2011 was a pretty toxic year for most people and left the UK economy reeling. Suddenly, major high street names are falling like nine pins and there seems to be no end to the ‘butterfly effect’ caused by the irresponsible actions of a few reckless and greedy people in the banking sector. However, there are ways that smaller businesses can protect themselves from the effects of the financial crisis and, while not making themselves exactly recession-proof, the shrewd entrepreneur can certainly put in place measures to limit damage and indeed nurture increased revenue streams.
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Large businesses are notoriously bad at paying the invoices of smaller ones. However, one option to speed up cash flow is invoice factoring. However, there are pitfalls as well as benefits.
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What the UK Government defines as micro and small business communities (less than £440,000 turnover and ten or fewer employees) constitute approximately 60 per cent of all companies registered at Companies House, plus there are the tens of thousands of sole traders and partnerships in Britain. So, it is no surprise – and indeed it is good news – that the Government is looking at how it can help small businesses play their part in steering the nation away from an economic abyss.
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The profit and loss account forms part of a business’ financial statements. It summarises the trading results of a business over a period of time (typically one year). In contrast, the balance sheet is a ‘snap shot’ of the assets and liabilities of the business at a particular point in time.
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