The budget creates further cashflow restrictions for businesses

Its been described as a “big budget” and, as expected, the changes announced by Rachel Reeves with regards to businesses has caused significant concern in the business world already. Specifically, the rise in employer National Insurance contributions by 1.2%, from 13.8% to 15%.

This will cause additional immediate difficulties for businesses already struggling in the current economic climate, who are now going to encounter further challenges with their cash flow, which may well cause many to fall into financial distress.

It will, therefore, be of the utmost importance to those businesses to protect themselves and their cash flow. They will need to make sure that they collect payment of their own invoices sooner rather than later. This will likely result in a number of businesses reducing their payment terms, and increasing the level of aggression in relation to their cash collection efforts. It will also most likely lead to higher levels of litigation when their customers do not pay within those reduced new credit terms.

It is going to be more important than ever for businesses to ensure that they recover cash rightfully due to them as quickly as they can. The threat, and sometimes use, of litigation is often a powerful tool in their armoury. I suspect that this tool is going to be used more often in the next year or so.

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.