Jubilee Celebrations Cause Cashflow Problems for SMEs
The Queen’s Diamond Jubilee could cause serious cashflow problems for UK businesses, according to RBS Invoice Finance, one of the UK’s largest providers of invoice finance solutions. With so many company directors, finance staff, and other signatories expected to take time off during the June celebrations, many important payments could be delayed. In addition, a large number of London-based employees are being encouraged by their employers to work from home during this period, which could cause further disruption.
RBS Invoice Finance has created a list of Golden Rules for any companies that are concerned about potential cashflow problems during this period. For a start, the company recommends re-visiting any current cashflow projections with a ‘worst case scenario’ in mind, so that SMEs can see exactly what impact late payers will have on the business. Businesses might be able to encourage some of these customers to pay more quickly by offering discounts for early payment.
Invoice finance is a flexible solution that helps companies to manage their cashflow during times when receivables may slow down, as it enables creditworthy companies fast access to cash secured against their order book.
Mark Qualter, Director of Strategy at RBS Invoice Finance, warns:
“The Queen’s Diamond Jubilee will provide a great opportunity for celebrations across the country, but UK businesses also need to be aware of the potential business impact of these festivities. A lot of directors and finance staff will no doubt use this occasion as an opportunity to take some extra time off work, which means that cheques may not be signed and payments may not be authorised in a timely manner. Unless companies begin to follow our Golden Rules plan for this disruption now, they could end up being crippled by cashflow problems later.”
To avoid any problems with cashflow, some businesses may also want to consider invoice finance, which provides up to 85% of the money that the company is owed within 24 hours of submitting an invoice; the rest is available less fees and charges once the invoice is paid. RBS Invoice can also help with collecting payments if businesses do not have the capacity to collect payments themselves. With this approach, companies can use their time and resources in a more efficient way, and concentrate on their day-to-day business.
“Cashflow is the lifeblood of all modern businesses, and especially important for SMEs and smaller companies. A wide range of solutions now exist to make this area much easier for firms to manage, but companies will need to take action now in order to benefit from a more structured approach to financial management – not just during the Queen’s Jubilee, but going forward as well.”