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.