Cash flow is essential for any business but many business owners will be faced with cash flow problems at some point during the company’s trading life. I have seen many companies that have traded profitably for years suddenly being faced with a lack of cash. If your business has no cash, debts start to mount and before long the business debt begins to spiral out of control.
Cashsolv offers a range of business debt services that can assist business owners.
What options do business owners have when business debt begins to mount?
If your business is viable but has significant business debt and tax arrears that it cannot pay under normal payment terms, then it is possible to restructure these debts under a Creditor Cashplan. This is a low cost debt management plan which will enable the company to repay the business debt over a period of 10 months. Cashsolv will act as an intermediary and will write to the company’s suppliers to explain why the company is experiencing cash flow problems.
We will advise the suppliers that Cashsolv will be responsible for making 10 equal monthly payments to them in order to discharge their outstanding debt. Each month the company will pay to us 10% of the total amount that is due to the trade suppliers and we pay the funds to them. After a period of 10 months the total amount due will be repaid.
What are the advantages of a Creditor Cashplan?
- It is a confidential agreement so, unlike a formal insolvency procedure, it is not registered at Companies House.
- It frees up valuable time for you to concentrate on running your business rather than fire fighting.
- It allows the company the breathing space that it needs to improve its cash flow.
- Not all suppliers have to be included in the plan, so if there are one or two suppliers that are key to your business, you can continue to pay them on normal payment terms.
- The suppliers are repaid in full after 10 months.
- It prevents the company from having to enter into a formal insolvency procedure.
What options do business owners have when tax arrears begin to mount?
An option open to business owners where the only problem debt is tax arrears due to HM Revenue & Customs (HMRC) is to seek Time to Pay. This means that a proposal is put to HMRC whereby the company agrees to pay off the total arrears over a period of up to 12 months. At Cashsolv we will put the proposal to HMRC on your behalf and provide an explanation as to why the business is not able to pay the tax arrears at present. If HMRC are satisfied that the business is viable and it will be able to pay off the arrears within the specified time period, it is likely that the proposal will be accepted and it will formalise the agreement into what is known as a ‘Time to Pay Arrangement’.
What are the advantages of a Time to Pay Arrangement?
- You are able to include all taxes – VAT, PAYE, NIC and Corporation Tax arrears.
- It allows your business to spread the cost of the tax arrears over a period of up to 12 months.
- By spreading the arrears over a period of time, this will assist with managing cash flow.
- It avoids an insolvency process.
If your business is suffering from cash flow difficulties, then we are here to help. We offer a free initial consultation so don’t delay in contacting us.