Economic recovery can often bring another set of challenges which is to spot and tackle financial distress. Opening the latest Business Finance Bulletin, we look at a new guide from R3 on identifying financial distress and the options available to deal with it.

Having access to support and guidance from industry experts is always welcome. A number of credit experts have launched a support group to assist businesses with questions on how to manage credit-related problems. Could this resource help you avoid falling foul of late payment and bad debts?

Managing cashflow is a key priority for any business. To wrap up this Bulletin, we review the forthcoming launch of Tide Bank’s Cashflow Insights app which is designed to help businesses better forecast and control their cash position.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Google, Spotify, Stitcher or itunes channel.

The start of a New Year can have a negative impact on a company’s cashflow but at least there’s a solution….

Due to illness, BLS’s Rob Warlow has been unable to prepare his weekly video Bulletin, so this week, a text-only version.

A Triple Whammy Cashflow Crunch

Whilst this time of year is the season of joyful celebration, for some business owners it can be a stressful time when it comes to juggling and managing cashflow.

As we approach the year-end there are businesses which can face a triple whammy hit to their cashflow. Each of these reasons is bad enough but combined, they can cause chaos to your cash position.

• If March is your Financial Year-End, then your Corporation Tax will be due by the end of December
• This quarter could coincide with your VAT payment period
• And if that’s not enough, you may be faced with a fall in sales and hence reduced cashflow, associated with the holiday period

In order to keep you credit record and payment profile ‘clean’ you need to be what you can to ensure these commitments are met.

But what to do?

Here are some steps to take.

1. To preserve cashflow consider talking to a select number of your creditors and see if they will agree to extended payment terms
2. Chase any outstanding invoices owed to you which are overdue – don’t be shy in chasing, this is money legitimately owed to you!
3. Take out a short-term loan (terms from 3 months to 24 months) to help put your cashflow back on track
4. Consider using Selective Invoice Discounting to unlock cash tied up in outstanding and new invoices

Don’t be hostage to a cashflow crisis; take firm action.

If you want to know more about short-term loans or Selective Invoice Discounting get in touch and we will be happy to chat you through the options.

Personal Guarantees… What Exactly Are You Signing Up To?

If you have every borrowed money and operate through a Limited Company then, as a Director you have probably been asked to sign a Personal Guarantee.

But do you know what signing such a document entails?

According to findings in a survey carried out Wirefund, a working capital loan provider, a large number of business owners are not aware of what they are signing.

When asked to describe what they understood a Personal Guarantee to be, just 45% could accurately outline what was at stake, which is that the bank would ultimately be able to repossess your personal assets if the business cannot pay back the loan.

Worryingly 21% said that a business owner/director who signs a Personal Guarantee would simply be personally guaranteeing that the money owed would be paid on time, to the best of their ability… a long way off reality.

Despite this lack of understanding, the majority of business owners have agreed to provide a Personal Guarantee when borrowing money. The survey revealed that 79% stated they had not been put off taking a business loan simply because it included a request for a Personal Guarantee.

The bottom line is that ultimately your personal assets can be at stake but in the survey 61% were not aware of this.

In the vast majority of cases, when lending to Limited Companies, lenders will want a Personal Guarantee, so be mindful of what you are entering into. Wirefund on the other hand is one the rare lenders which don’t insist on a Personal Guarantee.

To find out more about their loan product visit their website www.wirefund.com

That’s It…

That brings this text-only version of our weekly Business Finance Bulletin to a close. We hope that normal service will be resumed next week!