How to find an alternative finance option which can offer a viable solution to avoiding late payment penalties
Late payments are an increasing concern for small businesses and a key contributor behind the rising amount of unpaid VAT.
Total VAT receipts reached £7 million in December 2016, 12.5% higher than the same month in 2015, according to figures released by HMRC.
During the year period from April to December 2016, total VAT receipts reached £88 million, 4.2% higher than the same period in 2015/16.
A separate study by Funding Options claims that businesses currently owe up to £2.6 billion in overdue VAT bills, rising from £2.55 billion in 2014/15 to £2.59 billion in 2015/16.
Conrad Ford, CEO of Funding Options, said: “Businesses not being able to pay their VAT bills on time is a problem that is not going away. However, by having to pay late they risk having their assets seized or their business shut down altogether.”
Boosting your finance
Alternative finance offers a viable solution for businesses looking to find the cash they need in order to avoid late payment penalties.
It is important to familiarise yourself with the different options available in order to secure the finance you need for your business.
Here are some useful options:
If you’re chasing late bills, invoice financing may provide money based on the value of unpaid invoices sent to clients.
There are two types – factoring and invoicing discounting:
Factoring allows providers to purchase the bill owed to you by clients and making them responsible for collecting debt.
Discounting is where the provider will loan you a percentage of the value of your bill but you will be responsible for collecting overdue payments.
Overdrafts and loans
Overdrafts can be a short-term solution to cover unexpected payments. However it is important to make sure that your business can pay back the funds before making any agreement with your bank.
Repayments are often made in instalments and interest may be charge on any outstanding debts.
Charging interest on late payments
Interest can be claimed if your client is late making a payment. By law payments are due late after 30 days for transactions if the client receives an invoice or deliver of goods or service.
Talk to Condies about securing your business finance