November 21 Newsletter

Why you should switch to a digital payment process: 6 benefits to your business.

According to studies, SMEs spend on average, a whopping £4.4 billion per annum chasing late payments. This problem is only exacerbated by traditional (and slow!) payment methods too such as cash and cheques, so what is the solution to this?

To reduce the time between invoicing and the money actually clearing into your accounts receivables – thereby minimising the negative impact on your cash flow – small and medium businesses should consider switching to digital payment. Here’s why.

6 benefits of switching to a digital payment process

Consistent cash flow

Digital payments mean a faster processing time which results in a much faster cash conversion cycle. This means no more big gaps in cash flow due to late payments.

Lower processing costs

Switching to digital means lower payment processing fees than standard bank transfers. As there’s no need for manual reconciliation, labour costs are also reduced.

Greater visibility of your finances in real-time

Businesses that use a digital payment process always have their accounts receivables in real-time. This allows them to refine their credit control processes and make informed strategic decisions.

Quicker reconciliation

Digital payments don’t take days to reconcile, they show up on your accounts receivable almost instantly. The result? Better documentation and more time for your staff to focus on the high-value stuff instead.

Happier clients

Going digital benefits your clients too as it gives them the widest and most convenient range of payment options to choose from. Making it quick and easy for your clients to pay makes them happy and it builds loyal relationships too!

Security compliant

The vast majority of software providers abide by the Payment Card Industry Data Security Standard (PCI DSS). This means all business and client data can be processed securely.

Wave goodbye to late payments



Payment delays can build and threaten the future of your company. To avoid potentially irreparable damage, implement digital payments sooner rather than later. Not only will this balance out your monthly cash flow and reduce manual work and extra costs, but it will also improve your client journey and most likely ensure repeat business. 

 Income Tax Self Assessment

HMRC’s approach to late payment penalties

HMRC will take a ‘light-touch approach’ for the first year of the new penalty regime starting in April 2022 for VAT and 2023 for income tax. It won’t charge a penalty if you agree to terms within 30 days.

New penalty rules recap

The new rules mean that you won’t be charged a penalty if you pay your tax bill in full within 15 days after the date it was due. If you pay later there’s an initial penalty equal to 2% of the tax owing. After 30 days this increases to a further 2% of tax owed beyond day 15 plus another 2% of the tax owed as of day 30.

Soft start

HMRC have said that they will take a light touch approach to the initial 2% late payment penalty for customers in the first year it applies to VAT and income tax.

What is a ‘light touch’?

At the start HMRC will allow you 30 days from the tax due date to get in touch with it and make arrangements to pay. HMRC will then not usually charge the initial penalty. 

Reasonable excuse

Penalties may be cancelled if you have a reasonable excuse for paying late, e.g. significant illness. If you want to claim a reasonable excuse you must send an appeal (by post or electronically) to HMRC.

We would always recommend contacting HMRC as early as possible if you think that you will not be able to settle your tax bill in full and on time. You may avoid a late payment penalty if you can agree to a repayment plan that you stick to.

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In our last newsletter we highlighted that Ben had been recognised and shortlisted in the top 10 Rising Stars in the UK as part of the Digital Accountancy Awards. Unfortunately, Ben did not win the award on this occasion, but he is still a Rising Star in our eyes.

We have another new team member, Thomas. This is Thomas’ first job since leaving school where he studied finance and cyber security. We are delighted to have Thomas in the Youtopia team :) 

As ever, please feel free to pop in and see us in the office. We are in every day apart from ‘work from home’ Fridays! And, of course if there is anything you would like to discuss we are also available for video calls / phone calls (01908 751 972).

Keep safe and well,

Katherine, David, Ben, Michelle and Thomas