How is your cashflow affecting your commercial property operation?
If you’re a landlord who’s suffering from slow-paying occupiers or your landlord is making demands for payment earlier each month, you are not alone. According to a survey carried out by Venture Finance and Accountancy magazine, a third of accountants have seen debtor days increase to up to 14 days, with 18% talking of a wait of up to 30 days to receive payment; 5% had experienced a wait of more than 60 days.
Medium-sized businesses are seen as taking the brunt of the payment pressures ‘from all sides’, with ‘the resultant sap on cashflow’ being ‘singled out as their biggest challenge’, according to Venture Finance’s managing director Peter Ewen.
The survey also assessed the growth potential for their accountants’ clients. Only 25% of respondents said that their clients are showing growth; more than 50% reported growth to be ‘static’, while 71% said their clients had ‘halted’ plans for growth.
The issue of red tape is also investigated in the report. The government’s Localism Bill, possible changes to the planning laws, and Communities Secretary Eric Pickles’ recent proposal to make it easier to convert business property into residential, have all drawn comment and divided opinion within the commercial property sector; 55% of those surveyed pinpointed ‘red tape as a major limiting factor’ and 79% highlighted an apparent ‘complex business tax regime’ as ‘hindering growth’.
Of the accountants surveyed, 5.7% believe the 2% corporation tax cut to 26% will be of ‘significant benefit’, 66.8% foresee ‘a slight benefit’ and 16.8% expect it to be of ‘no benefit at all’.
It is clear that commercial property owners have many reasons why they may be finding things tough at the moment, but if late payment is one of them then it’s time to start looking more closely at the factors involved in this in order to nip it in the bud. Cashflow is essential for any business and in tough times a few late payers could mean the difference between inconvenience and insolvency.
