Before the rollercoaster last quarter of 2022, according to the Office for National Statistics, more than one in 10 UK businesses reported a moderate-to-severe risk of insolvency in August. High energy prices were cited as the most common concern.
Amid rising business insolvencies, these are times when keeping a close eye on your finances and planning ahead are key.
Whilst you can control how your business is run, the same cannot be said for your customers. It’s therefore worth a timely reminder of best practice for credit control:
- Keep an eye on debtor days and check if these have been creeping up
- Review customer credit terms
- Monitor customer credit scores using online monitoring providers
- Chase up late payers and encourage early settlement discounts
- Send statements
In addition, it is important to review your sales prices to see whether they reflect increased operating costs for your business. Whilst everyone is aware of energy prices and wages, there are also finance costs to bear in mind, such as interest rates, and a return to paying business rates for many.
Finally, from 1 April 2023 onwards, the UK moves to a hybrid Corporation Tax regime where there will be a small profits rate for companies with profits below £50,000 and a main rate for profits of more than £250,000.
Planning can be key here, as there are many factors that will affect the rate of Corporation Tax charged. Examples include asset investment, the timing of pension contributions, employee bonus provisions and year end cut-off procedures.
Director, PKF Francis Clark