A number of SME’s suffer from late payments, which leads them to face mahoosive tax bills. Thus, leading them to dip into their cash reserves. Compromising working capital is inconvenient and should be avoided at all costs. This is why we have devised five tips for SMEs to increase efficiency and combat a cash flow crisis.
The Apprenticeship Levy is a governmental initiative that was launched in April this year. This has given businesses the opportunity to hire apprentices. As well as help existing employees to progress their skillset at a fragment of the cost.
Employers that have a pay bill of less than £3m annually are required to pay 10% towards the levy. And the government are required to contribute the remaining 90%. The initiative should be utilised by businesses, as the government will be contributing 90%.
SMEs can also save costs through research and development (R&D) tax relief. This can be done by claiming payable credits as a proportion of their qualifying R&D expenditure, which will reduce a companies tax bill.
In order for a project to be filed under the R&D umbrella, it needs to seen as advancing the overall knowledge and capability of a business in science and technology. Even those that are uncertain of the outcome of their venture can qualify for R&D credits, as long as the business is seen as investing in technological advancement in the form of products or services.
Since April 2015, the tax relief rates for this scheme have risen to allow 230% tax relief on R&D costs. Approximately £1bn in tax credits go unclaimed annually, so ensure your business does not miss out!
To ensure that late payments do not cause a cash flow crisis, an SME can spread the cost of their tax liabilities over a period of time. A specialist external finance provider can provide tailor made funding solutions to allow an SME to do this. Thus stabilising expenditure. Contact us to hear more about this solution.
All businesses should make sure they take advantage of tax relief opportunities. Certain types of capital expenditure allow commercial property-owned businesses to claim capital allowances, which is a form of tax relief.
Included in this is heating and air conditioning, specialist plant and machinery, communication systems, security and IT related investment, as well as costs that are associated with building refurbishments.
Think of your expenses
Last, but not least, streamline your business’s cashflow. Many businesses lose out on billions each year because they still rely on spreadsheets and other processes that are inefficient.
We have seen many businesses invest in automated systems and cloud-based solution and have reaped the rewards of efficiency. These solutions allow business to get rid of admin burdens, as well as free up valuable time.