- 07 Aug
Eat Out To Help Out Scheme Cash Flow Problems
I noticed a recent social media post from one of our local restaurants who had originally signed up for the Government's "Eat Out To Help Out" scheme (EOTHO), saying that they would not be going ahead with the scheme due to cash flow issues.
Eat Out To Help Out Scheme Cash Flow
The post explained that they were not going to go ahead with it because it effectively meant they had to wait 12 days for the Government payments, equivalent to 50% of their food sales that were eligible. This would cause cash flow problems, hence their decision. It struck me that this problem might be more widespread and that invoice finance may be able to help companies in similar situations.
With an invoice finance facility, when new invoices are raised the user receives an immediate prepayment from the funder, smoothing out cash flow issues. The balance of the invoice is paid to the client when the debtor pays, less a fee for using the service. The level of prepayments varies from case to case, but it can account for the majority of the value of an invoice. This means that users are not waiting around to be paid by customers. There are selective services that can be used on a temporary basis as and when needed.
Under the EOTHO scheme, diners in cafes, restaurants, pubs and some other establishments are given up to £10 per head off of their restaurant food purchases (excluding takeaways), by way of a 50% discount that is funded by the Government. This scheme is to encourage people to eat out on certain days of the week.
At the present time, the scheme is available on Mondays Tuesdays and Wednesdays between the 3rd and 31st of August. Diners are able to use the scheme as many times as they like. There are no vouchers involved and there is no minimum spend. The discount cannot be claimed on alcoholic drinks or service charges and it is automatically available at participating restaurants. You can find a full list of the participating restaurants on the Government's site.
If you are in a similar situation to our local restaurant, that are unable to fully benefit from the scheme due to the cash flow pressures, please get in touch and we may be able to help you find a funder that will be able to provide support. Please call Sean on 03330 113622 for cash flow support.