Which one measure would most help your business survive a recession?

DanMartin · Oct 20, 2008

There's lots of talk among UK politicians at the moment about how small businesses can be helped through the economic downturn. But what do you think? Which one measure would be most beneficial to your business? Let us know in the poll above and add your comments below.

stockdam · Oct 20, 2008

My initial reaction is availability of cash. There are other things but I think cash is at the top of my list.

Lower bank charges would help as would better access to loans but I choose quicker customer payment. Unfortunately I can see that customers will be slower in paying and not quicker.

graemepirie · Oct 20, 2008

Although I voted for reduced NI contributions, simply on the grounds that any tax reductions are good, what I really think is that a lot of the current issues are down to fear driven (usually in glee) by the media.

A bit less negativity & we'd be a lot better off.

adventurelife · Oct 20, 2008

Red tape reduction please

All the rest businesses have a reasonable control over, and all though I like tax reductions we can live with current rates. Delayed VAT payments is a strange one, this must be a major contributor to the gov coffers and I cannot see any benefit in delayed payments as you always have to pay the piper sometime.

Now simpler VAT procedures not that would be useful.

debbidoo · Oct 20, 2008

I said NI contributions, but it was a toss-up between that and clients paying within 20 days.

Clients paying instantly, like my favourite client always does, would be the ideal scenario though

gamer1810 · Oct 20, 2008

Increased Bank lending..

Thats going to help business owners directly, but also indirectly as it will help thier customers and clients and get the ecomomy moving in general.

Simon-M · Oct 20, 2008

I don't think the government can help apart from giving us back our 2% they stole from us and gave to the rich fat cat bankers.

We want out corporation Tax reduced!!!!

deniser · Oct 20, 2008

Less red tape and in particular being able to employ casual labour without PAYE.

UKSBD · Oct 20, 2008

I agree with the less red tape and being able to employ casual staff easier.
Loads of times I have a few hours work that needs doing, I know someone
who could do it for me, but it is just too complicated having him do it.

DanMartin · Oct 20, 2008

logoquality said:
I don't think the government can help apart from giving us back our 2% they stole from us and gave to the rich fat cat bankers.

We want out corporation Tax reduced!!!!

Good point. I've added a corporation tax cut as an option.

dave_n · Oct 20, 2008

clear and easy 'green business incentives'

spigwell · Oct 20, 2008

A VAT allowance would help a lot of small businesses.

That would mean paying nothing on the first say £50k or £100k and only paying vat on everything over.

Jeff-Smith · Oct 21, 2008

A business can survive a long time without any profit, but it cannot survive one day if it does not have any cash.

Tax breaks are OK if your still in business at the end of the year, but they won't help you to survive, only cash can do that.

I don't look to the government for any help, the odds are better on the lottery at 15,000,000 to 1

DanMartin · Oct 21, 2008

From the results so far, it seems late payment is definitely most entrepreneurs' key concern.

The government has just unveiled a series of measures it says will help small business owners through the economic downturn. Included in the package of support is pressure on public sector organisations to pay suppliers within 10 days. I'd be interested to hear UKBF members' thoughts.

elaine@cheapaccounting · Oct 21, 2008

DanMartin said:
Good point. I've added a corporation tax cut as an option.

I would have voted for that but it wasn't there when I added my vote

DanMartin · Oct 21, 2008

elainec100 said:
I would have voted for that but it wasn't there when I added my vote

Sorry about that Elaine!

CKG · Oct 21, 2008

They need to look at and improve payment practise in the construction industry, both public and private sector.

It's the little guys that rack up horrific ammounts of debt and function as an extra interest free credit line for the big boys. We need more protection in these times.

I might be able to employ more people to work in this sector if I wasn't so worried about my cheques not coming through when they're supposed to.

Fuzzy · Oct 21, 2008

I have put less red tape as I guess we get paid in advance for work, but for some companies that must be a nightmare with cashflow!

rossoonline · Oct 21, 2008

It's interesting to see the most popular choice being about customers paying up within 20 days.

If that's true, is there a chance of any of the debt collection software out there being useful for this? I've been using software called debt collector solution recently and I'm hoping to see some good results.

Estimator · Oct 21, 2008

With a recession, I can't see any of the above being implemented, if anything they will get worse.

The govt needs a hell of a lot of money to finance this bailout & pay for the increased benefits of all the unemployed and homeless- they won't cut VAT, tax or NI. Scary to say this but - they need to increase taxes.

