The Insolvency Experts recommend various solutions to cash flow issues, such as:
- Leveraging business assets or considering other forms of borrowing
- Managing the levels of stock to avert excessive amount of inventory
- Charging interest on late payments and reclaiming the expenses of recovering debt
- Establishing an efficient credit control system that is operated by experts.
Who can I contact for help with business cash flow problems?
The Insolvency Experts have seen many times the level to which cash flow problems can adversely affect the operation and growth of any business. We have helped many businesses in the UK deal with their cash flow insolvency issues and avoid future problems associated with cash flow difficulties like in ability to pay taxes or amounts owed to creditors.
We have a team of financial experts who can help you to decide on the most suitable option for your company; including advice on best practices to make sure your structure isn’t contributing to issues, ways to collect outstanding invoices or gain funding against them and restructuring business debt. Call us today on 0300 303 8284 or email us to speak to our expert team and find out more about the different financial options available to you.