Business insolvencies latest – business news 16 September 2020.
James Salmon, Operations Director.
The latest on business insolvencies, and business debt, inflation, jobs, retail insurance 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.
Business insolvencies fall, ahead of expected Tsunami
The number of business insolvencies remained historically low in August after reaching a post-lockdown peak in July, according to government figures released yesterday
The figures show that there were 961 business insolvencies in August in England and Wales, down by 19% on the previous month, and 43% of those in August 2019.
R3, the trade body for the insolvency and restructuring profession, says the decrease is likely to be due to the Government support for businesses and reduced enforcement activity by HMRC.
There is no question that the pandemic is taking its toll on businesses and people, but to date the impact is not reflected in the insolvency figures. And that is to be expected with the Government support measures that have been put in place to fund businesses and keep people in employment.
But as this government safety is withdrawn, this situation will definitely start to change. It’s like the tide pulling out before a tsunami hits.
Voices in the insolvency industry are expected levels of insolvency not seen before.
As the furlough scheme ends, and when CBILS loans become due for repayment early next year, alot of businesses are going to face financial issues with a stalling of cash flow.
CPA has been supporting businesses and helping them improve cash flow for over 100 years.
However, in these unprecedented times, our late payment compensation service can help uncover a new source of cashflow for B2B companies who have been paid late in the past.
As a result of late payment you had extra costs, you had the distraction of having to chase payment, you had lost opportunity costs because your capital was tied up in their late invoices.
You put up with the PAIN – now claim the GAIN!
UK firms in £70bn of debt
UK firms have racked up £70bn-worth of debt, according to a new report from The City UK, with more than £20bn of that coming from government-backed coronavirus loan schemes.
The figure is down on the previous estimation of £102bn, partially due to government stimulus packages introduced this year, the industry group said. Its research also revealed that nearly 40% of businesses will encounter difficulties in repaying their loans, up from a previous figure of 30%.
“The fog of economic uncertainty that descended with this crisis has started to lift, and the obstacles to economic recovery that lie ahead are coming into sharper focus”, said Omar Ali, UK financial services managing partner at EY and chair of The City UK recapitalisation technical working group.
He added: “The key challenge now is how we help SMEs service the huge amounts of debt they have taken on as a consequence of the pandemic”.
Inflation
UK Inflation fell sharply last month due to the impact of the government’s Eat Out to Help Out discount meal scheme. Consumer prices rose by 0.2% in August, according to the Office for National Statistics, following a one per cent rise in July. The falling prices in restaurants and cafes due to the Eat Out to Help Out scheme, which offered customers a 50% discount up to the value of £10 on Monday to Wednesdays, dragged down CPI.
Chancellor vows ‘creative and effective’ jobs support
Chancellor Rishi Sunak has vowed to deliver fresh support as the furlough scheme comes to an end, saying he will “find ways of effectively helping people”. When quizzed on the matter by Treasury Committee chair Mel Stride, Mr Sunak said: “Throughout this crisis I have not hesitated to act in creative and effective ways to support jobs and employment and will continue to do so.” Having ruled out an “endless extension” of the job retention scheme, the Chancellor is said to be considering a limited extension of the business rates holiday, while business leaders have called on ministers to consider cutting employers’ national insurance contributions so as to reduce the cost of employing staff.
Starmer calls for national plan to protect jobs
Sir Keir Starmer has urged the Government to replace the furlough scheme, warning measures are needed to avoid the “scarring effect” of mass unemployment. The Labour leader urged ministers to “put party differences aside and work together in the interest of the country”, saying that working together could deliver “a genuine national plan to protect jobs, create new ones and invest in skills and training.” Speaking to the annual TUC congress, Sir Keir called on the Government to work with trade unions and businesses and suggested a targeted job retention scheme could help support the sector’s hardest hit by the pandemic.
Consultation deadline on redundancies
Employers seeking to make more than 100 redundancies must run a 45-day consultation, meaning today marks the last point they can start the process before the furlough scheme closes at the end of October. Richard Churchill, a partner at Blick Rothenberg, said the passing of the deadline meant businesses would no longer have time to plan for the furlough scheme being extended if the Government makes a U-turn on its future, making redundancies this month more likely.
Unemployment hits 4.1%
Office for National Statistics (ONS) figures show that UK unemployment rose from 3.9% to 4.1% in the three months to July, with the total number of people jobless climbing by 62,000 over the period.
The number of people unemployed from May until July was just above 1.4m. Redundancies increased by 48,000, quarter-on-quarter, with 156,000 recorded.