Banks won't lend cheaply again for a long time, because they have been burnt, they will do all they can to get back in the black if they can - that means increased bank charges and loan rates (back to the days of - 'we are happy to lend you money if you can show us you don't need it!').
Customers won't pay you earlier in a recession, for the simple reason that they are struggling too.
Limit red tape & change regulations - if this means putting some civil servants out of work, the govt won't do this, it's not a vote winner.
BTW I haven't voted! I have been ready for the recession for some time.

Wild Goose · Oct 21, 2008

As someone said earlier, cash is king! Businesses cannot last five minutes without it.

That's why I think the next natural move for the government will be to underwrite business debts - mass-factoring's the obvious route. Shouldn't be too difficult now that the state owns the banks. Otherwise even profitible businesses will go bust because they won't be able to pay staff or suppliers.

btw the feedback from my local HMRC collectors - the people on the ground - is that unprecedented numbers of businesses are already paying their VAT, NI, or tax arrears on the drip by special arrangement. So in a way the government's already embarked on funding small businesses.

garybooth · Oct 22, 2008

From all the replies I have seen so far, people seem to be focusing on things over which they have little, or no control.

What about focusing on something you have got full control of - i.e. driving down costs by making the business operation as efficient as possible.

Cheers, Gary .

RobertG · Oct 22, 2008

My experience has shown that HMRC (tax (personal and corporate) and VAT) are not sympathetic to late payments. They are aggressively chasing any missed payments with the argument `prove why you cannot pay`.

A deferment with interest is rediculous. If they cannot pay a VAT bill now how will they accrue enough to pay it with interest in 6 months time.

Payment instalment plans without interest for those that need it will ease the situation for many small businesses. If the government, like Northen Rock, demands payment and forces people to the wall what is the result? - they get nothing, lose tax/NI income and end up shelling out to support, through benefits, the very people they have `closed down`.

gamer1810 · Oct 22, 2008

garybooth said:
From all the replies I have seen so far, people seem to be focusing on things over which they have little, or no control.

What about focusing on something you have got full control of - i.e. driving down costs by making the business operation as efficient as possible.

Cheers, Gary .

Yes, a good point Gary! Probably better to focus on what we can affect and not think too much about what we can't!

And dont forget to keep up the marketing effort!

officeangel · Oct 22, 2008

The only one there that would have any significant impact on my business is cutting corporation tax.

My plan for getting my very new business through the recession is to keep working, keep focussed and to put money and efforts into marketing.

Interesting how many people have gone for paying within 20 days, I am either very lucky or very good at credit control because my average turnaround time on payment is less than two weeks. But I'm not complacent and I do understand how vital that cashflow really is.

KidsBeeHappy · Oct 22, 2008

Dan

Your survey ignores most small business owners, those that operate a sole trader or partnership. They don't pay corporation tax. And they've got a big payment due in January.

DanMartin · Oct 22, 2008

Boxby said:
Dan

Your survey ignores most small business owners, those that operate a sole trader or partnership. They don't pay corporation tax. And they've got a big payment due in January.

Good point but I was trying to cover all options.

KidsBeeHappy · Oct 22, 2008

Self Assessment tax (as corp tax) is paid on profits, and paying tax on money that you've just stuck straight back into the business to keep it going kind of hurts! As well as creating a cashflow problem when the tax is due.

There are no reliefs for reinvesting profits back into the business (as far as i'm aware of), espec if its for working capital to keep the business going as opposed to delayed capital allowance reliefs for investing in assets. There are such reliefs for investing capital gains into a business, but not for reinvesting income/profit.

This would help. And tax reliefs can be temporary.

Wild Goose · Oct 22, 2008

Boxby said:
Self Assessment tax ... is paid on profits, and paying tax on money that you've just stuck straight back into the business to keep it going kind of hurts! As well as creating a cashflow problem when the tax is due.

There's a possible useful election, Boxby, in changing your year-end accounting date for sole-traders or partnerships. Can be especially useful for young businesses where profits are rising - sometimes reduces tax and more often postpones payment.

I'll give you an eg of postponing tax. Suppose you are a sole trader and your year end is 31st March (or 5th April - same thing). The tax you will next pay in Jan & July 2009 will be based upon your profits for your trading year ending 31st March 2009.

Now suppose your profits were rising, a change of accounting year end date to 30th April would mean that the tax you will be paying next Jan & July 2009 would instead be based upon your profits for your trading year ended 30th April 2008. Very handy if your profits are rising, or if you didn't make much in the "year" that's being double taxed (in fact 11 months would be double taxed).

