A recent survey has revealed that unpaid tax bills are one of the main reasons SMEs find themselves with cash flow difficulties.
Cashflowfacility.co.uk surveyed 512 directors of UK SMEs during its online research and discovered the top two cashflow killers were late customer payments and banks freezing overdraft facilities. Unpaid tax bills came in at number three on the list.
Other reasons why SMEs find themselves short of cash were the purchase of IT equipment and new machinery, slow invoicing, delayed payment of insurance claims and the length of time it takes banks to make funding decisions.
Chris Baguley, a director of cashflowfacility.co.uk, said there are too many companies going under because they can’t find a way to cope these common business problems. We live in a turbulent economic environment at present and restricted cash flow prevents viable firms from making a full recovery.
It’s important that companies do find a way to settle their liabilities with HMRC. In fact failure to do so could see employers having to pay a security deposit as guarantee that future PAYE contributions will be passed onto the Revenue.
We all know that banks have cracked down on small business lending. Project Merlin missed its small business target last year and there are fears that the latest initiative won’t help the firms it is designed to help.
Companies that are experiencing cash flow difficulties may want to ask their accountant for advice on the best way to handle the situation.