Covid-19 business news update 1 May 2020.
1 May 2020.
James Salmon, Operations Director.
During the Covid-19 outbreak we will continue to share (as we can) the business news stories we have seen that we think will affect our members and readers. The news stories you might have missed that might have an impact on SMEs and those that sell on credit.
Markets
Stock markets turned negative yesterday with the FTSE 100 falling 3.5% with heaviweights Shell and Lloyds giving negative updates. US unemployment didn’t help with a further 3.8 million reported as unemployed in the last wee, bringing totals to 30 million in the last 6 weeks. Thank goodness we have furloughing here in the UK.
The European Central Bank has slashed interest rates on its loans and launched a special “pandemic” package to support the Eurozone economy during the coronavirus pandemic. The central bank however, stopped short of cutting overall interest rates further into negative territory or increasing its quantative easing. Although it said it was “fully prepared” to expand the recently launched quantitative-easing programme beyond its current size of €750bn ($820bn).
To absolutely no one’s surprise, Amazon reported that revenues surged 26% in Q1 to $75.5 billion as millions of locked-down consumers turn to e-commerce for everything. But the pandemic also brought with it extra logistical costs, mainly to do with safety and delivery: so profits actually fell by 29%. Apple meanwhile managed to eke out a 1% increase in revenues despite being hit by the shutdown in China during Q1.
Prime Minister Boris Johnson, returning to his duties, pledged a “comprehensive plan” to start easing lockdown measures and said the U.K. is past the peak. The details of those plans will become clearer next week. Speaking at today’s press briefing, Johnson said the country was “past the peak and we’re on the downward slope”.
Russia’s prime minister, Mikhail Mishustin, contracted covid-19 and has temporarily stepped down to recover.
Corporate insolvencies declined in first-quarter
Corporate insolvencies surprisingly fell in the first quarter despite the economic impact of covid-19, new figures show.
Office for National Statistics data showed there were 3,883 company insolvencies in the first quarter, a decrease of 8.5% from both the previous quarter and the same quarter in 2019.
The ONS said the statistics “largely predate the emergence of, and response to, the coronavirus pandemic”.
The number of individual insolvencies also decreased in Q1 2020, when compared with the previous quarter and the same quarter the previous year. Individual voluntary arrangements continued to be the most common type of individual insolvency.
However, it warned: “Some statistics may have been affected where individuals, insolvency practitioners, intermediaries and courts were unable to process insolvencies in the usual manner during the latter part of March”.
Duncan Swift, past president of insolvency and restructuring trade body R3, added that the quarterly and year-on-year decrease in corporate insolvency numbers “is highly unusual given the circumstances and climate, and very unlikely to last.”
Two-thirds of firms use furlough scheme to save jobs
The Office for National Statistics reports that 66% of businesses in the UK have applied for the Government furlough scheme to pay staff wages – but that less than a fifth have received it.
More than 500,000 claims covering 4m staff have been made under the jobs scheme, which pays 80% of wages, capped at £2,500 a month.
The ONS breakdown showed more than 80% of firms that have temporarily stopped trading are using the furlough, as well as 61% of those that have remained open.
Meanwhile, 56% of companies have also applied for the VAT deferral scheme, while 42% have received support from business rates holidays.
Government bailout bill at £100bn
The Office for Budget Responsibility says the Government’s bill for subsidies and tax breaks for businesses hit by the COVID-19 outbreak already stands at £103.6bn.
Measures included in the figure include £39bn for the furlough scheme which covers a proportion of wages for those unable to work due to the lockdown, but the Coronavirus Interruption Loan Scheme and £750m fund for start-ups are excluded as it remains unclear how many firms will default. T
he analysis shows that of the £103.6bn, £10bn is for the self-employed income support scheme; £15bn is for small business grants; and £13bn covers a business rates package.
Emergency coronavirus loans pass £4bn
Analysis shows that the value of emergency coronavirus loans to small businesses rose 46% to £4.1bn last week, although the number of approvals slowed.
