Spread your HMRC VAT bill over three months!
Did you know, you can spread the cost of your VAT bill over three months via a VAT loan from WestWon?
Many SME business owners will ask us “why does a VAT loan product actually exist? Surly, a business has collected in VAT revenue and the money has been put aside for paying the bill three months down the line.”
It can be simply that your purchases and sales invoices are out of synch. We see this ourselves where at the end of the month, our sales team are keen to invoice deals but then we might get the rent bill or other large expenses in the first week of a new VAT quarter. Again, taking our company as an example, we have some large unpaid sales invoices going back to a prior VAT quarter. We have to pay the VAT but have not received the cash in yet.
Simple budgeting for a HMRC VAT bill
Solicitors are one sector of UK companies that regularly use VAT business loans. We asked one solicitor why do they take out a VAT loan? Their answer was quick and simple, they wish to pay their VAT bill like they would their rent, rates or salary costs, i.e. on a monthly basis as opposed to a quarterly basis.
Architects also are enthusiastic about VAT bill loans. The Finance Director of one architect practice we work with explained. “We have been using WestWon for many years to arrange VAT and Corporation Tax funding. On average, we will fund three VAT bills every year. In the last 15 months, we have funded £425,000 of VAT and Corporation tax bills via WestWon. For us it’s a guaranteed extension to our bank overdraft facility. We do not have to ask our bank for an increase in the overdraft facility with the charges and time this takes. We just budget to repay the VAT loan every month as opposed to setting aside money on a quarterly basis.”
VAT funding is a positive way to borrow
If you are not making sales, then you have no VAT to pay to HMRC. The fact you have a VAT bill to pay is a positive thing. The fact that you wish to pay your VAT bill on time is equally positive. Its show you have confidence in your business. It may be you have been buying stock or in the case of architects, solicitors and accountants, you have work in progress or are generous with client payment terms.
WestWon and the banks we fund VAT loans through follow this logic. This is reflected in the low amount of bad debts experienced in the VAT funding sector. To date, WestWon have not had one bad debt from clients undertaking a VAT loan.
Our doors are open to all UK companies that want to finance their VAT bill.