21 tips for 2021
How to manage cash flow in a small business
Whatever your business is and however big or small it is, you need control over your cash flow to make sure you stay afloat and keep moving in the right direction.
Let’s get our terms right: your cash flow relates to the predictions you can make about what your business can spend in the coming months.
We help startups and small businesses to understand and manage their cash flow right. In this post, we share our best tips on how you can do the same.
Make every penny count
It’s the old adage “look after the pennies and the pounds will look after themselves.”
Spending wisely means keeping a close eye on your outgoings and being able to justify every single business expense you make.
All expenses must bring new value to your business or they must represent an essential expense that you can’t avoid.
Remember: treat every penny as a prisoner.
Check who owes you money
It’s all too easy to generate and send invoices, then to forget about them and move on. But it’s wrong to assume that every invoice will be paid correctly or to the timescale you expect.
Do your checks: see that your invoices are paid properly and at the right times. If you’ve agreed 30 or 60-day terms of payment, your customers should stick to them. So long as both parties agree upfront, keep in mind that you’re allowed to set your own boundaries for payment.
The important thing is to follow up and ensure that what you’ve agreed is what’s actually happening.
This doesn’t have to be a manual chore. Cloud accounting software such as QuickBooks and Xero will show you at a glance who owes you money. Keeping a close eye on things should mean that more of your invoices are paid on time.
Keep your VAT money in a second account
If you’re VAT registered, it can be easy to forget that 20% of the takings that go into your main bank account will need to be paid back during quarterly VAT returns.
To avoid the risk of accidentally spending that money, we recommend creating a second bank account into which you place 20% of all income from your invoices.
That way, when it’s time to submit your VAT return, there’s no stress because you’ll always have funds available to pay the bill.
Set up alerts to check bank balances
Many bank accounts offer free SMS or app alerts to let you know when your balance is above or below a threshold. Take advantage of these so you can be informed of an unexpected drain or surplus on your account.
Checking your bank balance regularly is sensible practice – especially to help you avoid potential fraud – but the true view of your accounting situation should come from your accounting records, which we recommend storing through a cloud accounting package such as QuickBooks or Xero.
Let’s sum up
We hope these tips help you to take control of the cash flow in your small business.
If you need more advice or direct help managing your accounts, please get in touch with our Digital Solutions team at digitalsolutions@mooreandsmalley.co.uk.
This update originally appeared on the website of our colleagues at MHA Henderson Loggie
Brexit: At last, a Free Trade Deal
Brexit Deal: Imposition of Rules of Origin for goods set to be one of biggest changes for business
Following the news of a Brexit deal, Jonathan Main, VAT and Indirect Taxes Partner at MHA Moore and Smalley, says the agreement is excellent news for business but that businesses need to bear in mind that it does not eliminate the need to address rules of origins and other costly import formalities:
“A Free Trade deal with the EU is very good news, but it does not mean that everything will carry on as it does today. The deal means that there will be no import duties on the movement of goods produced in both the UK and the EU (the so-called ‘origin goods’). This is a massive boost for businesses on both sides. The most significant change businesses will have to navigate will be the rules of origin requirements.
“Unlike a Customs Union, a free trade deal is a bilateral agreement which only allows tariff free movement of goods produced in either the UK or EU. The finer detail of the trade deal will confirm the origin rules, but it may help to provide an illustration. For example, there are commonly three ways to assess the origin of clothing: the production of yarn; turning yarn into fabric; and turning fabric into a finished garment. Unless two of the three stages happen within either the UK or EU, the finished garment will not be a UK or EU origin good and as such will not benefit from tariff free movement between the EU and UK.
“Aside from rules of origin, import formalities will also rear their head. These will add to cost and reduce profit margins. Businesses importing from and exporting to the EU will need to consult with their customers and suppliers and decide who is responsible for import formalities. If the UK business agrees to take responsibility for import formalities, it will be shipping goods DDP (deliver duty paid) to its customers.
