# Managing your money as a UK micro-business: a practical guide

*Source: https://credicorp.co.uk/managing-your-money-as-a-uk-micro-business/*

Most failed UK micro-businesses do not fail because of one big disaster. They fail because of small habits compounding — missing a VAT deadline, paying yourself unsustainable salary, letting one customer drift to 90 days. This piece is a tour of the routines that prevent the slow-burn version of running out of money.

## Separate accounts from day one

Open a dedicated business current account in the company name as soon as Companies House gives you a number. HMRC will accept a personal account in theory, but it makes bookkeeping miserable and it makes accountants charge you more. Most UK challenger banks (Tide, Starling Business, Monzo Business, Mettle) open a business account in 24 hours with no monthly fee for a starter tier.

## Build a one-month cash buffer before anything else

Aim to keep one month of total operating costs in a separate savings pot before drawing dividends. “One month” means rent, payroll, software, repayments, and the actual tax you owe — not the optimistic version. A buffer is what lets you say no to a bad customer and yes to an opportunity.

## Get paid on time — without being unpleasant

Long invoice terms are a habit not a law. Default to 14 days, ask for it in writing on the order, and send a polite reminder the day after due. Studies by the Federation of Small Businesses suggest the average UK SME is owed over £8,000 in late payments at any given moment. You can claim statutory interest under the Late Payment of Commercial Debts (Interest) Act 1998 — 8% over the Bank of England base rate plus a fixed fee — but the bigger win is simply asking.

## The four numbers to watch each month

- **Cash in the bank** — the only number that stops you panicking on payroll day.

- **Gross margin** — revenue minus cost of sales. If this is dropping you are pricing wrong or paying suppliers too much.

- **Net profit** — what is left after every cost. A loss is a signal, not a verdict.

- **Debtors days** — how long customers take to pay. If this drifts, your buffer drains even if the business looks healthy.

## The tax dates that matter

Corporation tax — pay within 9 months and 1 day of your year-end. VAT — quarterly returns under Making Tax Digital. PAYE — monthly. Self-assessment for the director — 31 January. Diary every single one of those today.

## Where to get free help

The Business Debtline runs a free advice line for small business owners (0800 197 6026). The Federation of Small Businesses publishes practical guides on cash flow, tax and disputes. The British Business Bank’s [Finance Hub](https://www.british-business-bank.co.uk/finance-hub/) walks you through the funding options if borrowing is on the table.

If a payment to us is going to be hard, please [tell us early](/help-with-payments/). We can almost always work something out if we know in time.

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Credicorp Limited — UK lender to limited companies (Company No. 16093826). credicorp.co.uk