Why cash flow management is essential right now
Last week the Office for National Statistics (ONS) stated that the UK’s rate of inflation dropped to 7.9% in the year to June, which means the rate of price rises in the UK has slowed more than expected, down from 8.7% in May – although it still remains high. Falling fuel prices contributed to the drop, while food prices rose less quickly than in June last year. Experts are predicting that the Bank of England will increase interest rates by a minimum of a quarter per cent in August as they continue with their plan to get inflation down to 2 per cent.
With increased supplier prices, continued rises in interest rates, and high annual inflation, managing your business’s cash and understanding the flows is a vital tool in maintaining resilience and being able to adopt flexible strategies for success.
An example of recognising the importance of cash flows is Amazon. They recently launched a flexible financing programme that gives businesses access to funding linked to their sales, allowing them to repay as they earn. A merchant cash advance, delivered in collaboration with financing provider “YouLend” could provide a new flexible financing option for eligible UK-based businesses selling on Amazon.co.uk, which provides greater cash flow suppleness in addition to the fixed-term business loans already offered by Amazon Lending. We expect to see more businesses adopting “elasticity” arrangements with their customers in the future.
Cash flows are a reflection of all the cash that is flowing in and out of a business. Owners can look at the direction of the cash flows for insights about the health of specific products or services and overall market patterns.
No matter how inventive or simple your business model is, you can still have problems with cash flow and here are some of our thoughts on managing the flow of cash in your business:
The first stage of understanding and predicting how funds flow is to perform a health check on your accounts. Look at your latest profit and loss statement and check that your income is sufficient to cover your expenses. If your profit is falling behind your expenses and cash flow is slowing down you might need to take action. Prepare a funds flow statement so you know where the money goes.
Next create a yearly budget, look where cash could become tight and identify months where you can save to cover off the quieter times. Look at those quieter months and think about flexible work scheduling, new products or services, or other activities to tide you over.
Finally make sure you collect your money from those who owe you quickly. Reward customer loyalty by offering early bird discounts. Set credit limits and payment terms to ensure customers follow the rules. If you take on new customers, make credit checks. Penalise late payers and request up front deposits or payment (if appropriate).
Talk to us about preparing a funds flow statement and annual budget so that you can work on your business for maximum success!
Working Capital Finance – can it help with cash flow?
Working capital finance solutions can offer businesses the opportunity to improve cash flow. The world of commercial finance and asset based lending (ABL) is complex and expansive with products, terminology and contractual interpretation varying from lender-to-lender.
The Benefits of arranging Working Capital are:
- Up to 90% of outstanding invoice value can be advanced relatively quickly;
- Flexible lending – funding increases in line with your growth (UK and Export);
- Confidentiality – lenders can offer a completely confidential service – your customers need not know you have a facility in place;
- Lenders allow you to manage your funding at all times;
- Sector-specific finance is often available;
- Structured ABL – funding for management buy-outs/management buy-ins; and
- Trade Finance & Supply Chain Finance Solutions.
Specialists in this area can advise on:
- Invoice Finance – an effective way of quickly accessing a proportion of the value (up to 90%) of your invoices. Effectively a business ‘sells’ its invoices to the lender in return for accessing cash at the point products and services are sold. Specific sector based offerings are available, as is the ability to arrange finance for selected invoices only.
- Structured ABL – generate a higher level of funding by unlocking the maximum value tied up in the combined assets within your business, including Debtors, Inventory, Plant & Machinery and Property. Additional forms of funding can be structured in addition to this, such as top up loans in order to drive growth.
- Trade Finance – supply chain finance with various options, enabling the purchasing of goods from overseas where you are otherwise unable to obtain credit from suppliers.
Typically, you will need to ensure your management accounts are up to date and you make available current detailed lists of debtors and creditors. You might need up to date projections before an expert will consider your application.
Please talk to us about finance; our working capital finance experts have many years of experience and success in advising businesses across a wide range of sectors in obtaining working capital finance solutions.
The New “Business Council” – Will it make a difference?
A new business council has been appointed by the UK Prime Minister to report from the business frontlines and to encourage stability and growth in the UK economy.
Fourteen business leaders, from a range of sectors across the UK economy, join the Prime Minister’s new Business Council. Chief Executives from AstraZeneca, NatWest Group and BAE Systems are among the fourteen business leaders joining the council, alongside SSE, Google Deepmind, Sainsbury’s and Vodafone. Other companies represented on the council include GSK, Aviva, Shell, Sage, Taylor Wimpey, Diageo and Barclays.
These leaders are recognised as trusted experts in their respective fields and are in charge of some of the country’s biggest employers in strategically important industries for UK growth, from construction, life-sciences and tech, to financial services and energy.
Together, they employ around 330,000 people across the country, with an even greater reach throughout their supply chain and a presence globally too.
The newly appointed Business Council will be a forum to bring a real-world perspective on how the current economic climate is impacting business and how government and industry can work together to boost investment and innovation, drive productivity and create highly skilled jobs.
