If the present wrangling over the terms of our exit from the EU result in terms that disadvantage UK businesses, what can we do now to protect our hard-earned business assets?
It is difficult to make this call as negotiations could drift in either direction: a continuing trade agreement or a so-called “hard-Brexit”.
No-one can say what trading conditions will be like from April 2019, but it is likely that perception will rule the roost. If uncertainty continues to cloud the debate, and there is no sign of resolution on the political front, opportunists, those brave, and some would say reckless, few will be on the lookout for ways to profit from any downward trend. For the rest of us, we need to consider our options, and quickly.
What could we do?
As the title of this piece suggests, we could add fat to our balance sheets by improving cash flow, cash is king.
How to do this:
• Examine your options if you are registered for VAT. There are schemes that determine liability based on monies received and paid rather than sales and purchases invoiced. Why pay VAT if it is tied up in debtors: money owed to you? There are turnover limitations, but worth considering if these don’t apply.
• Determine how many days credit you are giving to customers and aim to reduce these. Bad payers can quickly become bad debts if economic activity slows down. If customers are bad payers, what they are doing is using your money to underpin their cashflow.
• If you buy production goods from the EU consider increasing your stocks, or better, discuss setting up stock-holding facilities for your EU suppliers. Perhaps you could find space for them and they would provide stock on a sale or return basis?
• If you sell goods to EU suppliers adapt the previous strategy in reverse?
• Release working capital from obsolete or slow moving stock by offering to customers at reduced prices, a late summer sale?
Every business will have different opportunities to ready themselves for the changes next year. There is still time to consider your planning choices. Please contact us if you would like our help in considering your options.
- What is round the corner? - September 16, 2021
- Hundreds of business names dismissed by Companies House during pandemic - September 14, 2021
- Tax-free childcare costs - September 10, 2021
- SMEs can enhance business performance by joining Peer Network scheme - September 7, 2021
- Supply chain issues gaining traction - September 2, 2021
- Tax Diary September/October 2021 - September 1, 2021
- Tax collection options - September 1, 2021
- Furlough figures continue to fall - September 1, 2021