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How forward-funding of VAT and R&D can boost UK food production

Written by: Mike Underwood

Back in 2018, food and beverage was the single largest manufacturing sector in the UK with a turnover of £96 billion, which was more than the vehicle production and aerospace manufacturing sectors combined. Fast forward 4 years, an exit from our European trading partner and one global pandemic later, the largest manufacturing sectors are now Transport and Chemicals & Pharmaceuticals.

There can be no doubt that the food manufacturing and processing sector is currently under pressure and facing an increasing number of challenges. Many are having to increase their prices due to rising material costs as a result of the weak pound and higher energy costs. Firms reported that margins were being squeezed and this had the potential to weaken future investment. More recently, a report by the Confederation of British Industry (CBI) found that despite food manufacturers’ seeing a rise in orders, profit margins have been hit considerably.

Food production

Manufacturers, along with other companies in the food and beverage industry, are also coming under pressure to reduce the use of plastic packaging. Whilst the long-term benefits of reduced plastic usage for the environment can’t be denied, food manufacturers are faced with assessing how they can modify their processes to accommodate new packaging methods.

All of these challenges contribute to increased pressure on food manufacturers’ finances, as they decide where investment is best directed and how it can be funded. Nevertheless, there are innovative FinTech solutions to help them manage their cash flow.

There is where Adsum can bring tremendous benefit to this sector, as by using our technology to convert their tax credits (VAT or R&D) into an immediate cash payment, either as a single transaction or ongoing forward funding of VAT, our clients are able to manage their cash flow much more effectively with a higher degree of liquidity. Our in house VAT experts can navigate the complicated rules around food and VAT with complete confidence.

So if you are planning a large capital expenditure project on production machinery or just in a VAT net receivable position monthly, Adsum could have the instant funding solution for you.

Opinion R&D VAT

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