Successful law firm seeks help with a substantial VAT bill

One of the side effects of growth for many professional firms is ensuring that you can collect the increased fee-billing quickly enough so that you can continue to invest the businesses capital in sustaining a growth trajectory. Cash pressure from increased growth is by no means a problem for only the smaller firms. Any practice that achieves growth without an improvement in their lock-up days will get to a point where their traditional working capital facilities, bank overdraft and cash reserves, start to dwindle and this could cause additional management pressures.

One of our valued introducers had such a client. With 15 partners and in excess of 50 fee earners this law firm was by no means small, and due to a strong performance this year they were considering outside funding sources to assist with their working capital facilities. September and October had already been a cash intensive month for them with their Practising Certificates and Professional Indemnity Insurance due; add into that a record billing quarter, partner drawings and a £500,000 VAT bill, then you can see that even larger firms will occasionally find additional financial support welcome.

This firm intended to pay their entire VAT obligation from their own cash reserves, but due to a poor collection month, they realised with 10 days to go that they needed some short-term cash support to see them through. The firm in question decided that they had sufficient reserves to pay half of their VAT bill themselves and sought external support through the firm’s long standing broker partner for the rest. Time was of the essence as they had 14 days to pay HMRC and needed to focus their attention on running their business rather than a lengthy application process with their bankers.

Our broker partner had already placed a significant number of transactions with UTB and knew that we would fit the clients’ requirements exactly.

From the submission of the proposal to United Trust Bank, we were able to provide the client with documentation for a £250,000 loan, over 3 months, with the first repayment due in 30 days and at a rate that was competitive to the client and rewarded the broker for their efforts.

Another example of a VAT loan and another happy customer helping to cement our relationships with our broker partners as the de facto funder for working capital facilities in the professions sector.

Loan size – £250,000