Lambert Chapman LLP's Nick Forsyth looks at Law Firms and the Credit Crunch
The Law Society recently published the results from an online survey of its members regarding the effects of the credit crunch.
Many law firms highlighted the difficulty in paying their tax liabilities as one of the main concerns at the current time. Cashflow problems were being exacerbated by clients delaying the payment of bills.
A high proportion of the firms surveyed had relied on bank loans to bridge the gap between receipts and payments. Less than half reported difficulties in obtaining a bank loan, at the time of the survey.
Most respondents thought they would benefit from the 3-12 months tax deferrals that HMRC are offering through their Business Payment Support Service.
The survey also found overwhelming support for a return to a cash basis of accounting for small firms with annual turnover from £150,000 to £1,000,000.
The importance of careful planning
The results of the survey show that careful planning is needed in maintaining the firm’s cashflow and in preparing for the upcoming liabilities. If external financing is required, it will be best to obtain authorisation as early as possible.
Debt procedures may need to be tightened and clients reminded of credit terms.
The upcoming taxation liabilities will need to be clearly identified. The firm will need to ensure it recognises the importance of preparing budgets and forecasts.
How Lambert Chapman LLP can help you?
When preparing Financial Statements, our staff will seek to ensure all tax planning opportunities are identified to minimise potential tax liabilities.
With the increased pressure on cashflow, Lambert Chapman will be able to assist with the preparation of forecasts and projections and the monitoring of results. We would also be able to speak to the Firm's professional staff to make them aware as a group of the importance of sound principles surrounding the generation of cash.
If you would like more information on any of the above please contact Nick Forsyth on 01376 326266.
Date:18 February 2009
Lambert Chapman LLP is a limited liability partnership registered in England and Wales under registered number OC328593. The Registered Office is 3 Warners Mill, Silks Way Braintree, Essex CM7 3GB. Partner denotes member of the LLP.
Registered to carry on audit work and regulated for a range of investment business activities by the Institute of Chartered Accountants in England and Wales.
Registered with the Chartered Institute of Taxation as a firm of Chartered Tax Advisors