UK Finance said 8,638 customers secured an 80% Government-backed loan in the seven days to Tuesday compared with 9,000 the week before.
Mike Cherry, chairman of the Federation of Small Businesses, has warned that the initiative “has not worked for the small firms that make up 99% of our business community.”
Meanwhile, the Treasury is set to consult with banks on the price of 100% Government-backed bounce back loans today. The loans will be free of interest and fees for the first year, with the price set to be under 3%.
CBI: Private sector activity slips
The Confederation of British Industry’s (CBI) monthly growth indicator shows private sector activity fell at its sharpest pace in 11 years in the quarter to April.
A composite measure of business activity, based on 860 respondents, saw 65% of businesses say the COVID-19 outbreak has had “a significantly negative impact on their domestic operations, with 43% in a state of complete shutdown in the UK”.
While 48% have temporarily laid off some staff, 13% have done so permanently.
Almost 80% reported cashflow difficulties and a third said the availability of external finance was constrained.
Alpesh Paleja, the CBI’s lead economist, said: “Activity is expected to drop at unprecedented rates across the economy, so we are in for a rocky few months ahead.”
No VAT on PPE
Chancellor Rishi Sunak says taxes on vital personal protective equipment (PPE) are to be temporarily scrapped, with a tax break worth more than £100m to care homes, businesses and charities applying until July 31. This will apply to sales of PPE such as face masks and gowns.
Tech activity declines in Q1
KPMG ’s UK Tech Monitor Index shows the UK tech sector saw its worst performance since the global financial crisis in Q1.
The index came in at 47.1, down from 50.1 in Q4 2019. This marked the fastest decline in business activity since Q2 2009.
While firms said the COVID-19 outbreak had driven a decline in non-essential corporate spending and prompted projects to be cancelled, demand for services related to home working and business continuity rose.
Eurozone economy shrinks at record rate
Figures show that the Eurozone has been dealt a heavy blow by the COVID-19 outbreak as the economy shrank at the sharpest pace on record in Q1, with an estimate of GDP between January and March showing a contraction of 3.8%.
Figures show that France saw GDP dip 5.8% – the biggest quarterly slip since it was first recorded in 1949, while Spain saw a 5.1% contraction and Italy’s economy shrank by 4.7%.
European Central Bank president Christine Lagarde said that a sharp downturn in eurozone economic activity in April “suggests that the impact is likely to be even more severe in the second quarter,” adding a warning that economic growth could fall between 5% and 12% this year.
Small firms welcome support package
The Scottish Government has rolled out a £100m support package for smaller businesses and newly self-employed people, saying the scheme is designed to relieve the hardship of small enterprises ineligible for other forms of support.
A £34m hardship fund for the newly self-employed, £20m for small firms in the creative, tourism and hospitality sectors, and up to £45m for viable but venerable small firms “crucial to the Scottish economy” will be administered by local authorities and enterprise agencies.
The Federation of Small Businesses welcomed the new help, with Andrew McRae, the group’s Scotland policy chair, calling the measures “another important piece in the jigsaw of support required to minimise the economic impact of this crisis”.
Oasis and Warehouse stores unsold
Administrators at Deloitte have been unable to find a buyer for the stores of Oasis and Warehouse, resulting in 1,803 redundancies.
Intellectual property assets and certain stock belonging to the retailer, which ceased trading online on April 22 due to the “rising costs of fulfilling online orders and associated logistical challenges”, have been sold to Hilco Capital.
Joint Administrator Rob Harding commented: “COVID-19 has presented extraordinary challenges which have devastated the retail industry.”
Health spending will mean tax rises
Oliver Kamm in the Times says the coronavirus health crisis has caused an economic crisis.
He considers the cost of protecting public health, saying that in the long term “spending on healthcare will certainly have to expand and this will mean higher taxes”, insisting: “There is no other feasible way”.
He says people “will need to get used to paying more in tax to support an adequate health and care system.”
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).
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.
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