Business News for Credit Managers that you might have missed (23/1/20).
23rd January 2020.
James Salmon, Operations Director.
To give you a peak behind the curtain of this news page, I keep an eye out as I watch the news for stories that might be relevant to Credit Managers or those that sell on credit. I then make a note of them and when I have time spare in my activities as Operations Director for CPA, I turn them into posts for the benefit of our members and site visitors.
The problem has been over the first few weeks of January I have been quite busy with the day job so a few stories have piled up that I haven’t had time to turn into posts but really I would like to share. So here you go. This is a collection of news stories I have seen that I think will be of interest to SME’s and those that sell on credit.
Retail
lets start with a sector that unfortunately has been in the news alot in the last couple of weeks. Those that sell to retailers will be all too familiar with the trouble the sector is in.
Record low retail sector health
The health of the retail sector hit a record low last year, with the Retail Health Index published by KPMG and Ipsos reaching a record low of 74 in 2019 – the worst result since the tracker was established in 2006.
The report says the “golden quarter” of Christmas trading did not deliver a strong enough rebound to negate a difficult year for the sector. The index score is expected to remain at 74 in the first quarter of 2020.
A third of listed retailers warn on profits
Analysis shows that a third of retailers were forced to put out profit warnings in 2019, with 32 listed firms in the FTSE Retailer index doing so.
The report, from EY, notes that the figure is down 11% on the 36 recorded in 2018. So far in 2020, four firms have issued profit warnings – the same number that did so in the whole of Q4 2019.
EY’s Lisa Ashe said the sector has been hit by “intense promotional activity”, with prices cut to attract customers.
Beales falls into administration
Department store chain Beales entered administration this week, having failed to secure a buyer, leaving over 1,000 jobs at risk.
KPMG has been appointed as administrator and the firm’s 23 stores will continue to trade while it assesses options for the business.
Will Wright, partner at KPMG and joint administrator, commented: “With the impact of high rents and rates exacerbated by disappointing trading over the Christmas period, and extensive discussions around additional investment proving unsuccessful, there were no other available options but to place the company into administration.”
Retail jobs
The UK Retail Sector shed 57,000 jobs in the fourth quarter of last year following the worst year on record for the UK high street. The total number of retail employees fell 1.8% year on year, in the 16th consecutive quarter of decline, the latest research found.
The World of credit
Credit card spending hits £6.6bn over Xmas
TSB research shows that Britons spent £6.6bn on credit cards over the festive period – an average of £435 each.
Analysis shows that one in five people with a loan or card are concerned about meeting their repayments, while just over half worry about money at least monthly.
TSB’s Craig Bundell urges those with debt problems to create a budget, saying: “If your credit card interest is too high, look at the best balance transfer offers, or consolidate debts with a personal loan.”
Credit for companies at lowest since 2008
The Bank of England’s (BoE) credit conditions survey shows that the amount of credit made available to corporates fell for the sixth successive quarter in Q4 2019.
It fell to minus 9.2 in Q4, down from minus 3.5 in Q3, marking the fastest rate of decline since Q4 2008. The balance for expected demand for credit for capital investment over the next three months fell to minus 27.4 from minus 18.5, the weakest since Q1 2009.
Howard Archer, chief economic advisor at EY Item Club , suggested that lenders had been concerned about domestic political uncertainty and a struggling economy. He said: “This was likely to weigh down on business activity and profitability, thereby making businesses less attractive and more risky to lend to.”
The Economy
Bosses back Britain
A PwC poll of almost 1,600 CEOs places the UK as the fourth most important country for international firms, behind only the US, China and Germany.
The poll shows that bosses in Germany, France and Italy see the UK as being as attractive now as it was in 2015, with “a notable uptick since last year”.
Almost one in four French bosses cite the UK as one of their three main growth markets, as do one in five American chief executives.
Business Secretary Andrea Leadsom welcomed the study, saying: “It’s excellent to see such confidence in the UK.”
Kevin Ellis, chairman of PwC UK, said: “The findings provide timely perspective on the UK’s standing as a place to invest and do business. Viewed against the turbulent global backdrop, the UK is a beacon of relative stability”.
Mr Ellis said the UK should look to “capitalise on our key characteristics,” saying “maintaining an open and globalised economy is crucial, as is an effective tax system.”
SMEs plan to spend £1.7bn
A survey by finance firm Together has found that British SMEs are set to invest £1.7bn over the next two years, with subsiding Brexit uncertainty seeing firms more willing to spend.
The poll saw a quarter of SME bosses say they will look to expand their premises, while 23% expect to hire new staff. With the decisive election outcome offering more certainty, 42% of SMEs are now optimistic about their prospects, compared with just 8% who would have been optimistic if the uncertainty had continued.
Andrew Charnley of Together said: “The investment taps can now be turned back on.”
UK employment hits record high
The latest data from the Office for National Statistics (ONS) reveals the strongest jobs growth in almost a year, pushing the employment rate to a new record.
The unemployment rate held at 3.8%, its lowest since the 1970s, but the number of people in work rose by 208,000. In the September to November period, the employment rate hit a record high of 76.3%, the ONS said, up 0.5 percentage points on the previous quarter.
When bonuses were stripped out, pay growth slowed to 3.4% in the three months to November.