Only time will tell if the UK government listens to the appointed business leaders. Certainly, encouraging investment, removing barriers to trade, and encouraging new opportunities would be welcomed by all businesses.
EU Settlement Scheme enhancements confirmed
From September 2023 people with pre-settled status under the EU Settlement Scheme (EUSS) will automatically have their status extended by 2 years before it expires if they have not obtained settled status.
The process will be automated by the Home Office and reflected in the person’s digital status. They will be notified of the extension directly. This will ensure that nobody loses their immigration status if they do not apply to switch from pre-settled to settled status.
The Home Office also intends to take steps to automatically convert as many eligible pre-settled status holders as possible to settled status once they are eligible for it, without them needing to make an application. During 2024, automated checks of pre-settled status will establish their ongoing continuous residence in the UK.
See: EU Settlement Scheme enhancements confirmed – GOV.UK (www.gov.uk)
Plastic Packaging Tax (PPT) Reminder
If you manufacture or import 10 or more tonnes of plastic packaging within a 12-month period you must register for PPT on GOV.UK, even if your packaging contains 30% or more recycled plastic.
You need to register for PPT if either of the following apply:
- you expect to manufacture or import 10 or more tonnes in the next 30 days (the ‘forward look’ test); or
- you have manufactured or imported 10 or more tonnes of plastic packaging since 1 April 2022 (the ‘backward look’ test).
Once you are registered for PPT, you will need to submit a return to HMRC, 4 times a year.
Your return must cover an accounting period.
The 2023 to 2024 accounting periods are:
- 1 April to 30 June 2023,
- 1 July to 30 September 2023,
- 1 October to 31 December 2023, and
- 1 January to 31 March 2024.
You must submit the return and pay any tax due no later than the last working day of the month, following the end of the accounting period you are reporting.
The deadlines to submit returns and pay any tax for the 2023 to 2024 accounting periods are:
- 1 April to 30 June 2023 – deadline is Monday 31 July 2023,
- 1 July to 30 September 2023 – deadline is Tuesday 31 October 2023,
- 1 October to 31 December 2023 – deadline is Wednesday 31 January 2024, and
- 1 January to 31 March 2024 – deadline is Tuesday 30 April 2024.
See: Plastic Packaging Tax – GOV.UK (www.gov.uk)
Innovate UK – new funding opportunities
UK registered organisations can apply for a share of up to £25 million for game-changing and commercially viable research and development innovations that can significantly impact the UK economy. The closing date to apply is 27 September 2023. To find out more and apply: Innovate UK smart grants: June 2023 – UKRI
Ofgem round 3: call for ideas
UK registered organisations can apply for a share of up to £450 million to deliver net zero at the lowest cost to consumers and support innovative businesses to grow and scale. There is no closing date for this opportunity. To find out more and apply: Ofgem round three: call for ideas – UKRI
Industrial decarbonisation: local plans
UK registered organisations can apply for a share of up to £5 million to develop strategic plans for place-based industrial decarbonisation. The closing date to apply is 2 August 2023. To find out more and apply: Industrial decarbonisation: local industrial decarbonisation plans – UKRI
Innovative technologies: nucleic acid medicines manufacture round 2
UK registered organisations can apply for a share of up to £5 million for manufacturing innovation for nucleic acid medicines. The closing date to apply is 19 July 2023. To find out more and apply: Innovative technologies: nucleic acid medicines manufacture round two – UKRI
Engineering biology collaborative R&D round 2
UK registered businesses can apply for a share of up to £6.7 million to develop engineering biology technologies, processes, products and services as a solution to societal challenges. The closing date to apply is 26 July 2023. To find out more and apply: Engineering biology collaborative R&D round two – UKRI
Women in Engineering Grant 2023
If you a female leader of an enterprise within UK engineering and are looking for funding to take your organisation to the next level, then check out this grant from manufacturing specialist Get It Made. They have announced a new grant, which aims to support female-led engineering enterprises and help encourage the next generation of women in UK engineering. The manufacturing grant consists of £5,000 (excluding VAT) that can be used when ordering any of Get It Made’s manufacturing services.
Applications close at midnight on 31 July 2023.
See: Women in Engineering Grant 2023 | Engineering Grants | Get It Made (get-it-made.co.uk)
Healthcare innovation funding opportunity for SMEs
SMEs developing medical equipment can apply for health and social care research funding from the National Institute for Health and Care Research (NIHR) through the Invention for Innovation (i4i) Programme.
The Connect stream of the i4i Programme aims to help businesses reach the next stage in the development process to apply for further funding, in particular for an i4i Product Development Award.
Your business must be developing medical devices in vitro diagnostics and high-impact patient-focused digital health technologies for use in the NHS or social care system.
The minimum entry point is experimental proof-of-concept or laboratory-validated technology. However, you may submit proposals to progress innovations at any stage of the research and development pathway leading to implementation.
