Tips To Cashflow Success

Cashflow funding of a business is key for its survival. A number of businesses fail within their first two years of trading, not because they didn’t have a good product or service, not because they didn’t have a market. They simply ran out of cash.

Sales Income

Prepare a detailed cashflow of your normal business trading, information from Sales already in your diary, if you have been trading for a few years. Use past history to project forward. For the new business set an achievable goal. Always look ahead a minimum of a year, three years if possible.

You may have peaks and troughs, downtime or seasonality, build these into your forecast.

Don’t forget VAT if that applies. Ideally shown it separately, and offset the VAT on purchases. Your sudden inflow of cash may belong to the Inland Revenue.

Your Costs

Main costs first

Materials
Wages
Rent
Travel etc.

At the bottom, how much do you have in the bank to start off with. Show the opening balance of the bank.

We always look at forecast cashflows, ie a budgeted one along with an actual one. As the months pass by update the cashflow with your actual figures and roll forward. So that you are always looking at a year to date. It does not necessarily need to be in line with your year end. Do a separate one for the year end if necessary.

By now you will know ahead of time your cashflow issues, peaks and troughs, you can now put a plan of action to make sure that you are covered in the troughs, and are saving in the peaks.

If you need a large amount of cash in six months time. Don’t leave the sudden influx of cash to the last minute. Build up over a period of time.

You might be wanting to buy capital expenditure, or take on more staff, it will help you predict when this can take place.

Look at your marketing to increase sales. Check your margins to make sure your sales cover your costs. Keep a close eye on the costs themselves.

Look at other options for finance other than your cashflows from the business.

Gain credit from your suppliers
Finance leases from the banks and other money lenders
A mortgage

Your credit score can even affect you being able to take on a large contract. You will still need the credit from your supplier to make that important sale.

By gaining credit it will increase your credit score and make you more attractive to lenders.

Nicola Cross
26/9/11

This blog is intended for information purposes only and is only advice from past experience, you may have other suggestions of your own. It is not intended to be used to make all of your business decisions but as a guide only.

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Rates and Threshold 2021/2022

All the important rates and threshold for the tax year 2021/2022

 

National Minimum Wage


This takes effect from 01 April 2021 and all workers are entitled to.

 

Category of worker

Hourly rate

Aged 23 and above

£8.91

Aged 21 to 22

£8.36

Aged 18 to 20

£6.56

Under 18 (but above compulsory school leaving age)

£4.62

Apprentices aged under 19

£4.30

Apprentices aged 19 and over (but in the first year of their apprenticeship)

£4.30

 

Please note the age rate bracket has changed from previous years also.

 

PAYE Tax Rates and Threshold


These rates depend on the amount of income you earn.

 

Personal allowance

£12,570

Basic tax rate – 20%

£12,571 – £37,700

Higher tax rate – 40%

£37,701 - £150,000

Additional tax rate – 45%

£150,000+


Employment Allowance

 

Employment Allowance allows eligible employers to reduce their annual National Insurance liability by up to the annual allowance amount.

 

Employment Allowance

£4,000

 

Statutory Sick Pay (SSP)

 

The same weekly SSP rate applies to all employees. However, the amount you must actually pay an employee for each day they’re off work due to illness (the daily rate) depends on the number of ‘qualifying days’ they work each week.

 

Number of qualifying days in week

1 day to pay

2 days to pay

3 days to pay

4 days to pay

5 days to pay

6 days to pay

7 days to pay

1

£96.35

 

 

 

 

 

 

2

£48.18

96.35

 

 

 

 

 

3

£32.12

£64.24

£96.35

 

 

 

 

4

£24.09

£48.18

£72.27

£96.35

 

 

 

5

£19.27

£38.54

£57.81

£77.08

£96.35

 

 

6

£16.06

£32.12

£48.18

£64.24

£80.30

£96.35

 

7

£13.77

£27.53

£41.30

£55.06

£68.83

£82.59

£96.35

 

Dividend Allowance


You also get a dividend allowance each year. You only pay tax on any dividend income above the dividend allowance.

 

Dividend Allowance

£2,000


Mileage Allowance


The allowed deductible rate per mile for business use.

 

Type of vehicle

Rate

Car

45p (for the first 10,000 business miles, then 25p for each subsequent mile)

Motorcycle

24p

Cycle

20p

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