630k firms in significant financial distress – business news 21 January 2021.
James Salmon, Operations Director.
630k firms in significant financial distress, 130k unable to cover mortgage costs, chancellor considering extending support, buying from Europe, inflation, house prices, covid-19, market and other business news.
Here are CPA we want to share the business news stories we have seen that we think will affect our members and readers. Many of us are busy fighting to protect our businesses and therefore might have missed some of the news that could impact small businesses, their owners and those that sell on credit.
630k firms in significant financial distress
The latest red flag report from Begbies Traynor shows that around 630,000 businesses were experiencing significant financial distress as they entered the most recent coronavirus lock-down.
The report shows that in Q4 2020 there was a 27% increase in companies suffering a marked deterioration in financial metrics including working capital, contingent liabilities and retained profits when compared to Q4 2019.
Each of the 22 sectors monitored exhibited increases in signs of significant distress, with Begbies Traynor warning that its figures marked “the tip of a very large iceberg”.
Julie Palmer, a partner at the firm, said: “Without the financial aid and support measures the Government has put in place during the pandemic, insolvency levels would have been much higher.” She added: “The sad truth is that for many this will provide little more than a stay of execution”.
Is your business in financial distress? If you sold B2B on invoice and were paid late then you could be entitled to compensation from your former customers. CPA is helping businesses calculate and recover that compensation.
Call us today on 0330 053 9263 or go to the section below CPA is passionate about late payment to find out more
Or of you are worried about your customers being in distress and possibly going insolvent leaving you unpaid, then see how we have been helping businesses like yours for over 100 years in the section Don’t let Covid-19 bust your business!
130k borrowers unable to cover mortgage costs
UK Finance figures show that around 130,000 homeowners in the UK are unable to pay their monthly mortgage costs. The analysis shows that around eight in ten of the 1.9m homeowners who took a mortgage holiday as a result of the coronavirus pandemic are once again making full repayments. However, around one in 84 are still relying on repayment holidays.
Chancellor considers extending support
Rishi Sunak is reportedly considering a further extension of the furlough scheme in a bid to support the jobs market amid the blow dealt by the pandemic. The CBI has called for the initiative to be extended until the end of June and followed up with targeted support, while the TUC has said it should be available through 2021.
Sources say the Chancellor is also mulling other support tools, including the revival of the £1000 job retention bonus. The Telegraph says Mr Sunak is also facing calls to extend reliefs on business rates and VAT that are due to come to an end at the end of March. Ministers are also being urged to deliver support for entrepreneurs unable to access financial support, with Glenn Collins, head of policy at the ACCA, warning: “Many of them may go bankrupt, many of them may also have to lay off employees”, with Richard Wild of the Chartered Institute of Taxation echoing the warning and saying entrepreneurs are “definitely in need of support.”
Beware of ordering deliveries from Europe
The BBC website is warning consumers that ordering items online from Europe can bring additional customs costs. Once the parcel arrives at UK customs. Anyone in the UK receiving a delivery from the EU worth more than £39 may now face a bill for import VAT – with many items charged at 20%. For goods costing more than £135, customs duties may also apply, which can range from 0% to 25% of the product you’re buying if they have not been paid by the sender already. The extra charges are usually collected by the courier on behalf of the government, with customers asked to pay before they can pick up their package. With many couriers adding an additional handling charge to cover their costs of collecting the levies. These levies are the responsibility of the customer, not the retailer, who often has no idea of how much the eventual extra cost might be. They cannot be paid in advance and are levied only when the item reaches the UK.
PAC asks HMRC to explain support shortfall
The Public Accounts Committee has called on ministers to explain why so many people have been “left without a penny” of coronavirus financial support, with MPs giving HMRC six weeks to explain why many freelancers and other excluded groups have not been given greater help.
A report from the cross-party group said a lack of certainty over the support schemes has been an issue and argued that “quirks in the tax system” have left some groups of taxpayers excluded from financial support that other taxpayers received throughout the pandemic.
