Business news 21 December 2020
James Salmon, Operations Director.
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.
Former LSE chief in debt warning
Xavier Rolet, former boss of the London Stock Exchange, has warned that companies are now “so awash with debt that central banks simply can’t control it”, saying that this poses a major risk to the long-term economic recovery. He believes the issue could see ministers come under pressure to consider debt cancellation programmes. Arguing that governments would have to cancel their own debts and that of individuals before turning attention to company loans, Mr Rolet said: “It’s going to be very difficult for any government to tell their taxpayers they should essentially support the cancellation of debt of companies that have borrowed in order to increase their profits”. TheCityUK estimates the total amount of unsustainable debt taken on by British businesses at around £70bn. Richard Peberdy of KPMG said the level of unsustainable debt is a “massive issue for the economy”, adding: “This is not the sort of base that we hoped to spring into post-Brexit”.
Inflation expectations
Philip Inman in the Observer looks at what path inflation may take in 2021, noting that it has fallen toward zero as 2020 nears its end, hitting 0.3% in November. He says some commentators have warned that prices may jump as the economy “overheats” post-pandemic and post-Brexit. He questions the concern, noting that the economy is set to be around 10% smaller at the end of the year than it was at the beginning, with the Office for Budget Responsibility (OBR) not expecting it to recover its previous peak until the end of 2022. The OB R foresees economic growth of 5.5% in 2021 and 6.6% in 2022. This, Mr Inman, argues, seems “electrifying” compared with the annual expansion of 1% to 2% seen over the past 10 years, but it is “playing catch-up and no more”. He also says that without wage increases “there can be no boom”, at least not a sustainable one.
Retail sales down in November
Retail sales fell in November, with the first decline in six months coming on the back of the closure of non-essential shops amid England’s second national lockdown. Office for National Statistics (ONS) data show that sales were down 3.8% last month when compared to October. Food and household goods were the only sectors that saw sales growth in November, with respective increases of 3.1% and 1.6%, while clothing sales were hit hardest, falling 19%. Despite the month-on-month decline, sales were up 2.4% on November 2019. Year-on-year, online sales were up 74.6% on November 2019, while sales made online accounted for 31.4% of retail sales last month – up from a 28.6% market share in October. Silvia Rindone of EY says the impact of the November lockdown is clear, with consumers continuing to shop more online. “Physical shops are hoping to catch up on trading in the remaining festive period&rd quo;, she adds. She suggests that with many retailers “under acute pressure”, they need to evolve to meet “seemingly permanent changes in consumer habits.”
MPs tell HMRC to name companies using furlough scheme
Ministers have been told to reveal the names of companies that took furlough money, with the Commons Public Accounts Committee (PAC) saying HMRC should publish a list of all businesses that have used the Coronavirus Job Retention Scheme. Ministers have also been urged to outline plans to recover furlough funds from companies that have performed well despite the pandemic. PAC chairwoman Meg Hillier said: “Sunlight is the best disinfectant – if a company’s got nothing to hide, it should not be worried about its name being made public”, adding: “Profiteering from the taxpayer is not acceptable.” The Sunday Times notes that BDO U-turned on a decision to keep the £4.1m it had received under the furlough scheme, with this coming on the back of criticism of £500,000-per-partner payments.
Ashley eyes empty Debenhams stores
The Mail on Sunday says Frasers Group owner Mike Ashley is considering moving his brands into empty Debenhams stores as part of a deal to acquire the company, prompting concern that a full rescue of Debenhams is becoming increasingly unlikely. Debenhams, which is being run by administrators at FRP, is running a sale to clear stock as it prepares to close stores if a deal is not struck.
Covid-19 general news
A new strain of the virus is spreading through the UK that is said to be 70% more transmissible. On Sunday Britain reported an increase in covid-19 cases of 35,928, the highest daily rise since the start of the pandemic.
London and much of the south east was placed into a new stricter tier 4 and the 5 day relaxation of covid restrictions for the rest of the country was reduced to one day.
PM Boris Johnson will hold crisis talks with ministers after France banned lorries carrying freight from the UK and countries around the world ended flights amid fears over the new mutant coronavirus strain
There is chaos in the travel sector as much of Europe shuts down travel to & from the UK because of the rapid spread of a mutant strain of the coronavirus in Britain that saw the government abruptly cancel Christmas and ramp up social restrictions.
Markets.
Friday the FTSE 100 closed at 6444.5, down 1.3% and the 250 Closed at 19,776.5 down 1.7%. Sterling is slumping at 1.088 Euros and 1.323 US Dollars. Brent Crude is at $49.67 and Gold is at $1873.
US Markets slipped from record highs in volatile trading on Friday as lawmakers struggled to bridge differences on additional coronavirus stimulus measures. Over the weekend they eventually agreed a deal on about $900 billion to boost the US economy.
Oil Prices dropped about 5% this morning as the fast-spreading new covid strain that has shut down much of the United Kingdom fueled worries over a slower recovery in fuel demand amid tighter restrictions in Europe.
Gold Prices climbed to a six-week high this morning, driven by news that US congressional leaders reached agreement on a COVID-19 aid package, while lock-downs in the United Kingdom soured appetite for riskier assets and added to the metal’s support.
Brexit
Brexit Talks will continue today despite missing the European Parliament’s deadline for an agreement. The Parliament, which will need to ratify any agreement, had said last week that it would only hold an emergency meeting if a deal had been struck by midnight Sunday.