Payroll data shows that 695,000 fewer people are in employment than when the coronavirus lockdown started in March.
ONS figures also show that the number of people claiming unemployment-related benefits has hit 2.7m, a 121% increase since March. Darren Morgan, director of economic statistics at the ONS, said that while some of the effects of the pandemic on the labour market “were beginning to unwind” in July as parts of the economy reopened, the employment and redundancy figures show “it is clear that coronavirus is still having a big impact on the world of work.”
Considering the ONS findings, Josie Dent at the Centre for Economics and Business Research warned the “worst is yet to come, as the end of the furlough scheme draws near”, while Yael Selfin, chief economist at KPMG, pointed to a “difficult autumn”, saying: “As furlough starts to wind down, the unemployment rate will move to reflect the scale of the crisis we are in.”
Grocers
UK Grocery Sales recorded a fifth consecutive period of double-digit growth but sales slowed in August as “some aspects of pre-Covid life resumed”, research agency Kantar said. In the 12 weeks to September 6, UK take-home grocery sales grew by 11%, but growth was a more moderate 8.0% in the month of August as consumers returned to their pre-Covid routines and took advantage of the government’s Eat Out to Help Out scheme.
Retail’s post-lockdown gains slip
The Scottish Retail Consortium-KPMG sales monitor for August reveals post-lockdown gains for Scottish retailing have petered out. Total sales decreased by 7.5% compared with August 2019, while year-on-year drops in April, May, June and July had come in 40.3%, 27.6%, 18.6% and 8.3% respectively. On a like-for-like basis, sales fell by 8.9% last month. Paul Martin, KPMG’s head of retail, said: “August’s figures reinforce the overwhelming challenges facing Scotland’s high streets.”
Business Interruption insurance
The High Court has ruled that insurers should pay out on some business-interruption claims connected to the coronavirus pandemic, with thousands of firms expected to benefit from the ruling.
The Financial Conduct Authority (FCA) brought the case on behalf of businesses after insurers refused to pay out on claims by firms hit by the coronavirus pandemic.
While the court considered 21 sample policies from eight defendants, the decision will affect policies from more than 60 insurers.
The City watchdog said insurers should act quickly now the judgement is in place, saying policyholders who had been denied payouts should be contacted within seven days.
The FCA believes about 370,000 businesses and £1.2bn of business-interruption cover will be affected by the ruling, although the judges did not find insurers liable in all cases.
Mike Cherry, chairman of the Federation of Small Businesses, welcomed the decision as a “partial victory” but says it leaves many firms with “little certainty around whether they will receive payouts.” Chris Woolard, interim FCA chief executive, hailed the decision as “a significant step in resolving the uncertainty being faced by policyholders”.
SMEs scrap sale plans
A poll by Nucleus Commercial Finance shows that while almost two in five SME leaders were hoping to sell their firm within the next two years, almost half have scrapped these plans due to the coronavirus crisis. A quarter of those no longer looking to sell up say finances have been hit, while a fifth have seen the value of their business fall. However, a fifth are reassessing because business is better than it was before the crisis.
Tax break available despite office returns
With workers increasingly returning to workplaces part time, consumer expert Martin Lewis has offered advice on tax perks for homeworkers, telling the Express that people are still entitled to a £6 a week tax break for working from home even if they spend some of the week in the office.
He says that if an employer requires an employee to work at home they can claim to cover increased costs, such as for heating and electricity. He notes that while those with higher costs can claim more than the £6 a week rate, “it becomes a much more labour intensive process”.
Pandemic prompts virtual inductions for trainees
Emma Reed in the Telegraph looks at how the coronavirus crisis and restrictions in place to curb the spread of the virus will impact upon graduate trainees joining firms this month.
She highlights that PwC faces a “mammoth task” of inducting 1278 graduates, with the firm having couriered laptops to new starters’ homes. Louise Farrar, the firm’s director of student recruitment, says that while the initial part of the induction will be virtual, offices are open, adding: “We’re very keen to give them face to face time if they feel comfortable. It’s very much a flexible approach based on the individual.” On wellbeing, Ms Farrar notes: “We have wellbeing teams available at the start of their induction and they are all assigned a career coach and a career buddy.”
Covid-19 general news
With 380,492 new cases yesterday, global cases now hit 29.5 million with 935,000 deaths.
The OECD has updated its estimates and said the global economy will shrink 4.5% because of the pandemic, down from the 6% previously forecast in June.
Chancellor Rishi Sunak has assured MPs that he will be “creative” in protecting jobs after the furlough scheme ends, potentially hinting at a limited extension of the emergency measure. When asked if he would provide sector specific sectoral support after the end of the furlough scheme next month, the chancellor said he had “not hesitated to act in a creative and effective ways to support jobs and employment and will continue to do so”.
