Are your finances stretched ?

If you continually stretch elastic bands, they will snap unless the tension is eased. It’s the same when describing stressed business finance, particularly where there is creditor pressure, maybe CCJ’s or HMRC arrears. Individually, they may not be cause for concern, however when blended together, cash flow can become unmanageable.

Financial institutions have advanced in excess of £76bn under the four Government backed financial loan schemes that operated until 31 March 2021.

It has been widely reported that many of the 1.5m businesses who received assistance, have chosen to extend their loans and/or defer outflows where possible in the hope of improved trading.

In addition to loans, many organisations have taken advantage of the furlough scheme, reduced vat and rates relief. These aids are now tapering away and will have a consequential impact on cash flow.

Overtrading is a major cause of business failure. This occurs when a business expands their own operation too quickly only to discover it has inadequate resources to fulfiul those orders.

Now more than ever, it is imperative directors maintain sensible projections to enable them to forecast cash flows. This sounds obvious, however multi-tasking owners tend to shun administrative duties, particularly those around finance.

Businesses need to ensure sales invoices are dispatched as soon as possible and credit controllers need to become more accomplished with debt collection. If there are problematic cases, then it can be advantageous to let a solicitor/collection agency pursue collection.

‘There’s no point in having a client if they are unwilling or unable to pay’.

Early dialogue with your backers is essential since it provides the opportunity to discuss potential re-organisation of finances, trading practices and working patterns. The more prepared you are, the more sympathetic your funders are likely to be. Sadly for some, no amount of deferral will be sufficient as their business models prove to be obsolete.

We understand that owners have an emotional connection with their businesses and are often reluctant to ask for help, as this is deemed a weakness. It’s not. It demonstrates your understanding, commitment and systems for identifying issues and determination to seek a solution.

Here at WCF, we have over 25 years experience of raising finance and can help you assess your situation and formulate a plan to steer you through the challenges that lay ahead. There are numerous financial providers and funding streams, so let us connect you to the right option.

We are not insolvency practitioners so a successful outcome is ensuring you emerge with a more robust business.

E : clive@whitehallcf.co.uk

T : 07977 409389