“DDP is one of a range of Incoterms, a set of internationally recognised rules which define the movement of goods between supplier and customer, and determine which party takes responsibility for freight, insurance, risk and import formalities on that journey. If a supplier sends goods DDP to its customer, it will have an obligation to register for VAT in the customer’s country, as it will be the ‘importer of record’ in that country. It may also have to appoint a fiscal representative to act on its behalf.
“No matter what the final fine print will look like, businesses in both the UK and the EU will need to adjust to the new way of operating and ensure they fully understand the impact on supply chains and profit margins.”
Find out more
In our latest Brexit publication we set out the key points to take-away from the announcement.
Attend our event
Join us for a post Brexit update and discussion on 6 January 2020.
Government announces further extension to Furlough Scheme
On 5 November 2020 the Chancellor Rishi Sunak announced that the Coronavirus Job Retention Scheme (CJRS) – also known as the Furlough scheme – will be extended for a further five months.
The furlough scheme was initially extended until 2 December. However, evidence from the first lockdown showed that the economic effects are much longer lasting for businesses than the duration of restrictions. Hence the Government has decided to extend the scheme until the end of March 2021, with a review in January.
CJRS key points to note
- The grant will be paid at the rate of 80% of reference pay, capped at £2,500 per month
- Employers will therefore still need to pay:
- Employer National Insurance Contributions (NICs), and
- Pension contributions
- Flexible furloughing will be allowed in addition to full-time furloughing
- Neither the employer nor the employee needs to have previously used the CJRS that was in place from March to October
- There will be no gap in eligibility for support between CJRS schemes
While the government updates the system, employers will submit their wage claim to the government, and be refunded afterwards. After that, they will be paid upfront to cover the cost.
Further details, including when claims can first be made in respect wage costs during November and how to claim this extended support through an updated claims service will be provided shortly.
It is still unclear what reference pay will be applied, as there are now ‘new’ employees able to participate. The working assumption is that, like the delayed JSS arrangements, it will be the higher of the normal regular contractual pay at 19th March or at 30th October. We will advise as soon as this is clarified or confirmed.
Qualification is as previously, but as a reminder:
Employers must have:
- A UK bank account and
- A UK PAYE scheme
- Agree any working arrangements with employees
Eligible employees are:
- Those on an Employer’s PAYE payroll by 23:59 on 30th October 2020. This means employees included in a Real Time Information (RTI) submission notifying payment for that employee to HMRC on or before 30th October 2020
- Employees can be on any type of contract
Need further advice?
We will provide a further update when more details are known, but if you have queries in the meantime please contact our tax team if you require advice on this issues.
Budgeting for January 2021 tax liabilities
The Engine Issue 8
Using Personal Data & Data Protection after 1 January 2021
Regardless of whether the UK and the EU agree a trade deal, if a business needs to continue to receive personal data from the EU for business use, they may need to take action on data protection.
If no UK data adequacy decisions have been made by the end of the transition period, UK businesses will need to map out data flows with their EU partners and put alternative transfer mechanisms in place to continue to lawfully receive personal data from the EU. Most commonly, this will require standard contractual clauses being put in place.
Businesses will also need to familiarise themselves with the data protection provisions of the Withdrawal Agreement, to ensure they are in a position to comply.
Refer to the Information Commissioner’s Office (ICO) website as they have detailed guidance on any additional steps businesses may need to take and an interactive Standard Contractual Clauses tool to use.
Further guidance is available online by searching for ‘using personal data from 2021’ on the GOV.UK website.
This update originally appeared on the website of our colleagues at MHA Monahans.

Remote Working – are you sure of the impact on your business?
Impact of Remote Working
As we have entered a second national lockdown in the UK and other countries globally are maintaining their own domestic restrictions, it is imperative to consider what impact remote working may have on your business.
Remote working can be broadly described as an employee performing their working duties in a location other than their usual place of work (for example, working from home instead of their usual office environment).