Apply to the Connect stream of the i4i Programme.
This i4i Programme is one of the health and social care research funding schemes available to researchers in this field and, in some cases, Northern Ireland-based SMEs.
Other funding schemes available from Autumn 2023, include:
- The Evidence Synthesis programme,
- Research for Social Care,
- Programme Grants for Applied Research programme, and
- Programme Development Grants.
See: Invention for Innovation | NIHR
Asbestos and construction – new resources available
The Health and Safety Executive’s (HSE) “Asbestos and You” campaign urges tradespeople working in construction to be aware of disturbing asbestos.
Two new free resources have been launched for workers to test and enhance their knowledge about asbestos and the risks associated with it.
- Take a quick Asbestos and You quiz to test your knowledge on the risks of asbestos and how to protect yourself and others from exposure to asbestos fibres.
- Watch the webinar Lurking in the shadows – the truth about asbestos hosted by the Institution of Occupational Safety and Health to get an understanding of the campaign and hear experts discuss the risks continued to be associated with asbestos, particularly with younger workers.
See: Asbestos & You – Work Right to keep Britain safe
£1 million investment in green vehicle innovation
The Welsh Government will co-fund a third round of investment in greener and cleaner innovation through the Ford Low Carbon Vehicle Transformation Fund as part of its response to the climate emergency.
Set up by the Ford Motor Company in 2020, the Welsh Government-administered fund addresses strategic industrial technical challenges associated with low-carbon vehicles, including electrical energy storage, electric motors, power electronics and powertrains. Collaboration and building new future supply chains are key elements of the Fund.
The latest round of funding, which opened earlier this month, will see up to £1 million invested in projects by the end of 2024.
See: Ford Low Carbon Vehicle Transformation Fund now open! | Innovation (gov.wales)
Road works to take place on M4
Motorists are advised to plan ahead before they travel in the coming months as a series of major road works and lane closures are set to begin on two separate sections of the M4 this summer.
The road works between junctions 47 and 49 will take place from August to December. There will also be diversions in place between junctions 24 and 28 on the eastern side of the Brynglas tunnels in September.
Both projects involve essential maintenance work to ensure the longer term resilience of the road network and to avoid any unplanned emergency repairs. The work will involve the re-waterproofing, resurfacing, and replacement of bridge joints to several bridge decks. Work is taking place during the summer period to minimise the likelihood of delays to the work caused by adverse weather conditions.
During the works between junctions 47 and 49, the traffic management layout will change to accommodate each phase of the scheme with traffic running in contraflow using the hard shoulder from early September until mid-November. Lower, mandatory speed limits will also be in place to protect drivers and the workforce delivering the scheme.
To accommodate works between junction 24-28 a four-weekend and eight-night work programme has been put in place involving full carriageway closures, avoiding simultaneous closure of the eastbound and westbound carriageway. This could be reduced to two weekends and eight nights depending on weather conditions.
See: Traffic Wales | Traffic Wales
High-tech American engineering firm to expand in Wales with UK-based subsidiary
Economy Minister Vaughan Gething announced last week that a leading American advanced engineering firm is expanding its presence in Wales by establishing a new centre of excellence in the Vale of Glamorgan, which could see the creation of 75 new jobs and support a further 200 indirect jobs.
The Minister made the announcement as he officially opened the new engineering headquarters of Sierra Nevada Corporation Mission Systems UK LTD (SNC MS UK), the UK subsidiary of Sierra Nevada Corporation (SNC), at Bro Tathan in the Vale of Glamorgan.
SNC is a leader in solving the world’s toughest challenges through advanced engineering technologies in space systems, commercial solutions, and national security. The company has taken on a long-term lease on an aircraft hangar at Bro Tathan in the Vale of Glamorgan to create a “Mission Systems Centre of Excellence.” The firm, which has invested significantly to upgrade the hanger’s infrastructure, already employs 46 people at the site.
See: High-tech American engineering firm to expand in Wales with UK-based subsidiary | GOV.WALES
The Reconstruct Programme
Acorn by Synergie have set up the Reconstruct Programme, a way for construction businesses to pledge to support people with convictions into employment.
In partnership with His Majesty’s Prison and Probation Service (HMPPS), Acorn Recruitment Ltd are working with people with convictions via three Welsh Prisons and HMP Bristol to offer those nearing the end of their sentence the potential to secure meaningful employment in the construction industry.
If your business chose to be part of this network it would include these benefits:
- It is free to join;
- Business featured on dedicated network web page supporting people with convictions into employment;
- Social media promotion of your support;
- Shows you are supporting social value in the form of improving social mobility;
- Fantastic evidence to include in tenders and case studies;
- An easy way for you to do something massively rewarding and worthwhile without having to allocate a lot of resources to it;
- A fantastic way to identify new talent to assist with skills shortages; and
- Positive PR for your business.