Committee chair Meg Hillier warned that “out-of-date tax systems are one of the barriers to getting help to a significant number of struggling taxpayers who should be entitled to support.”
Inflation doubles in December
Figures from the Office for National Statistics show that UK inflation doubled in December, with prices up 0.6% on December 2019. This compares with a 0.3% annual increase recorded in November. The Consumer Prices Index grew by 0.3% month-on-month after a 0.1% fall in November.
The increase came despite food and drink prices falling, with rising prices for clothing, transport and cultural activities pushing inflation higher.
Howard Archer, chief economic adviser to EY Item Club, commented: “Price conscious consumers, excess capacity, limited earnings and curtailed economic activity are likely to limit inflation in the near term at least”.
House prices hit new high
UK house prices have hit a record high, with Land Registry data showing the average price rose to £250,000 in November. Property values rose 7.6% in the year to November, with this marking the steepest annual price growth since June 2016.
Across UK nations, England saw values climb 7.6% year-on-year in November, reaching £267,000; the average in Scotland rose 8.6% to £166,000; Wales saw growth of 7%, taking the typical value to £180,000; while Northern Ireland’s 2.4% increase took its average to £143,000.
London House Prices jumped at the end of last year, with average values breaking the £500,000 threshold for the first time. Average house prices in London rose four per cent between October and November last year, according to the latest official data.
Analysts believe the stamp duty holiday has helped drive the market and push up prices, warning that the market and growth may slow once the tax break ends on March 31. Howard Archer, EY Item Club’s chief economic adviser, said: Elevated housing market activity and robust prices will prove unsustainable sooner rather than later,” adding that prices could fall by up to 5% this year .
Building delays mean buyers may miss tax break
The National Federation of Builders has warned that more than 16,000 homebuyers could miss out on stamp duty savings because the coronavirus crisis has forced developers to slow down their building projects. It notes that delays are stretching to up to two months, meaning buyers of new build homes hoping to complete before the stamp duty holiday ends on March 31 could miss the deadline and lose out on savings worth up to £15,000. The federation has backed calls for the cut-off for the tax break to be extended.
Low-deposit mortgages return
Moneyfacts analysis shows that low-deposit mortgages have made a return, with many products for buyers with a 10% deposit pulled last year on the back of coronavirus-driven uncertainty. The report shows that there were 44 deals available for those with a deposit equal to 10% of the property’s value in September, with this now climbing to 197. Deals for those whose deposit covers 15% of the value have also increased.
Covid-19 general news
The U.K. reported another record number of daily deaths with 1,820 prompting one official to compare some hospitals there to “a war zone.”, Germany mandated the use of medical-grade masks in shops and on transport, and a South Africa study raised questions about the protection Covid-19 antibodies provide against new virus strains
There were 38,905 new cases in the UK yesterday raising the total above 3.5 million with 93,290 deaths.
Globally 689,683 new cases brought the total to 96.8 million with a record number of Global deaths topping 17,500, bringing the total to 2,074,887 deaths.
Chancellor Rishi Sunak is reportedly set to extend the government’s furlough scheme beyond the end of April in his 3 March Budget. The chancellor is drawing up plans to extend the £82 billion scheme into the summer as the UK looks set to have strict Covid restrictions in place for several months.
Markets.
Yesterday the FTSE 100 closed at 6740.39, up 0.41% and the 250 Closed at 20881.46 up 1.35%. In Europe, The Euro stoxx 50 was up 0.56% and the 600 up 0.76%.
Sterling is at 1.132 Euros and 1.373 US Dollars and Brent Crude is at $55.7 and Gold is $1872 as the gold prices rose to the highest in nearly two weeks as the dollar eased on hopes of further stimulus under President Biden’s administration.
Shares started the day in negative territory but turned positive as Joe Biden became the 46th US President. The market was helped by a positive reaction to Pearson’s January trading update. The educational publisher saw online learning and virtual schools performing strongly lifting the shares by over 8% to close above 737p.
Strong risk-on sentiments pushed all 3 major US indices to new record highs overnight as the DOW rose 0.83%, the S&P 500 rose 1.39% and the NASDAQ rose 1.97%.
