Energy News 24/03/2017
Check out our weekly round up of the stories that have been making the headlines in the energy world over the ...Read More
UK SMEs have long relied upon HMRC’s Time To Pay arrangements (TTP) to help manage financial liabilities. Significant changes may adversely impact those most in need.
The often large compulsory payments required by the state on an annual, quarterly or monthly basis – such as PAYE, National Insurance and VAT – can leave businesses facing hefty bills at a very inopportune time.
Where businesses may have fallen into arrears with these payments, a HMRC Time To Pay arrangement could offer an option to pay the monies owed in monthly instalments.
TTPs come with all sorts of conditions, perhaps most importantly the demand that all future liabilities are paid on time. But the system became earned a reputation for (unintentionally) enabling businesses to miss or delay their payment deadlines with very little punishment, if at all.
HMRC’s response to this flouting of the rules is to remove the unintended breathing room. From 3 August 2015, TTP arrangements will be collected by Direct Debit – taking the onus away from individual businesses to transfer the money, or send a cheque.
Yet this re-imposes some of the challenges: switching payment collection to Direct Debit means organisations that already struggle to manage their cashflow will be required to have enough funds in their account on exactly the right day to deliver the payments required, or face further penalties from HMRC.
The very nature of TTP is to aid businesses that may have a lumpy cashflow, allowing them to catch up on monies owed. So how can companies still reap the benefits of TTP and comply with all its conditions?
There are some simple steps that can be taken, says Nick Haggitt, Director of IGF Invoice Finance. “It is important make sure that any money owed is received as quickly as possible, giving the money needed to pay overheads or even fund investment. Delivering the right product, at the right place, in the right quantity – in the best quality – will increase the chances of businesses being paid on time.”
Businesses should familiarise themselves regular customers’ payment habits, Haggitt adds. “Knowing who is reliable can make a realistic cashflow estimate easier to achieve. Avoiding any reason for clients to delay payment is key, so put preventatives in place, such as thorough invoice checking and communication of credit terms, early in the relationship.”
Business managers should also revisit their attitude to credit, Haggitt advises. “The general distrust of borrowing on credit is a hangover from the financial crisis. Interest rates will likely remain low for the foreseeable future so the economic climate is ideal for businesses to borrow. Bank loans are not the only source of funds; familiarisation of the full range of financial support available will help towards making an informed decision.”
Haggitt says that SMEs can get free advice to ensure their cashflow strategy matches their unique circumstances, including using alternative finance: “Although the changes to TTP may place additional pressures on some firms, it’s a sign that the Government now believes small and mid-sized companies are able to handle more rigour in their tax payments and repayments, which suggests confidence in the growing economy. SMEs should embrace this assurance and use these changes to take more control of their finances moving forward.”
You can find more about IGF Invoice Finance here
Helpful, friendly and we saved lots of money!
"Jessica Purnell was helpful and friendly, she made the whole process easy and simple AND we saved lots of money thanks Jess"This review was posted by Melanie Baker on the 23rd of March 2017
Quick & Easy
"Kabibi was very helpful and the whole process was very efficient. The one small reservation I had was that I was phoned up by Kabibi almost immediately having received my online quote - which wasn't enough time for me to finish reading the quotes! Fortunately she was able to assist me in a greater savings on both Gas & Electricity, and so as long as the switchover is seamless I will remain very happy with the service."This review was posted by Amanda Brown on the 21st of March 2017
"I am very happy with Aaron's service. He has helped me save over £1000 a year on my businesses energy costs."This review was posted by R Thomas on the 21st of March 2017
So helpful and quick
"Prompt advice and help from Ashley. I hadn't realised changing energy suppliers could be so easy and quick. Thanks so much. Will definitely recommend!"This review was posted by charlotte on the 21st of March 2017
Easy and stress free
"I hate this time but f year when it's time to renew my electricity. I decided to use a comparison site this time round and never looked back. My advisor (Aaron Gallagher) was polite and knowledgable and efficiently changed my business."This review was posted by Kevin on the 21st of March 2017