The weeks leading up to the end of the UK tax year (5 April) are among the most challenging periods for SMEs. Cashflow becomes tighter, operational demands increase, VAT and PAYE deadlines collide, and large annual costs often fall at the same time. For many businesses, this combination creates a perfect storm — especially when sales haven’t fully recovered from January and customer payments are still catching up.
The good news is that tax-year-end cashflow pressure is predictable, and with the right preparation, entirely manageable. This guide walks you through the steps SMEs can take in February and March to prevent cashflow problems, protect working capital, and enter the new tax year with stability and confidence.
Why the Tax Year-End Creates Cashflow Pressure
Before exploring solutions, it helps to understand why March and early April consistently put pressure on businesses of all sizes.
- Multiple HMRC Deadlines Fall Close Together: VAT bills, PAYE payments, and corporation tax commitments often cluster at the end of Q1, draining available cash.
- Year-End Supplier Invoices Land at Once: Many suppliers issue annual or quarterly invoices between January and March.
- Customer Payments Slow in Q1: It’s common for invoices issued in December or January to be paid late, shrinking cash reserves.
- Businesses Make Last-Minute Purchases: Trying to maximise allowances before 5 April often leads to rushed or poorly planned spending.
- Directors Withdraw Cash at an Unsustainable Pace: As the tax year closes, many owners attempt to optimise drawings or dividends.
These pressures are normal — but without forward planning, they become disruptive.
1. Conduct a Full Cashflow Review Before March
The earlier you review your cashflow, the more options you have. A review helps you understand which weeks in March or early April may create pressure.
Your review should include:
- Invoices due in
- Invoices due out
- Payroll dates
- Supplier deadlines
- VAT or HMRC commitments
- Annual renewals (insurance, licences, subscriptions)
- Customer payment forecasts
Even a simple spreadsheet projection can help identify pinch points weeks in advance.
What to look for:
- Are incoming payments timed too late?
- Are you relying on a single large invoice?
- Do outgoings fall in the same week?
Your goal is to spot problems early, not react to them when they hit.
2. Tidy Up Your Receivables and Chase Outstanding Payments
Late payments are one of the biggest contributors to cashflow problems at the tax year-end.
Steps to take now:
- Send reminders for overdue invoices
- Encourage early or on-time payments
- Offer small incentives for quicker settlement
- Use automated reminders through your accounting software
Every payment received in February is one less problem in March.
3. Review Your Outgoings and Reduce Non-Essential Spending
The tax year-end is a perfect opportunity to streamline your expenditure.
Potential reductions include:
- Unused software subscriptions
- Outsourced services no longer delivering value
- Overlapping tools or duplicated services
- Temporary cuts to non-essential marketing spend
- Renegotiated payment terms with key suppliers
Reducing spend now preserves working capital for high-pressure weeks later.
4. Plan Ahead for VAT, PAYE and Other HMRC Payments
VAT deadlines are among the most common causes of March cashflow panic.
Ask yourself:
- Do you have enough funds set aside?
- Will VAT drain your operational cashflow?
- Would spreading the cost be more sustainable?
If VAT or PAYE liabilities pose a risk to your cash position, planning early unlocks options such as VAT loans or working capital support (covered later in this guide).
5. Avoid Rushed Asset Purchases Before 5 April
Many businesses feel pressure to buy assets in March to utilise allowances before year-end.
However, rushed decisions can lead to:
- Poor timing
- Unnecessary cashflow strain
- Choosing the wrong finance structure
- Overstretching working capital
Instead of last-minute purchases, review your needs early in February so you can plan expenditure strategically — or finance assets appropriately.
6. Forecast Your Cash Position Beyond April
Most businesses focus only on the tax year-end itself, but April can be just as challenging.
Consider:
- New financial year subscriptions
- Supplier increases
- Q2 seasonal trends
- Staff costs and holidays
- Price rises across utilities and services
A cashflow forecast covering February to June allows you to prepare for issues before they arise.
7. Consider Short-Term Funding for Stability
Short-term finance is not about taking on unnecessary debt — it’s about smoothing financial timing and reducing pressure points. Here are the most effective solutions for the tax year-end:
Working Capital Loans
Provide fast, flexible support for operational costs. Ideal for bridging gaps caused by delayed invoices or high outgoings in March.
VAT Loans
Allow you to spread your VAT bill over several months rather than paying a large lump sum. Prevents unnecessary strain on cash reserves.
Short-Term Business Loans
Useful for unexpected costs, supplier payments or cashflow stabilisation during busy HMRC periods.
Revolving Credit Facilities
Access funds as needed and repay as cash improves. Helpful when income timing is unpredictable.
Invoice Finance
Releases cash from unpaid invoices, giving immediate working capital relief.
When used correctly, these solutions provide:
- Predictability
- Stress reduction
- Cashflow smoothing
- Protection against last-minute crises
- Time to plan properly for the new tax year
Short-term support should be viewed as a stability tool, not a burden.
8. Strengthen Communication with Suppliers
Suppliers prefer early communication over late payments. If you anticipate cashflow pressure ahead of 5 April, a proactive conversation can lead to:
- Adjusted payment terms
- Extended deadlines
- Flexible arrangements
- Split payments
- Temporary reductions
This reduces pressure on your cashflow and preserves long-term relationships.
9. Review Pricing and Margins Before the New Tax Year
The end of the tax year is the ideal moment to review whether your pricing still reflects your costs.
Consider:
- Supplier price increases
- Rising wage costs
- Higher energy bills
- Increased cost of goods
- New operational expenses
Even small pricing adjustments can dramatically improve cashflow stability going into the new financial year.
10. Get Expert Advice Before Pressure Peaks
Avoiding last-minute decision-making is crucial. Seeking support in February gives you access to better options and more time to plan. This is where working with a commercial finance specialist like WSC is invaluable.
WSC helps SMEs by:
- Providing tailored short-term funding options
- Comparing lenders for the best fit
- Ensuring repayment terms suit your revenue cycle
- Offering clear, jargon-free guidance
When cashflow becomes tight, clarity and speed matter.
Cashflow problems at the tax year-end are common — but entirely avoidable. With early forecasting, reduced outgoings, improved payment management and access to the right funding solutions, SMEs can protect their working capital and enter the new financial year with renewed stability.
If you want to stay ahead of cashflow challenges this March and April, WSC can help you review your options and plan a clear path into the new tax year.