Figures produced within the last few weeks indicate that almost double the number of people paid tax at the higher rate in 2007 as compared to when Labour came to power in 1997 - almost 3.7 million people paid higher rate tax in 2007 compared to around 2 million ten years previously.

If you are an owner-manager of your own limited company or are currently self-employed, you may well be contributing to this statistic, although in almost all cases, there are simple methods that can be employed to avoid paying tax at the highest rate.

To find out an easy and very cost-effective way to reduce your overall tax bill, please email wes@a4gsolutions.co.uk, or log on to www.a4gsolutions.co.uk/taxsaver to book your FREE place at one of our TaxSaver forums.

Following on from last week’s article on cash flow problems, we will look to focus over the next few weeks on some of the reasons for poor cash-flow in small businesses following requests from some of our readers.

This week we will focus on the issues surrounding debtors and credit terms offered to customers.

Whilst it is usual for many businesses to offer credit to their customers, care must be taken to offer credit only to the right customers together with the right credit period.

With usual credit terms offered often being 30 days, you can expect that at least 1/12th of your annual turnover is tied up in debtors and therefore not available as cash. However, most businesses find that there is often much more than this owing to them at any one time, and so it is not surprising that this is one of the largest influences on cash flow.

If you find that the amount owed to your business is substantially higher than your credit terms suggest (e.g. If you offer 30 day terms, this should be approximately 1/12th of your turnover plus VAT), then you should revisit the ways in which you chase and collect your debts, as well as whom you offer credit terms to.

If you are concerned in the level of debts in your business and would like to free up more cash, please contact anna@a4gsolutions.co.uk for further advice.

“Don’t assume your customer is as happy as you are. Monitor customer reaction on an on-going basis”

JACK WELCH