Household optimism hits 12-month high
A IHS Markit survey has found that UK households became more upbeat about their finances in January, with optimism hitting a one-year high. Households saw living-cost inflation dip in January, while incomes from employment continued to grow.
The conclusive election result seen in December and the clarity it brings in regard to Brexit are among drivers of the optimism, with Joe Hayes, economist at IHS Markit, saying: “Latest survey data certainly show some post-election bounce for UK household.”
The poll also reveals that 23% of people expect the Bank of England’s next move on interest rates will be a cut, up from 19% in December.
IMF downgrades global growth forecast
A report from the International Monetary Fund (IMF) predicts that economic growth in Britain is set to be sluggish over the next two years, with a forecast that GDP will grow 1.4% in 2020 and 1.5% in 2021.
The IMF says the forecast “assumes an orderly exit from the European Union at the end of January followed by a gradual transition.”
The report suggests the eurozone will see a slightly lower rate of growth, with an increase of 1.3% this year and 1.4% next, while global growth is expected to be 3.3% in 2020 and 3.4% in 2021.
Looking at 2019, the IMF expects global growth to come in at 2.9%, lower than its previous prediction of 3%. It predicts that UK GDP rose 1.3% over the last 12 months.
UK borrowing falls
UK government borrowing in December was less than expected, at £4.8bn, and down £0.2bn compared to the same month a year earlier, according to the latest figures from the Office for National Statistics (ONS).
As chancellor Sajid Javid prepares to boost spending in his March Budget, for the financial year so far – March to December – UK government borrowing stood 8% higher than a year earlier at £54.6bn.
Overall public debt was £1.82tn at the end of 2019, an increase of £35.5bn on December 2018, while corporate tax receipts dipped 3.4% year on year, the biggest drop since 2012/13.
PwC chief economist John Hawksworth said: “If current trends continue, the Chancellor should have some room for manoeuvre in his Budget in March, particularly in terms of increasing planned infrastructure spending.”
Other
Government to review IR35 rollout
The government is to review the rollout of the controversial IR35 tax plan, which is due to take effect in April 2020 to prevent workers from disguising themselves as freelance contractors as a way to pay less tax.
The government said the review, to be concluded by mid-February, would engage with individuals and businesses on their experiences of the implementations of the reforms and that it would also launch a separate review to explore how it can better support the self-employed.
Mike Cherry, chairman of the Federation of Small Businesses, called for a delay to the rollout of the new rules in the light of the review: “This important review presents an opportunity to reassess our flawed off-payroll legislation,” he said.
His view was echoed by Tej Parikh, chief economist at the Institute of Directors, who added: “It’s not immediately clear how any new steps to smooth the process could take effect in time for April. Firms and contractors have already been impaired by the looming deadline and lack of clarity around the rules.”
The CBI, the ATT and the ICAEW also backed a delay.
Union: Government has learned nothing from Carillion
The Unite Union has accused the Government of failing to learn any lessons from the collapse of outsourcing firm Carillion, saying ministers are “proposing to do exactly nothing” to reform accounting rules to prevent a similar corporate disaster caused by “rampant bandit capitalism”.
Gail Cartmail, a Unite assistant general secretary, said the accounting and audit system was “clearly not fit for purpose” and accused the Government of failing to demand reforms because it “has many friends among the major accountancy firms”.
The Guardian noted that Carillion’s collapse in 2018 is being investigated by the Financial Reporting Council, the National Audit Office and the Official Receiver, with no reports yet published.
Rachel Reeves, who hopes to be re-elected as chair of the Commons Business Select Committee, said: “The Government needs to urgently reform the way business works by toughening up the controls on the governance and auditing process.”
Fraud reports from formation agents fall
The number of suspicious activity reports (SAR) filed by company formation agents to the National Crime Agency (NCA) has fallen by more than half.
Figures reveal that there were 23 SARs from trust and company service providers in the year to March 2019, with the 56.5% decline coming despite Government attempts to improve the system.
The number of reports from other industries, including banks, accountants and estate agents, rose 3.1% to 478,437.
Rachel Davies Teka, of Transparency International UK, said that the low number was disappointing, while Ava Lee, senior campaigner at anti-corruption organisation Global Witness, said: “This extraordinarily low number should be a wake-up call. The Government must fix the supervisory regime”.
A spokesman for the NCA said: “It is vital that companies and professionals engage properly with the SARs regime . . . and the UK Financial Intelligence Unit works to raise awareness of SARs and encourage submissions across all regulated sectors.”
The Office for Professional Body Anti-Money Laundering Supervision (Opbas), which is based at the Financial Conduct Authority, was created in 2018 to oversee professional body supervisors, including the Association of Chartered Certified Accountants, which in turn supervise company formation agents.
UK manufacturers upbeat amid poor figures, CBI says
New orders among UK manufacturers fell at their fastest pace since the financial crisis in the three months to January, according to the Confederation of British Industry’s (CBI) latest survey.
Its confidence gauge however, the difference between businesses reporting higher rather than lower optimism, recorded its biggest swing since the survey began in 1958 – taking confidence to its highest level for almost six years.
“It looks promising,” said Howard Archer, chief economist at the EY Item Club. “This is all good news for the Chancellor. The economy certainly seems to be picking up
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.
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.
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