The government is facing criticism about its coronavirus test and trace system, with labs overwhelmed as demand for tests rises.
On Tuesday, U.S. President Donald Trump again stoked hopes about swift approval for a coronavirus vaccine, saying that the shot could be ready within four weeks. He made the comments at a town hall one day after Chinese claims that a vaccine could be ready by November.
Meanwhile, researchers monitoring Pfizer Inc.’s giant trial of an experimental Covid-19 vaccine have reported no safety problems even after more than 12,000 people received their second of two doses.
At a midday briefing, officials from the World Health Organization, UNESCO and UNICEF, which just released new guidance for school reopenings, emphasized the risks students who aren’t going to school are exposed to, including physical and emotional violence and vulnerability to child labor and sexual abuse. Of about 1.6 billion children sent home due to Covid-19, 872 million still remain so today.
Markets.
The FTSE 100 climbed 1.32% yesterday to 6105.54 at the Euro Stoxx 50 climbed 0.47% to 3332.26 as upbeat industrial output data from China powered shares of trade-exposed miners, while online supermarket Ocado surged on reporting a jump in quarterly retail sales. U.S. import prices increased more than expected in August and gains in the prior month were revised sharply higher, supporting the view that inflation pressures were building up.
In Asia, the Nikkei is up 0.16%. the Hong Kong HSI is down -0.24%, the China Shanghai SSE is down -0.24% and the Singapore Strait Times is up 0.44%. Overnight, the DOW rose 0.01% the S&P 500 rose 0.52%. and ehe NASDAQ rose 1.21%.
The Oil price rose amid hurricane supply disruptions in the United States, but forecasts of a slower than expected recovery in global demand from the pandemic was a negative. The Gold price rose to its highest in nearly two weeks yesterday, strengthened by a softer dollar and expectations the U.S. Federal Reserve will reinforce its accommodative monetary policy.
The World Trade Organization undercut the main justification for President Donald Trump’s trade war against China, saying that American tariffs on Chinese goods violate international rules. While the ruling bolsters Beijing’s claims, Washington can effectively veto the decision by lodging an appeal at any point in the next 60 days.
New Look wins landlords’ approval for CVA
New Look has secured landlords’ approval for its CVA, safeguarding 11,000 jobs. The agreement allows New Look to switch to turnover-based rents at 402 of its UK stores, while a remaining 68 stores will not be charged rent. The approval will allow New Look to access a £40m injection of new capital, while the retailer has also secured a debt for equity swap, reducing senior debt from around £550m to £100m. Backing for the CVA comes despite several landlords voting against the deal. Daniel Butters, CVA supervisor at Deloitte, said: “The approval of the CVA is an important milestone in New Look’s restructuring, enabling the business to move forward.”
Next to rescue Victoria’s Secret UK business
Next has agreed a deal with L Brands to rescue Victoria’s Secret UK business from administration, in a move that will save around 500 jobs. The joint venture, of which Next will own 51% and Victoria’s Secret will hold a 49% stake, will operate all Victoria’s Secret stores in the UK and Ireland, subject to approval from its landlords. Its UK online business, which is currently operated in the US, will be folded into the partnership in spring next year. Rob Harding, administrator at Deloitte, said: “This is an ideal way to secure the future of more than 500 employees.”
Travelex creditors’ £368m hit
A report from administrator PwC shows that unsecured creditors in Travelex are facing heavy losses after suffering a shortfall of more than £368m in a pre-pack administration of the foreign exchange business. About £319m of this sum is owed to bondholders who took control of the company through the administration. PwC estimates that unsecured creditors stand to receive 0.6p to less than 0.1p in the pound for Travelex entities that are able to salvage a dividend.
EY chairman expresses Wirecard regret
Carmine Di Sibio, global chairman of EY, has said the firm regrets a delay in uncovering fraud at German payments firm Wirecard. In a letter to clients, he said: “Even though we were successful in uncovering the fraud, we regret that it was not uncovered sooner.” Wirecard filed for insolvency in June following a scandal centred on over €1.9bn of missing cash balances. Mr Di Sibio said EY is implementing new risk and audit procedures regarding fraud, carrying out “ongoing checks” on “management probity”. He added that the firm will increase its use of technology and utilise more external information to detect fraud, such as social media content. Mr Di Sibio also said that while primary responsibility for preventing and detecting fraud sits with a business’ management and supervisory boards, “audits should play more of a role in the future to detect material frauds
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 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.