US President Joe Biden has begun to undo some of Donald Trump’s key policies, hours after being sworn in. In his initial acts as the 46th US president, he signed 15 executive orders – the first to boost the federal response to the coronavirus crisis. Other orders reversed the Trump administration’s stance on climate change and immigration.
Financial Services Business volumes climb in Q4
Business volumes in UK financial services grew for the first time in two years during Q4, according to the latest Financial Services Survey. It was found that firms expect business volumes to grow at a slightly quicker rate in the first three months of 2021. They also expect to cut headcount this year, while the shift toward remote working is prompting many firms to consider redefining, reconfiguring or cutting existing office space. The report, published by the CBI and compiled by PwC, was completed before the latest lookdown restrictions were rolled out, with CBI chief economist Rain Newton-Smith saying: “Unfortunately, the health and economic picture has sadly deteriorated since with restrictions tightening again”. With the report suggesting many City firms have opened hubs in the EU, the Mail notes EY analysis showing that over 7,500 financial jobs have so far left Britain for the bloc.
Sage
Sage Group has reported an almost 5% rise in recurring revenue for the final quarter of 2020, as it confirmed it plans to ‘progressively increase investment’ in 2021. Sage’s recurring revenue increased by 4.7% to £408 million, supported by software subscription growth of 11.3% to £303 million. As a result, subscription penetration increased to 68%.
Business Secretary pledges to ‘get the ball rolling’ on audit reform
In his first appearance before the Business, Energy and Industrial Strategy committee since being appointed Business Secretary, Kwasi Kwarteng pledged to “get the ball rolling” on long-delayed changes to rules for auditing financial accounts. More than a year after findings were published from the last of three separate reviews into auditing that were prompted by a string of corporate failures, Britain has yet to introduce legislation to implement recommended reforms. Mr Kwarteng did not put forward a timetable for when the recommendations will be realised.
Experts not buying online sales tax
Experts have spoken out over a potential online sales tax, with Tom Clougherty of the Centre for Policy Studies saying: “Taxing internet sales differently is a terrible idea, especially in the middle of a pandemic when many have no choice but to shop online.” He added that online shoppers already pay VAT and “there’s no good reason for clobbering them with an additional tax.” John O’Connell, of the TaxPayers’ Alliance, also questioned the potential move, saying online purchases “have been a lockdown lifeline for millions” and warning that if an online sales tax is put in place, “hard-pressed shoppers can’t win”. The comments came after Treasury Financial Secretary Jesse Norman said a levy on internet sales was one of the measures being considered as officials look to tackle the deficit.
Swap student loans for graduate tax, says report
A report from the Higher Education Policy Institute suggests student loans should be replaced by graduate tax, arguing that the current system operates under a “fiscal illusion” and is “so flawed that there is no realistic way in which it could be revised to make it workable”.
Burberry questions tax-free shopping move
Burberry has warned about the impact of the move to scrap tax-free shopping for tourists, saying sales are likely to shift from the UK as a result. The scheme allowing VAT-free shopping for tourists to the UK ended on January 1. CFO Julie Brown said the fashion brand had written to the Chancellor to highlight the potential hit the move could have the UK, saying the firm was “disappointed” that the Government had not reversed its stance.
Don’t let Covid-19 bust your business!
It will if your cash flow dries up, either sooner or later.
The Credit Protection Association (CPA) has been assisting thousands of UK businesses to get paid since 1914. We have seen many financial crises, this one will be particularly deadly for suppliers for sometime to come.
CPA eases cash from tardy debtors – Efficiently, Effectively, Economically and Ethically. Above all tactfully, because maintenance of goodwill is paramount.
To meet the needs of creditors in the current crisis, we have designed a “critical care” package especially tailored for the situation.
- The annual package costs start at very low rates
- A minimum performance warranty is provided
- Several complimentary services included
Clients instruct CPA on-line via their PC or phone, completely user-friendly. Your late paying customers are told to pay you direct (not to us).
