CCJs predicted to increase in 2021 – business news 16 December 2020.
James Salmon, Operations Director.
CCJs predicted to increase in 2021, pandemic prompts insolvency warning, record spike in redundancies, Capital Economics issues optimistic prediction, 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.
County Court Judgements predicted to increase in 2021
County Court Judgements (CCJs) hit a record high in 2019, but the average value has almost halved since 2010, reaching a record low in 2017. Every region in the UK saw a higher percentage increase in CCJs under £500 than over £500. London and the south had the largest increase in the number of CCJs since 2010. The region of Greater London saw the largest increase in the number of CCJs but also the largest decrease in average value of CCJ of all regions across the UK. Northern Ireland and Scotland were the only regions that saw an increase in the average value of CCJs. The majority of regions in the UK saw the largest increase in CCJs valued at £251-£500.
Portify.co’s in-house credit expert explained this trend:
“Requesting a CCJ involves both making a court claim, paying a fee and securing a lawyer for the court hearing. This is why in the past businesses only went through the process of taking out CCJs for high amounts. Since the end of the last financial crisis in 2010 the collections industry has boomed, either through consolidation of big players or through PPI processors moving into the space. This means that due to economies of scale at the processing stage, the cost of getting a CCJ became competitive and cheaper for businesses via these third parties. It has also meant that companies were able to introduce CCJs as a debt recovery tool on lower amounts or as a new strategy altogether.
The number of people in their 20s with court orders for unpaid debt has been on the rise over the past year, according to the BBC Radio 4 programme Money Box. A CCJ can remain on your record for up to 6 years from the date of issue unless you pay the full amount owed within one month. A CCJ will impact your credit score and can affect your ability to obtain credit, employment and a place to live while it is actively on your report.
Registry Trust data shows over 120,000 County Court Judgments (CCJ) were given in 2019—a record high. Financial experts attribute the rise in CCJs to increased use of payday loans, zero-hour contracts, unstable loans, increasing rent prices and defaults due to unpaid mobile contracts. Most people don’t realise that mobile contracts are a debt that they can default on. In fact, mobile providers have increased the rate at which they sell this type of debt to credit collectors.
As for what to expect in 2021 our expert said: “Given the economic uncertainty caused by COVID in 2020, and the reports showing an increase in the number of firms and individuals in financial distress across the UK we can expect to see a rise in the number of CCJs in the months after the economy starts to recover”.
Pandemic prompts insolvency warning
Patrick Collinson in the Guardian reflects that while UK Insolvency Service figures show that individual bankruptcies and debt relief orders have fallen over the last year to the lowest level in a decade, the Citizens Advice Bureau has warned that the coronavirus crisis has driven up energy bill debt, unemployment and rental arrears.
He highlights that the number of applications forcing someone into bankruptcy has fallen as various initiatives reduced proceedings, while noting that a “broad system of support” for those in debt has emerged.
However, Mr Collinson says the “great reckoning is to come”, with history pointing to an 18 month to two year lag after a crisis “before the proverbial rug gets pulled”.
He notes that the peak period for individual insolvencies was in Q4 2009 – two years after financial crisis first hit. “Expect that record and many people’s lives – to be shattered some time in 2022”, he warns.
Record spike in redundancies
Office for National Statistics (ONS) figures show that redundancies rose by an all-time high as 370,000 jobs were lost in the three months to October. The losses mean the jobless rate has hit 4.9%, up from 4.8% in September to the highest level since 2016.
The number of UK workers on payrolls has fallen by 819,000 between February and November due to the impact of the coronavirus pandemic. On top of this, the ONS estimates that around 4.5m workers are currently on furlough.
Experts have suggested that the Chancellor may be forced to extend the furlough scheme beyond March, with Investec’s chief economist Philip Shaw warning that a no-deal Brexit may have an impact, saying: “That is a non-COVID-19 event but one that could disrupt the economy in such a way to persuade the Chancellor to extend.”
Paul Dales, chief UK economist at Capital Economics, said that if the pandemic means the Government is forced to continue tiers or lockdowns beyond March, “I think they are obliged to continue the furlough.”
Capital Economics issues optimistic prediction
Economists at consultancy Capital Economics have predicted that the coronavirus vaccine will see the UK economy recover more quickly than most analysts expect.
While the Government’s official forecaster has predicted growth of 5.5% in 2021 and 6.6% in 2022 following a decline of 11.3% this year, Capital Economics believes that following a record decline of 11.5% this year, the economy will grow by 7.5% next year and by the same rate the year after.
Paul Dales, chief UK economist at Capital Economics commented: “We think the C OVID-19 crisis will lead to minimal long-term scarring. Later this decade GDP will return to the path it would have been on if C OVID-19 never existed.” The firm also suggested that chancellor Rishi Sunak will not raise taxes or reduce spending in 2021 or 2022.
To save the high street, first fix business rates
An FT editorial calls for reform of the business rates system, saying it needs to be fit for purpose so as to help address the challenges facing the retail sector.
UK firms see highest impairment charges since 2012
UK companies have recorded the highest goodwill impairments since 2012, with Duff & Phelps analysis showing that FTSE 100 companies recorded an aggregate impairment of €16bn in 2019, a 248% increase on the year before.
UK companies within the pan-European Stoxx 600 recorded a 172% increase in impairment charges, with an aggregate of €19.3bn. Michael Weaver, Duff & Phelps’ managing director and head of valuation advisory, said: “The data is already showing that aggregate goodwill impairments will likely exceed 2019 levels as the effect of C OVID-19 as well as Brexit negotiation uncertainty continue to weigh on companies’ outlook”.
