Businesses Raise Cashflow Concerns Following UK Budget

In the run up to today’s Budget, there was a general sense of doom across the nation. The significant fiscal black hole created concern in the business world that taxes would be inevitably rise.

Some of those concerns were borne out by today’s Budget, not least with regards to the increase in the minimum wage. Many businesses have been suffering with regards to the costs of running their business, and the increase in the minimum wage will simply exacerbate those problems, especially in the tourism and hospitality sectors.

This will cause additional difficulties for businesses already struggling in the current economic climate. These businesses are now going to encounter further cashflow challenges. This may well cause a number to fall into financial distress. This past 18-24 months have been difficult. Things unfortunately may well get a bit worse.

It will, therefore, be imperative for those businesses feeling the pinch to protect themselves, and to protect their cash flow. They will need to start collecting payment of their own invoices sooner rather than later. They will most probably do so by reducing their own payment terms and increasing their levels of aggression in relation to their own cash collection efforts. This will likely lead to higher levels of litigation which, if successful, may well have a knock-on effect to other businesses further down the ladder.

It is going to be more important than ever for businesses to ensure they recover their cash quickly. The threat of litigation is a powerful tool in these circumstances. I strongly suspect this tool is going to be used more often in the next few years.

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The information and opinions contained in this blog are for information only. They are not intended to constitute advice and should not be relied upon or considered as a replacement for advice. Before acting on any information contained in this blog, please seek solicitor’s advice from Gilson Gray.

David Alexander
Partner, Head of Debt Recovery

David is a founding partner of the firm and heads up our award winning Debt Recovery Team which is ranked band 2 in the Legal500 for Debt Recovery in Scotland. He is recognised as a Leading Individual in the Legal500 and is well respected for his straight talking, no nonsense approach to litigation. His clients like his speed, his results driven approach and his clarity on costs.