A very recent report shows a 23% increase in the number of unpaid invoices since March 11th THIS YEAR – are you getting a build-up of late payers?
Right now, overdue accounts must be a concern and CPA has a great track record of encouraging slow-payers to pay their suppliers quickly.
It takes less than 17 minutes to see how you would benefit, do you have the time now?
No face-to-face meeting required – just call Peter Uwins, CPA’s National Sales Manager, on 020 8846 0000 (business hours) or email nsm@cpa.co.uk today.
When you see your money come in, you will be so glad you used CPA.
Do you sell on credit?
With pressures on the cash flow it is essential that you stay on top of the credit limits you grant customers and watch carefully for any late payments.
Those customers will look for the easiest option to boost their cash-flow. Don’t let it be you.
You can’t just assume your customers can and will pay you eventually, no matter how big their name is.
It is essential to have credit management systems in place to monitor and check your customers credit worthiness.
It is also best practice to use a trusted third party like CPA to make sure you are paid on time by customers, no matter how good a name they have.
About CPA
The Credit Protection Association can help!
Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.
At the Credit Protection Association, we provide first class credit information that can help you avoid being over extended to customers who are at risk. Our monitoring service can flag up warning signs long before the end, giving you the chance to adjust and reduce your exposure. We provide recommended credit limits and credit scores on a traffic light system and can help you set appropriate credit policies for your customers.
We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.
Companies in trouble usually have very bad cash flow and they try to deal with it by delaying payment to their suppliers, increasing your exposure to them.
If you supply on credit, help us help you identify the risks.
Why use a third party collector?
As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When your customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.
Over the years we have collected billions in overdue invoices for our customers.
Our debt recovery and credit management services give our members the financial freedom needed to grow and prosper, while our new Late Payment Compensation department could unlock hidden potential and offer the compensation needed to springboard your business to success.
You might be hesitant about contacting a debt collection agency. What are they going to be like?
Can they help your particular type of business?
There is no need for concern. CPA are courteous, helpful and very probably have had direct experience of working with your type of business.
Debt collection agencies are not all alike.
Success lies in both recovering money and keeping customers happy. The Credit Protection Association was founded in 1914 and has helped tens of thousands of UK businesses to collect outstanding payments and reduce the risk of incurring bad debt. We believe that creditors deserve to be paid for the work or goods they have supplied but we fully understand the need to maintain
the best possible relationship with customers!
At The Credit Protection Association, we provide solutions, advice and back-up in all areas relating to the supply of services or goods on account. Client-members receive everything they need from a single source to reduce debtor days and write-offs.
The Credit Protection Association has helped has assisted tens of thousands of UK businesses with their credit control requirements, since the First World War.
We are polite, firm and efficient when it comes to recovering outstanding debt.
“We have used CPA for a number of years now. The website is easy to navigate around with lots of helpful reports. The staff are always at hand and very friendly. CPA has helped us reduce our debt over the years and keep track of potential issues with our customers.”
~ CPA client in Buckinghamshire
“The service from CPA has proved to be everything that you said it would be. We have already seen a huge benefit. We have had a number of overdue accounts paid promptly and directly to us. It is also a huge weight off our mind to know that once we have passed an overdue payment over to you, you take care of everything whilst keeping us informed.
~ Credit Controller client in Warrington
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
CPA is passionate about late payment
The Credit Protection Association has been protecting smaller firms against poor payment practices for over 100 years.
We are extremely passionate about breaking the late payment culture that holds back the UK economy and threatens many SMEs, with cash flow difficulties being the single biggest killer of Britain’s small businesses.
If you were regularly paid late we can help. Those former customers used you to boost their own cashflow, regularly paying you late.
As a result you had extra costs, you had the distraction of having to chase payment, you had opportunity costs because your capital was tied up in their late invoices.
Under little used legislation, you are entitled to compensation for those late payments.
You put up with the PAIN – now claim the GAIN!
Now you can boost your own cash-flow.
CPA can help unearth the those hidden treasures.