He added that while the full impact of the pandemic remains uncertain, “the outlook for European companies has deteriorated significantly from the beginning of the year”, with analysts dramatically cutting earnings growth forecasts for 2020.
Barclays
Barclays has been fined £26m by the FCA over its poor treatment of customers in financial difficulty. Barclays failed to understand the reasons for these difficulties, and proposed solutions that were un-affordable or unsustainable.
Covid-19 general news
There were 18,450 new cases in the UK yesterday with 506 more deaths.
Globally 625,480 new cases brought the total to 73.5 million with 1,637,054 deaths.
The Government is reportedly reviewing its plan to allow 3 households to mix over christmas after The Health Service Journal and the British Medical Journal have said the relaxation of Covid-19 rules over Xmas is a “rash decision” that will cost lives, and that people will see the lifting of restrictions as “permission to drop their guard”. Downing Street said in response the rules were under constant review. The journals said that rules should be tightened instead. This comes a day after a new mutation of covid-19 was identified as spreading rapidly in some parts of the country.
A hospital in Northern Ireland treated patients in ambulances in its parking lot as the surge in cases strains resources.
Dr Fauci has urged Joe Biden and Kamala Harris to get the Pfizer vaccine as soon as possible.
America’s Food and Drug Administration (FDA) has found the covid-19 vaccine produced by Moderna to be 94% effective. The regulator’s analysis should mean it will receive emergency authorisation within days. The vaccine can be stored -20℃ which makes it much more practical than the -75℃ required by Pfizer’s vaccine which is already in use.
Germany recorded the biggest increase in Covid-19 deaths since the pandemic began with 910 as Chancellor Angela Merkel hinted that a hard shutdown that takes effect Wednesday will remain in force beyond January.
New York City’s mayor told residents to prepare for a shutdown of all but essential businesses soon after Christmas.
Markets.
Yesterday the FTSE 100 closed at 6513 down 0.28% and the 250 Closed at 19852.39 up 0.53%. The Euro Stoxx 50 also climbed 0.5% Sterling is up, at 1.107 Euros and 1.351 US Dollars. Brent Crude is at $50.9 and Gold is at $1862.
Overnight in the US, the DOW rose 1.13%, the S&P 500 rose 1.29% and the NASDAQ rose 1.25% as markets moved to risk-on mode. Asian markets followed their lead and also rose.
EU Commission leader Ursula von Leyen said this morning there is a pathway to a deal in respect of Brexit.
Amazon giveaway
MacKenzie Scott former wife of Jeff Bezos has reportedly given away close to US$6bn this year with approximately $4bn in the last four months to working charities specifically aimed at helping the poor.
Airlines
The Competition & Markets Authority is investigating airlines over their refunds policy amidst concerns the airlines have delayed and refused refunds.
Ministers urged to extend or adapt stamp duty holiday
Banks have urged the Treasury to extend the stamp duty holiday rolled out to support the property sector amid the coronavirus pandemic beyond the March 31 cut-off, arguing that pushing the deadline back could prevent close to a quarter of a million sales from collapsing. Yorkshire Building Society estimates that 240,000 sales worth £58bn could miss the deadline. While some banks and those within the property sector are calling for the stamp duty holiday to be extended, others have mooted a technical change that would mean contracts had to be exchanged by the end of March, with current rules saying deals must be completed by the end of Q1 2021. Nitesh Patel from Yorkshire Building Society has called on ministers to give buyers three months to complete purchases if their mortgage offer has been accepted by the current cut-off.
Mazars repays £1.1m furlough cash
Accounting firm Mazars has repaid £1.1m of Government money claimed for furloughed workers. The financial support Mazars claimed under the Coronavirus Job Retention Scheme applied to 349 employees furloughed at the start of the scheme during April and May. Employees were also furloughed during June and July but the firm did not claim any money for that period. The repayment by Mazars follows BDO’s decision to pay back £4.1m, with the firm having initially said it would not return the money despite seeing profits averaging more than £500,000 per partner. The Times notes that PwC, Deloitte, EY and KPMG did not furlough staff.
Treasury plans UK tax shake-up for asset holding companies
The Treasury has detailed proposed reforms to taxation of specialist vehicles used by private equity and infrastructure funds, a move that could “remove barriers” to establishing such companies in the UK.
Wealth tax debate
With former MP Michael Meadowcroft having suggested that land could offer a viable route to taxing wealth, Robert Rhodes, QC, writes to the Times to argue this may be “unduly optimistic”. He says most land outside towns and cities is used as working farmland, with few farms sufficiently profitable to bear a wealth tax. He adds that a wealth tax is “not a realistic option to raise a huge amount of money quickly”.
WPP gets its numbers wrong by £300m
Advertising agency WPP has admitted to understating its losses by £301m, with the accounting error meaning a record half-year loss of £2.6bn reported in August has been corrected to a loss of £2.9bn. WPP said its finance team spotted the error after the results were issued, adding that it plans to restate accounts for 2017 to 2020 to correct them. Lord Sikka, a professor of accounting at Sheffield University, said the disclosure raised questions about why no one at WPP or Deloitte – which signed off accounts in 2017, 2018 and 2019 – spotted the mistake sooner. He commented: “What on earth were the auditors doing and where are the regulators?”
Retail sales fall north of the Border
The latest monitor from the Scottish Retail Consortium and KPMG shows that retail sales in Scotland fell by 10.2% last month compared with November 2019. On a like-for-like basis, sales decreased by 9.6%. Paul Martin, UK head of retail at KPMG, said ongoing localised lockdowns have “hit the sector at a time when it usually reaps the rewards from a pre-Christmas sales surge.” He added: “November’s data reflects the near-daily fight for survival facing many of Scotland’s retailers.”
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.