Understanding equivalence
The Sunday Times’ Jill Treanor offers a bluffer’s guide to equivalence, saying that it has become the City’s new buzzword having become a sticking point in trade talks. Peter Bevan of law firm Linklaters says equivalence is “mitigating the effect of hard Brexit on the ability of firms to access the EU single market”, with Ms Treanor offering that this makes it a “way of smoothing financial firms’ trading with the bloc” post-Brexit. She says financiers have been exploring ways to maintain access to the EU, including relocating, with EY analysis suggesting 7,500 UK staff have been switched to EU offices. Andrew Gray of PwC says the longer a lack of engagement on equivalence continues, “the more firms will adjust – and the less valuable it will be.”
Location hits hiring, say SME leaders
Research from freelance service provider AnyTask suggests that businesses are having to employ workers who are unsuitable for roles simply due to their location. A poll of 500 SME leaders saw 84% say they have given someone a job despite them not being the ideal candidate, with 58% saying their location had restricted the applicants available. The SME leaders said hiring the right staff was their biggest challenge, followed by keeping up with changing rules and regulations. A fifth said they struggled to find time to deal with HR issues, while the same proportion have had issues with inconsistent quality of work from staff. Just under 70% said an inconsistent order book means permanent, full-time staff sometimes don’t have much work to do, with 57% saying outsourcing work to freelancers makes financial sense. Cash flow was a concern when hiring staff for 64% of bosses.
HMRC urged to delay self- assessment deadline
Industry groups including ICAEW have urged HMRC to push back the self-assessment tax return deadline, saying people may require more time to file their accounts due to the coronavirus pandemic.
Advisers suggest sacrifice salary for tax break on broadband
A government advisory group has suggested that employees should be offered a salary sacrifice scheme that lets them buy ultra-fast broadband in exchange for tax breaks. An interim report from the Gigabit Take-up Advisory Group says voucher schemes or salary sacrifice schemes would boost the uptake of faster broadband.
Lords criticise ‘flawed’ plan to give HMRC extra tax powers
The Lords Economics Affairs Committee says proposed powers allowing HMRC to force financial institutions to divulge information about people’s assets without court approval are “flawed”, voicing concern over the removal of taxpayer safeguards. The measures, to be included in the 2021 Finance Bill, are “poorly targeted, disproportionate and lacking necessary safeguards”, the committee said. Meanwhile, the committee welcomed plans to give HMRC tougher powers to go after promoters of tax avoidance schemes.
Opinion: Tax higher earners more as cuts do not trickle down
The Observer’s Business leader column says pressure is building on the Chancellor to tax City financiers and business owners, saying studies suggest nations that follow a tax-cutting agenda “do nothing for the underlying strength of their economies”. It cites London School of Economics analysis of fiscal policies in 18 countries over 50 years which concludes that tax cuts for the rich “have never trickled down” and tend only to benefit those who are directly affected, boosting the finances of higher earners, increasing inequality and doing little to stimulate investment. The piece says higher taxes will help address concern over executive pay, arguing that increases cause no harm, “except to the bank balances of those they target.”
Next in line for Arcadia
Retailer Next is in talks with asset management firm Davidson Kempner Capital Management about joining forces and financing a bid for Arcadia, the collapsed retail group which includes Topshop, Topman, Burton and Miss Selfridge. With Deloitte, which is running the sales process, setting Monday as the deadline for first round bids for Arcadia, Next has just two days to agree the tie-up. CEO Lord Wolfson is also reportedly holding talks with rival financial backers including Carlyle and Alteri. Other potential bidders include Boohoo, Mike Ashley’s Frasers Group, Barney’s owner Authentic Brands and Shein, a Chinese fast-fashion firm. Documents circulated to potential bidders by Deloitte show that Arcadia’s revenues came in at £829m for the year to September 2019, compared with £846m the year before.
Average house price climbs £13k in 2020
Analysis from Halifax shows that the average UK house price climbed by £13,316 in 2020. The report shows that the average UK home was valued at £239,927 at the start of 2020, fell towards £237,00 after the first national lockdown and then jumped to £253,243 by the end of last month, with the stamp duty holiday driving activity. The increase in prices record between the end of June and the end of November marks the fastest five-month jump since 2004.
UK House Prices are set to finish the year on a high note despite the worst downturn since the 1700s, with the residential property market racking up £62bn more in agreed sales in 2020 than last year.
Third of buyers would pull out if they missed stamp duty deadline
A survey has revealed that 31% of home buyers would abandon their purchase if they missed the March 31 deadline for taking advantage of the Government’s stamp duty holiday. The survey, from the Guild of Property Professionals, asked 1,000 people who were currently in the process of buying a home whether they would continue with their purchase if the sale did not complete before the deadline.
Employers back ethnicity pay gap disclosure rule
A leaked report seen by BBC News shows that three quarters of employers believe large firms should be forced to release data on the pay gap between staff of different ethnicities. The findings stem from a consultation exercise on ethnicity pay gap reporting launched in 2018. Of the 321 responses to the consultation, 73% supported compulsory ethnicity pay gap reporting for organisations with more than 250 staff – an obligation similar to one already in place which covers gender pay gaps. BBC News notes that a group of 30 business leaders wrote to Prime Minister Boris Johnson in October, calling for the mandatory duty to be introduced. CBI president Lord Karan Bilimoria told BBC News that members want to disclose their ethnicity pay gap “because they know this is such an important issue” “If they address this issue, they will have companies that are more diverse, more inclusive, mor e profitable, more innovative,” he added.
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.