We have the technology to reveal the compensation you are due and we have the extensive experience and expertise to then turn those claims into cash.
Did you know that your business is entitled to a minimum of £40 for every commercial invoice paid late to you over the past 6 years?
How many of your invoices are paid late each month – 20, 50, 100 or more?
At £40 per invoice that’s claim of £57,600, £144,000, £288,000 plus interest. The more invoices the bigger the claim!
At £100 per invoice it’s £144,000, £360,000, £720,000 plus interest.
For over 20 years, CPA has calculated and recovered Late Payment Compensation on behalf of Clients!
Yes, CPA can help you boost your business cash-flow.
Don’t let your bankers control you, contact CPA today.
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
Do you realise you could be sitting on a fortune?
Late payments often result in a cash flow crunch and leave SMEs in need of a cash injection.
If you sold B2B on credit then there may be a hidden source of capital you can call on.
If you fancy an extra bit of extra cash in your business, rather than jumping through hoops with your bank, you could look to uncover the resources from an unexpected source within your own business.
Not many are aware but there could be a hidden fortune within your business, sitting there, just waiting to be uncovered and released.
We can help you uncover the pile of gold, you didn’t even know you were sitting on.
If you trade with other businesses and were often paid late then you could be entitled to significant compensation.
Under little known and under-utilised legislation your business could be due huge amounts in compensation that you didn’t even know about.
Let’s be clear – this is not a way to weaken any customer relationships you value. It is one that identifies who’s been paying late and then recover the potentially significant sums in compensation using Late Payment Legislation from businesses where the relationship has already ended.
You can pick and choose who you want us to follow up – but once we’ve agreed which companies you’d like to pursue compensation from it’s a fast process and there’s no financial outlay to you whatsoever. My team at CPA put its expertise to work to recover the compensation due and fight late payment culture.
That compensation could provide the cash boost your business needed.
But don’t delay, that compensation evaporates if not claimed within six years of the late payment.
How can CPA help?
CPA has developed a unique technology to dig into your accounting records and discover the cash injection you are due by means of compensation. The software does all the hard work. Our software interacts over the cloud with over 300 different software packages, working directly with your accounts package, just so long as it’s stored on a computer.
We recognise that most companies do not have the resources to spend time on the identification and calculation of Late Payment Compensation. Our service can produce an Analyses within just a few days with (usually) less than 30 mins of co-operation from our clients. We work directly with over 300 accounting packages but can also work with bespoke accounts packages. Indeed, speed is essential as the oldest invoices may fall foul of the 6-year time limit.
Once the Sales Ledger Analyses is made available to clients, all that is required is that management decide which commercially sensitive ex-customers to remove from the list and return it to us.
CPA then uses its years of collection experience to explain and recover the Late Payment Compensation Claims. Clients do not handle any part of the recovery process as our team will take all communications from the companies against who the claims has been made. Often, it’s simply a case of explaining the legislation, sometimes we have to go all the way and enforce the legislation through the courts.
The result is that we are realising clients’ claims worth tens and sometimes hundreds of thousands of pounds which, of course, is pure net profit. You may also be among the recipients of “hundreds of thousands of pounds” should you elect to take advantage of our services.
We do the work, you receive the cash.
If you have supplied goods and services to businesses on credit and were regularly paid late then you could be due significant sums in late payment compensation.
We are talking to companies and unearthing claims in the hundreds of thousands from former business customers who paid them late. Large business customers who abused their power to inflict unfair and sometimes illegal payment practices.
We are helping business owners who are looking to boost the returns from their business before they retire. We are helping businesses who have lost major clients after years of loyal service to get properly compensated for systematic late payment. We are helping companies that were looking to close down, who looked insolvent and finding that cash injection they need to avoid insolvency.
Those former clients who regularly paid you late can finally be made to pay.
Ready to speak to an advisor?
For help or advice on credit management, entirely without obligation.
Call us today
0330 053 9263
The Credit Protection Association is a credit management company established in 1914. If you supply goods or services on credit then we can help you!
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.
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The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections.