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This week, tips on avoiding ATOL pitfalls, and how to raise money for business expansion.
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Last week was the end of the ATOL renewal deadline. How do I find out which companies are now ATOL protected and what implications all the changes will potentially have on my business? If a company no longer has an ATOL, what do I tell a client who asks why?
HB, Hull
You can easily check on the ATOL website (Atol.org.uk). The Civil Aviation Authority issues lists of the firms that haven’t had their ATOLs renewed by the set date. They’re split into two groups, so you can see which firms have applied but not been relicensed and which aren’t seeking renewal. You can find the two lists by clicking on ‘trade information’ on the left-hand menu, then into the link ‘more about March renewals’. There are updates as firms have their licences renewed late. Or to check on any particular firm, enter its name in the ‘ATOL tour operator search’ box on the ATOL home page.
Most firms who have applied are ‘not renewed’ for technical reasons, such as they haven’t supplied the renewal information or a bond; sometimes it’s more serious. For obvious reasons, the CAA can’t say why a firm is on the list. But you should tell clients that until a firm has had its licence renewed it cannot legally accept an ATOL booking, or even a balance due on a holiday already booked, so you must avoid dealing with them on licensable business. If the delay is more than a couple of days, you should ask the firm concerned whether and when it expects to be relicensed.
I’m looking to expand my business and I’m not sure what the necessary steps are to raise money for business improvements. What are the potential pitfalls and what sort of repayments should I be looking to commit to?
DH, Brighton
Consider how much money is required, what you wish to spend it on in order of priority, and what financial benefits each element of that expenditure will bring. Commit this information to paper and then ensure the period over which the new revenues will repay any new lending is reasonable from a business point of view. The shorter this period and the longer the lifespan of any assets purchased, the better. Avoid the assets becoming obsolete before you have finished paying for them.
Look at your cashflow revenues and expenditure and work out how much you can afford to repay each month. Capital expenditure is not generally suitable for funding via a working capital overdraft and should instead be funded via a regularly reducing loan or asset finance such as leasing or hire purchase contracts. If bank funding is required then approach your bank manager in good time, and be prepared to share your financial calculations and assumptions in detail. Be enthusiastic and realistic – if you aren’t then the bank is unlikely to be.
The monthly repayments should be affordable along with your other commitments and should allow some margin of safety for a slight downturn in business or unexpected outside factors. If things don’t go to plan, advise your lender at an early stage and work with them to find a solution rather than letting the situation get out of hand.