Whilst the idea of remote working is not a new one, recent events have forced many businesses to embrace this method of working, often to the fullest extent possible. The COVID-19 pandemic has led to the closure of international borders and countrywide lockdowns and this has had a significant impact on all workforces, whether they were already globally mobile or have had to become so due to these restrictions.
Remote working from outside the UK
Employees that work remotely, but still within their own country, are unlikely to create any global compliance issues for their employer. However, employers that have employees working for them outside of the employee’s home country will need to look closely at how this affects their business.
For many jurisdictions, an employee working in a country will bring with it associated compliance obligations, and costs, for the employer. This may be in the form of:
• a requirement to register the employer as having a presence in that country
• the operation of tax and social security withholding
• or an assessment to determine whether the employee has created a Permanent Establishment (PE) for corporation tax purposes.
Whilst this may bring associated administrative expenses for your business, failure to address these local compliance obligations can lead to costly penalties and difficulty to resolve any historical issues.
Moreover, as each country tackles the COVID-19 pandemic in their own way, it does mean less consistency when considering mitigating circumstances. For example, one country may lift travel restrictions before another, so an employee may still not be able to return to their usual country for work purposes but the authority in the host country may no longer allow a relaxation of local employer compliance obligations.
The key initial thoughts for your business – so you can be sure of the impact – are therefore:
• Do you have employees working across borders? Are you satisfied you have considered all local employer compliance obligations and accounted for these costs?
• Are you sure you know where all your employees are working? The pandemic has led to many different working patterns that may not yet have been communicated to you by your employees.
• If you are considering implementing, or updating, a remote working policy, possibly following a request from your employees, are you comfortable you can track their working pattern for employer compliance purposes?
Contact Us
Please get in touch by emailing us at info@mooreandsmalley.co.uk, if you need support.
This update originally appeared on the website of our colleagues at MHA Macintyre Hudson.
Self-Employment Income Support Scheme (SEISS) Grant Extension
Following the Chancellor’s announcement, as part of the Winter Economy Plan the SEISS continues to be a key part of the financial support that the Government, via HMRC, is providing to many self-employed people to help get through the economic downturn caused by COVID-19 and the lockdown.
Are you eligible?
To be eligible for the scheme you must meet the following criteria:
- Currently be eligible for the SEISS (although you do not need to have claimed the previous grants – this is explained below)
- Declare that you are currently actively trading and intend to continue to trade
- Declare that you are currently impacted by reduced demand caused by COVID-19 in the period of 1 November to the date of your claim
You are currently eligible for SEISS if you meet the following conditions. The first condition is that your self-employment income is less than £50,000 and the self-employment income must be more than half of your total income. This is met in one of the two following ways:
- Your self-employment income for 2018/19 is less than £50,000 and the self-employment income is more than half of total income for 2018/19.
- Your average self-employment income for 2016/17, 2017/18 and 2018/19 is less than £50,000 and that average is more than half of the average of your total income for the same three years.
The other conditions are that you:
- Have submitted your Income Tax Self-Assessment tax return for the tax year 2018-19
- Traded in the tax year 2019-20
- Are trading when you apply, or would be except for COVID-19
- Intend to continue to trade in the tax year 2020-21
- Have lost trading/partnership trading profits due to COVID-1
How does the grant extension work?
The extension will provide two grants for the six month period from November 2020 to April 2021. The grants will be paid in two lump sums, the first for the period from the start of November until the end of January, the second for the period from the start of February to the end of April. The second grant may be adjusted to respond to changing circumstances.
This grant is subject to Tax and National Insurance Contributions and will amount to 20% of your average monthly qualifying trading profits capped at £1,875 per month. This has dropped from the previous 70% with a cap of £2,190.
Making a claim
The government will release full details about when and how you can make a claim soon although we expect you will have to apply online via the government website.
Contact us
If you have queries regarding the SEISS please contact our tax team if you require advice on this issues.
A version of this blog originally appeared on the website of MHA member firm, MHA Tait Walker.