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VAT Funding Case Study – Aviation Business

V4B Business Finance has been working with companies in the manufacturing sector for years and we understand they face some unique challenges. These companies have had to contend with the full brunt of the supply chain issues, labour shortages and health and safety over the course of the pandemic. Despite this, UK manufacturing firms have worked hard and weathered the storm. 

One of these businesses is a client of ours that works primarily in aviation. Their firm was doing well as they emerged from the worst of the pandemic but they had an issue on the horizon. One of their largest customers was temporarily going from paying invoices every 30 days to every 60 days during the pandemic. This meant a temporary but serious budget shortfall. 

The manufacturing firm had a large amount of work on the horizon but an extra month of waiting for payments meant an interruption in cash flow. Without capital on hand, they would struggle to pay suppliers and meet their expenses. 

This was a very serious problem because any liquidity issues could slow the production of current orders which would jeopardise future business. Many of the manufacturing firms’ customers rely on a short turnaround time and demand their manufacturing be both efficient and flexible.

A substantial delay could mean the loss of ongoing contracts and businesses looking elsewhere for their manufacturing needs. 

 

Tailored VAT Funding

Our client had seen operating costs nearly double alongside their customer’s payment terms changing from 30 to 60 days. This meant that VAT had shot up and they were in need of a short term cash infusion. V4B was able to arrange a loan of more than £120,000 to help cover their VAT costs. This was deposited instantly into their account when their VAT came out. The firm was then able to spread the repayments over 3 months which smoothed out cash flow and allowed them to make the necessary payments to suppliers. 

As VAT is taken quarterly, the firm could have also used our loans to spread out the cost over the entire year with monthly repayments. Plus tax relief is available on the interest elements of our VAT loans as they can be written into the firm’s accounts. 

By allowing our client to pay their VAT monthly, we were able to give them the flexibility they could not have achieved on their own. This is something we do with clients across a range of sectors with VAT loans as well as equipment loans, vehicle finance, corporation tax loans and a whole host of other lending options. 

 

 

Results

Using a VAT loan, our client was able to continue growing their business without any interruptions and adjust to the new billing terms for their largest customer. Their loan was paid off in 3 months and they are able to cover a variety of other potential funding issues using our variety of loan options.

 

Takeaways

Many of our clients have no idea that VAT loans are even available. As such, they ensure continual disruption to their cash flow. By working with V4B Business Financing, you can spread the cost of your VAT and claim tax relief on the interest from the loans. This allows you to spread a quarterly cost over 3 months without incurring a substantial financial burden. The benefits of a VAT loan from V4B include:

 

  • No set-up fee
  • Fixed interest payments
  • No Directors Guarantees up to (150k) & over £1 million
  • Retain capital
  • Improved budgetary control
  • Easy to arrange
  • HMRC paid directly
  • Credit facility available for all quarters

 

To learn more about our VAT loans or any of our other lending products, please fill out our form to see if you are eligible.