That's just a simple eg that might cut taxable profits and aid cashflow. Caveat: it might have the opposite effect. Depends upon the circumstances. You need to ask your accountant to plan this and work out the possibilities and consequences. Oh, and there are time-limits and other constraints (generally, you mustn't change more than once every five years; and there can be a downside the day you cease trading).

I have one or two clients we're changing right now who won't be paying much tax next year - because they've effectively postponed their hefty payments for a year. Anyhow, that's just one example.

JamieM · Oct 22, 2008

I'm in the minority that picked delayed VAT payments but not because we couldn't pay, just because we could put the money to quick good (profitable) use.

danpaul · Oct 22, 2008

By freeing up the cash (ease of borowing within limits) businesses can undertake forecasted projects thus hiring (creaing new jobs) resulting in more consumer spending.

wordsinart · Oct 22, 2008

Agree 100% with the less scaremongering in the press....

The only person that benefits in boom or bust on both sides of the pond is a certain Mr Rupert Murdoch who feeds the masses their fix of gloom.

Fox/Sky - the new world order....

An Oasis · Oct 22, 2008

If our governments were not so wasteful in their operations then they could offer all the options and still have funds in the kitty. You just have to look at how many large projects overrun and go off the scale if anyone on this forum operated on the same basis they would be dead in the water.

It's a no vote on any option from me. I'm tired of being offered stupid pathetic crumbs from our idiots in power. It is time that they became accountable.

Lauren_GB · Oct 22, 2008

Its interesting to see that getting customers to pay within 20 days is quite popular. At the moment if you are giving them 30/60 day credit and they aren't paying when the payment is due , how would you ensure that they will pay you within 20 days?

UKSBD · Oct 22, 2008

I can't see how a cut in corporation tax can help small businesses that are
struggling. If they are struggling they can't be making much profit, so
what good is a cut in corporation tax to them?

DanMartin · Oct 23, 2008

The FSB has made some interesting proposals including a £1bn survival fund. What does everyone think?

danw · Oct 23, 2008

Lauren_GB said:
Its interesting to see that getting customers to pay within 20 days is quite popular. At the moment if you are giving them 30/60 day credit and they aren't paying when the payment is due , how would you ensure that they will pay you within 20 days?

Talking to a plasterer yesterday he said that he was once owed £4,000 for a job. After so many weeks of chasing and waiting, he tried calling HMRC and said something like "this company owes me £4,000, which 25% of will be yours. So if you chased them for payment they're going to pay up and then I'm happy and you're happy".

Ok, there's a lot of what-if's, but that might help encourage faster payment?

JamieM · Oct 23, 2008

DanMartin said:
The FSB has made some interesting proposals including a £1bn survival fund. What does everyone think?

I think there is no indication of what it actually is. :|

Wild Goose · Oct 23, 2008

danw said:
Talking to a plasterer yesterday he said that he was once owed £4,000 for a job. After so many weeks of chasing and waiting, he tried calling HMRC and said something like "this company owes me £4,000, which 25% of will be yours. So if you chased them for payment they're going to pay up and then I'm happy and you're happy".

Ok, there's a lot of what-if's, but that might help encourage faster payment?

A number of the companies I'm close to are finding that, having exhausted their credit terms with usual suppliers and being unable to settle their accounts on time, they simply go instead to smaller alternative suppliers and order. Thinking it must be their birthday, the smaller firms trip over themselves to supply their wares to their newly acquired customers blissfully unaware that they will be at the bottom of the payment pile.

Why are (my) companies acting that way? Because someone hasn't paid them, so they in turn are unable to pay their regular suppliers and are forced instead to open accounts with new and unsuspecting suppliers.

Your plasterer probably had a "won't pay" customer; the slump has turned these into "can't pay" customers.

adventurelife · Oct 23, 2008

I know all businesses cannot do this for cash flow reasons. However, if you can you can win a lot of friends and you do not know when you will need them going forward.

I am currently paying all my suppliers within 7 days of production of invoice and service rendered. My normal terms were 14 or 30 days for them. I view this as a time when I should help as many of my suppliers as possible as I do not know when I might need their support going forward!

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Which one measure would most help your business survive a recession?

Which one measure would most help you survive a recession?

Delayed VAT payments

Cut in National Insurance contributions

Increased bank lending

Less red tape

Customers paying up within 20 days

Lower bank charges

Delayed introduction of new employment regulations

Cut in corporation tax

graemepirie

Simon-M

spigwell

CKG

Fuzzy

rossoonline

wordsinart