Responding to the week-long IT problems at TSB, Bradley Post, managing director at Rift Tax Refunds, provides a survival guide for TSB small business customers suffering from the meltdown.?
With 70 per cent of SMEs counting cash flow blockages as a key survival threat, the TSB crisis is hitting vulnerable businesses hard. While the bank waives overdraft fees left and right to ease the pressure, the crash is costing small business owners more than just money.
The administrative workload is squeezing valuable hours from the working day for many, and it’s difficult to overstate the reputation damage done when employees and suppliers aren’t paid on time.
The question many small businesses will be asking, as they are left with the cost of other people’s errors, is who will compensate them for the additional admin time? A simple value cannot be put on this and the impact is far greater than is being considered by much IT focused reporting on the issue.
With TSB small business customers hitting trouble over things like VAT, PAYE and NI payments and the associated penalties for missing them, HMRC are promising to consider the meltdown when doling out fines. That’s promising, but no specific helplines or instructions exist so far.
Some industries will have been even harder than others, for example all the small business in the Construction sector who have to make CIS quarterly payments to HMRC on the 22nd of the month will not have hit that that deadline, incurring an automatic 100 fine for doing so.
Even the ability to claim any penalties back doesn’t eliminate the stress and time it takes to resolve the problem.
As for weathering the storm, the advice for TSB small business customers with cash flow problems is the same as always:
Focus on receiving payments promptly never assume the money’s safe until it arrives
Keep accurate cash flow budgets
Pare back unnecessary expenditure. Don’t over-commit on orders
Look into financing options BEFORE you need them
Talk any concerns through with your accountant
Positioning itself as a challenger bank, TSB targets SME customers with talk of breaking the shackles? of the big banks.
Shopping for a business bank account can be confusing, and many simply stick with the devil they already know. In fact, 90 per cent of the UK’s 4.3m small businesses still use the big banks. TSB was looking to loosen that stranglehold, but now faces penalties, compensation claims and a severely dented reputation.
With proper planning, your business should be able to survive anything from late payments to banking crashes. When a crisis does hit, your survivals depend on these preparations, along with being up-front with your trading partners and workforce. That means:
Letting them know the moment an issue arises, so they can prepare as well
Keeping records of your transactions and payments in case you need them for information or evidence
Checking if you’re covered by the Financial Ombudsman Service. Current proposals are in the works to widen the range of businesses with access to it