UK Businesses Owe £2.6bn in Overdue VAT

The HMRC are owed £100m more in arrears this year as UK businesses struggle to pay their taxes UK businesses owe the HMRC £2.6bn in overdue VAT, according to figures released by specialist finance provider LDF. The deficit has increased by £100m in comparison with last year, causing concern for UK businesses struggling to fund tax payments. For companies with a turnover in excess of £1.35m, VAT bills are issued on a quarterly basis and calculated on a company’s invoices, not the amount that has actually been received from customers over that period. Businesses are therefore often unable to keep up with their taxes as they are still awaiting payment from customers. This struggle to meet VAT payments could especially be an issue for small and mid-sized businesses as a recent report by the As... »

Small Businesses Losing Thousands in Debt Every Year

34% of small and mid-sized businesses are failing to chase-up late payment debts, despite billions being owed Research shows that 34% of small businesses fail to pursue debtors, with 81% of businesses finding it ‘too uncomfortable’ and a fifth fearing it will cause them to lose customers. The report, by credit control service Satago, highlights that late payments remain a huge problem for the small and mid-sized business community with only 17% stating that there has been an improvement. This is not surprising considering a third of small and mid-sized businesses are writing off debt every year with 50% admitting that money could have been recovered if they had made an effort to pursue it. Furthermore, although businesses continue to lose money on unpaid debt and late payments, 77% do not ... »

Business Owners Unaware of Business Partner Debts

The results of a survey published by online directory suggest that one in three business owners were unaware of their business partner’s debt, while roughly the same number admitted they had been lied to about the state of a business partner’s debt. More than 20% of respondents said they had found themselves caught up in “financially unsound business relationships” after failing to study company credit reports. More than three-quarters (77%) neglected to research a business partner’s financial history by obtaining a business credit report. Such reports detail a businesses’ financial health and history by outlining county court judgments, which stay on the register for six years. Dominic Blackburn of said: "We advise businesses to use a com... »

Don’t let late payments destroy your business

Small and medium sized businesses continue to be hard hit by the credit crunch, with late payment resulting in debt recovery problems, warns the Association of Chartered Certified Accountants(ACCA) Glenn Collins, head of advisory services, ACCA UK says: “Good credit control is essential at all times, but particularly at the moment when, for so many businesses, every penny counts. If you are having difficulty in recovering costs then seek assistance from a chartered certified accountant who can make you aware of your options.” When controls such as credit checks, sticking to credit limits and monitoring activity of debtors fail, debt recovery will be the only option. The following are ACCA’s top ten tips in securing debt recovery: Decide whether it is worth a fight. There ... »

Debt Factoring and Invoice Discounting

Financial services companies that provide businesses with debtor finance, secured against unpaid invoices are known as Factors and Invoice Discounters. Factors buy your trade debts and typically will pay 80% to 85% as soon as they receive a valid copy invoice. The balance, less charges, is paid when the customer pays. The Factor collects the debt from your customer directly but will usually agree collection policies with you, in order to ensure faster customer payment without loss of goodwill. Some Factors also provide bad debt insurance. With invoice discounting responsibility for collection of debts remains with you and the service is normally undisclosed to customers. Payments that you receive are paid into a bank account administered by the Invoice Discounter and you are then credited ... »