winter cashflow crunch

Avoiding the Winter Cashflow Crunch

Victoria Scally News

The winter can often be a time for worry for many owners. Depending on your business, it can be a time where managing cashflow, where cash is coming in vs what needs to go out, can be a challenge.

Add to this 3 (or more!) ‘Lockdowns’ for a nasty virus and the future could look bleak. The good news is that with careful planning, some of these ‘cliff edges’ can be removed.

In this blog we wanted to give you some tips and our thoughts on what you can look at to help:

Create a general plan

It is always a great idea to have a plan for how your cash will look over the coming months.

Make sure you plan out, in a really simple way, your expected ins and out over the next few months. You can use our free downloadable spreadsheet from our cashflow blog to help you do this. 

Dong this can help you see where problems might occur in the future, and allow you to plan for how you might deal with this.

Action point: Download this spreadsheet and plan your cash.

Credit Control (a.k.a Chasing Money).

If you sell on credit, for example you give your customers 14 days to pay, it’s important to be on top of it. There is often a ‘lag’ in payments around Christmas and the new year in the small business world, as everyone breaks and returns to work.

History shows as we approach this period, money can be tight for people. If you are dealing with businesses, you have these Christmas closures and new year back to work etc to deal with. This can impact on when you get paid.

Action point: Make it a diary point now to regularly chase these invoices.

Personal tax deadline 31st Jan 2021

Any personal tax you have to pay is due on this date. You need to file your tax return to understand what you liability is.

Due to COVID19 business support measures, you can delay the tax due if it is under £30,000. In order to do this you will need to make sure your tax return is filed with HM Revenue & Customs.

On this payment plan you will be able to spread this over 12 months in equal instalments. 

If your debt is over £30,000, you still could get time to pay, but will need to contact HMRC payment helpline.

Action point: File your tax return. If you cannot pay, go to and see how you can spread your payments out.

VAT deferral 31st March 2021

During ‘Lockdown 1’ you could defer your VAT due between March and June. It was originally payable in 31st March 2021.

This combined with personal tax and potentially Bounce Back Loan repayments, (which we will talk about below) would mean quite a cliff edge in early 2021.

You can now spread this VAT over 11 equal instalments in 20/21. There will be an ‘online opt in’ service in early 2021 here.

Bounce Back Loan Repayment 

If you took a Bounce Back Loan early in ‘Lockdown 1’, you will have to start repaying this soon.

There are now a few ways to make the repayments much lower. You can (under a few conditions):

  • Spread the loan over 10 years, making repayments smaller each month.
  • Ask for interest-free payments for 6 months. You can do this 3 times over the loan.
  • Ask for a payment break for 6 months – you need to have paid 6 months first.

All of the above are arranged via your lender.

Action point: If you need to spread your payments, get in touch with your bank.

And finally…. Look at your payment terms

If you give customers credit, ask yourself if you can:

Tweak your terms to ask for more money up front?

Add a card facility to take deposits or earlier payments?

Take direct debit, or remove barriers for people paying you?

Action point: Give some thought to how your customers pay you. Don’t become a credit facility – late payment is a massive issue in the small business world.

That wraps up our tips on dealing with the winter cashflow crunch. If you need help planning your business cashflow, please do book in with one of our team.