Sollertia Blog

Cash flow issues can have a negative effect on a company, even if the profits are reasonably healthy. Your firm may be affected in ways other than financial, which can be just as devastating. If you have more money leaving the business than coming in, you may struggle to pay your own bills and will be unable to invest in future of your enterprise.

Borrowing more money

Although a short-term overdraft or a small loan may be the solution to a temporary problem with cash flow, in many cases it will just lead to more debt, higher interest charges and an extension of your credit. Borrowing more money won’t fix the problems, but it could certainly add to them. A healthy cash flow will reduce the likelihood of borrowing, so you pay less interest. In an ideal situation, all your clients will pay promptly so that you can settle your bills in a timely manner.

Problems with suppliers

If you have issues paying suppliers due to a poor cash flow, you may find that relationships with them decline. If you have problems with clients paying you, this could mean that you have to miss a payment, which in turn will affect your entitlement to credit.

Morale of workforce

If you are experiencing difficulties with cash flow, you are likely to be stressed. Your workforce will notice this and could also become tense. If there are concerns about you being able to pay your suppliers, which could have an adverse effect on your business, employees may start to wonder about their own job security. This can affect staff retention and absence rates, ultimately affecting productivity.

Losing customers

When staff are feeling the pressure of problems at work, they may not be as responsive to customers. Bright and cheery staff who are helpful to clients will generate a positive feeling, encouraging customers to make purchases. If employees are feeling low due to concerns over the future of the company, they are likely to be less helpful and pleasant to customers. This could result in lost custom, which will have a huge impact on an already struggling cash flow.

Controlling cash flow is crucial for a successful company. Management outsourcing is just one way to ensure your cash flow is free of problems, making it possible to build the company and reap the rewards of a thriving commercial venture . For more advice, please call us today.

Companies that sell digital services and products to European countries are facing new rules for VAT from 1st January 2015. The VAT rules in the country of the buyer apply to Read more

Small Business Saturday will be taking place for the third consecutive year on 5th December, 2015. More than 16 million people supported local enterprises in 2014 and organisers are expecting even more to do so this year.

A host of events and workshops will Read more

According to statistics, up to two-thirds of new companies will fail during the first 12 months of trading. This statistic may be even worse in some areas of the UK. Running an enterprise is always challenging, especially in the initial year, and even a profitable company can face problems that may lead to Read more

The team here at Sollertia is proud to announce that we received the coveted Service Provider of the Year prize from the Hire Awards of Excellence (HAE) on Saturday night.

In a glitzy event held at Read more

The team here at Sollertia was recently excited to discover that we have been nominated in the Service Provider of the Year category of the Hire Awards of Excellence (HAE) 2015.

The HAE honours were Read more

When you make the decision to start your own company, you have to decide what its structure will be, with the main types being partnership, limited company and sole trader.

The choice you make will Read more

There are various types of penalty charged by HMRC, and they can soon add up to a considerable amount of money. The simplest way to avoid them is to ensure you comply with all deadlines, report new information in a timely manner and remain compliant with HMRC.

However, there are some easy methods of avoiding those charged for self-assessment.

Notify HMRC of all changes in circumstances

If you fail to inform HMRC of a change that has an impact on your liability to tax, you may be charged a penalty for ‘Failure to Notify’. Such changes must be reported to the organisation at the right time to avoid a penalty. Instances where you may be charged a penalty for failure to notify include not telling HMRC when your new business makes a profit and you become liable to pay tax. You must also let HMRC know when you start a company that must be registered with the organisation – for instance, when excise duty will be charged.

The penalty will be calculated based on Potential Lost Revenue (PLR), which is the amount of tax that would have been payable if HMRC had been aware. If you come forward to report the failure to notify to HMRC, the penalty may be reduced.

Check your tax returns and documents for errors

Before submission of any documents, including your self-assessment tax returns, check them for errors as you may be charged for mistakes that lead to the incorrect amount of tax being calculated. There are some scenarios where HMRC will charge a penalty, which includes not taking ‘reasonable care’ and deliberately providing incorrect information. Keeping accurate and timely business records is an indication of taking reasonable care, and HMRC may reduce the penalty if this can be proven.

The penalty is based on the PLR and the reasons for the mistake being made. Depending on the nature of the error, the penalty will be charged based on a percentage of the tax that will become due when the error is corrected. Reductions can be made when you come forward to admit the error.

File all tax returns and documents in a timely manner

If you fail to complete and submit your tax return by the relevant deadline, you will be charged an instant £100 penalty. If you still haven’t submitted the tax return after three months, further penalties will be charged.

If you outsource accountancy, your advisor may be able to help you avoid penalty charges, although the legal responsibility for filing remains with you, the client. Call us today if you want more information on this complex subject.

Setting up in business as a limited company has various advantages. A number of people set up as a sole trader before converting to a limited company, generally due to the administration required when running the latter. However, the benefits far Read more

When you start a company, you must decide how you will record income and expenditure through the year. There are two methods used to record details and calculate profits, and these are the cash basis and accrual accounting methods. Of course, there are Read more