The World Cup may be over, but it’s reminded us that success isn’t built over ninety minutes.
By the time the referee blows the whistle, months of preparation have already happened behind the scenes. Training, analysis, planning, recovery, selection.
Match day brings all of that work together. Financial commitments for professional practices work in a similar way, except there’s no extra time available once deadlines arrive.
When a tax or VAT payment becomes due, there isn’t an extra week to get organised because a client payment hasn’t arrived, or a large matter is still waiting to complete.
The deadline remains the same. But much like your favourite football team, your firm can prepare months in advance -whether that’s with forecasting or leaning on external law firm finance– to ensure you meet deadlines comfortably, without putting unnecessary pressure on your cash flow.
Why firms feel the heat in July
July is one of those months where several financial commitments can arrive at once.
While clients are on holiday, the out of office doesn’t apply to your firm’s regular commitments. VAT payments, Corporation Tax, payroll, supplier invoices and the normal costs of running a practice all still need to be met. But approvals can take longer and payments that were expected this month can easily slip into the next.
It’s something we see across many UK professional practices. A law firm may have plenty of work in progress but little of it has reached final billing, creating cash flow delays from client lock-up. An accountancy practice might be between busy periods and could be experiencing fluctuations in cash flow. Barristers can often wait months before fees are recovered.
The cash may not have arrived yet, even when the work is there. Which is why forward planning is so critical.
Don’t wait until the deadline is close
One of the biggest mistakes firms make is treating a tax payment as a problem to solve when the payment deadline is just days away.
By that point, the options are naturally more limited and you may feel reliant on your reserves to make payment.
Planning earlier instead gives you time to look at the wider picture. You can decide how to protect cash reserves, whether tax or VAT funding solutions would help smooth the timing of payments and how to avoid putting investment plans on hold because one liability happens to fall due.
The conversation shifts from “How do we pay this?”, to, “What’s the best way to manage this without disrupting the rest of the business?”
That small change in thinking often leads to more informed financial decisions for firms.
A simple preparation checklist
You don’t need an elaborate forecasting model to identify potential cash flow pressures. Setting aside some time to review the next couple of months can be enough.
Before your next tax or VAT deadline, ask yourself:
- What payments are due over the next eight to twelve weeks? Include VAT, tax liabilities, payroll, partner drawings and supplier payments.
- When is cash actually expected to arrive? Base this on realistic payment dates, not when invoices were issued.
- Could any significant client payments be delayed? Think about how that would affect your available cash flow and operations.
- Would meeting these liabilities leave the business feeling stretched? Consider whether any growth investments or day-to-day spending would need to change.
- Have you explored funding before you need it? Exploring options early with a professional practice finance provider usually gives you more choice and time to make the right decision.
A review like this doesn’t need to happen every week. But completing it before key deadlines makes it much easier to spot potential issues while there’s still time to deal with them.
Look beyond the payment itself
Paying HMRC on time matters, but so does everything else that happens in between and after.
If settling one liability means delaying recruitment, shelving a technology investment or putting growth plans on hold, it’s worth asking whether there’s a better way to manage the timing.
Good financial planning gives your practice choices. It helps protect day-to-day operations while keeping longer-term plans on track.
Unlike football, financial deadlines don’t have extra time.
Once the payment date arrives, the decision has already been made. Planning ahead gives you the chance to make that decision on your own terms, rather than it being forced under pressure.
If an upcoming tax or VAT payment is likely to put pressure on cash flow, Shire Professions Finance can help you spread the cost while protecting working capital for the rest of your practice. Speak with our friendly team of experts today to see how we can help.