Covid-19 business news update 27 April 2020.
27 April 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.
Prime Minister Boris Johnson returns to work today in Downing Street. The PM will chair the regular morning cabinet meeting on Covid-19 before holding talks with senior ministers and officials.
Markets
The London Stock markets had a mixed end to the week on Friday as investors digested yesterdays unemployment claims coming out of the US, and UK retail data released Friday morning. At the close of play the FTSE 100 was 74 points lower at 5,752 – basically flat on the week.
With most of the UK locked down, retails sales saw their sharpest fall on record for the month of March. Total sales volumes fell 5.1% month-on-month as many stores shut their doors in the face of Covid-19. On an annual basis, retail sales were down 5.8% against trader expectations of a 4.7% drop.
US markets climbed throughout the day on Friday and ended the week with gains. Asian markets rose in this morning, as the Bank of Japan announced its decision to enhance monetary policy easing.
Oil continued to recover and edge higher after more producing countries promised output cuts. However prices started to fall this morning on signs the world is running out of storage capacity.
The EU Chief Negotiator has said that progress made in post-Brexit trade talks between the UK and EU has been disappointing so far. Michel Barnier said “genuine progress” and a decision on whether to extend the transition period were both needed by June.
Britain facing lengthy recession
A survey by Retail Economics reveals that Britain could face a lengthy recession once the lockdown is over because very few people are willing to go back to their pre-coronavirus habits.
The survey found just one in 10 consumers is planning to resume spending and travelling as they did before, if restrictions ease off early next month.
Over 25% of people surveyed also said the disease will lead to permanent changes in the way they shop, which is likely to accelerate long-term trends away from the high street and towards online shopping.
UK starts getting businesses back to work
Britain should be in a position to start lifting the lockdown by mid-May, scientific advisers have told ministers, as the government discreetly advises businesses on how to resume work within the existing restrictions.
A Downing Street source said: “If people are within the rules and follow social distancing guidance, we are more than happy for businesses to resume on that basis.” Ministers are also considering allowing larger groups of family and friends to gather in a “cluster” of up to ten people, according to the Mail, in an approach already being looked at in Scotland and Belgium.
The Times reported on Saturday that Chancellor Rishi Sunak is drawing up measures to allow non-essential businesses to reopen in a “safe and practical way” and ensure that offices and workplaces are free from coronavirus.
Business leaders’ group the Institute of Directors has called on the government to provide more information about reopening the economy as directors grow fearful about their firms’ prospects after the covid-19 outbreak. It comes as a report shows that 1-in-3 jobs are at risk in some parts of the country, including the constituency of chancellor Rishi Sunak.
Advisers help construct protocols to get Britain back to work
The Times reports that the government is already putting protocols in place for each business sector as pressure to get the economy going again grows.
The paper says that the Department for Business, Energy and Industrial Strategy (BEIS) has brought in EY to work with companies and trade associations on the protocols.
A government spokeswoman said that it was “engaging with key stakeholder and industry groups, as well as unions, on safe working once lockdown measures have been relaxed”.
Half of SMEs in UK will run out of cash in 12 weeks, finds survey
A survey by the Association of Practising Accountants has found that some 60% of owner-managed businesses had less than 12 weeks’ cash in the bank and 40% had less than eight weeks’.
A separate study by Tax Assist Accountants reveals 61% of the 3,000 businesses and self-employed professionals polled expect to lose at least three quarters of their income by July. Some 80% expect to suffer cashflow problems, with a third of those braced for an immediate hit and the rest anticipating trouble within three to six months.
Finally, the Manufacturing Barometer, which surveyed more than 600 SME manufacturers in England, shows that 55% expect to cut jobs between now and October, despite the business grants on offer and the furloughing scheme for staff.
Four in ten firms fear collapse
Research from insurance consultant Mactavish has found that over 40% of businesses believe they will collapse into administration due to the disruption caused by COVID-19.
Mactavish’s survey also found some 22% of company directors have tried to claim on their business interruption policies, while a further 21% are considering doing so, but many insurers are rejecting the claims.
Elsewhere, the Sunday Times reports that over 260 small businesses have formed a group to take action against insurer RSA for refusing to pay out for disruption caused by the coronavirus outbreak.
BBB leaves lenders left in limbo unable to support small firms
As many as a hundred non-bank and fintech lenders are still waiting to be accredited by the British Business Bank (BBB) for the Treasury’s Coronavirus Business Interruption Loan Scheme (CBILS), the Sunday Telegraph reports, with many simply giving up.
The BBB said almost 50 lenders have been accredited so far with 80% of SMEs having a relationship with those approved but Oliver Prill, chief executive of fintech firm Tide, said the process was “very slow” and risked the collapse of many small firms, the cost to the economy of which would far outweigh the incremental credit losses.
Craig Beaumont, director of external affairs at the Federation of Small Businesses reiterated a call for the accreditation of more non-traditional lenders and for the government to underwrite 100% of loans under £30,000.
UK retail sales in historic drop as lockdown triggers shopping freeze
UK retail sales declined 5.1% in March from February, the Office for National Statistics reports, the largest drop since the agency started collecting the data in 1996.
Clothing stores saw huge retail sales slumps of 34.8% even though the coronavirus lockdown only started on March 23rd.
Food sales and online-only firms were the only to see growth as the lockdown bit the sector.
Supermarkets and other food stores recorded a 10.4% jump in sales, while alcohol sales jumped 31.4%. Online sales were worth 22.3% of all UK retail sales.
MP questions whether lending rules are too tight
The Financial Conduct Authority (FCA) was questioned by MPs on Friday over whether rules intended to prevent risky lending in normal times are causing major delays in the administering of the government’s emergency business loan scheme.
During a conference call between the regulator, MPs and banking industry representatives, Tory MP Kevin Hollinrake questioned whether there were “unfair requirements on the banks”. The call was held to discuss a plan for offering a 100% state guarantee on bank loans of up to £25,000 for “micro-firms” – the idea is backed by MPs and senior City executives.
The Telegraph’s Ben Marlow on Saturday questioned why such a scheme is required given the success of the grant support package. He also cites RBS boss Alison Rose, who points out that even with full state backing. lenders will still be constrained by the Consumer Credit Act and have a duty of care to ensure customers are capable of repayment.
But the Times’ Katherine Griffiths said on Saturday the new policy will likely excuse banks from observing the Act, which covers loans of up to £25,000 to small businesses.
Banks create additional barriers for coronavirus loans
Lloyds Bank has been accused of putting unnecessary barriers in front of businesses applying for emergency loans.
The bank reportedly requests nine pages of information from a firm before it considers permitting the formal request.
Such “pre-application applications” have caused alarm for industry leaders such as Craig Beaumont, the director of external affairs and advocacy at the Federation of Small Businesses. He said companies in need of loans should be fast-tracked through the process: “This underlines the need for a new approach for smaller loans that does warrant all this bureaucracy.”
Half of eligible firms have not yet secured emergency funds
According to a report from the BBC Shared Data Unit, around half of companies eligible for the COVID-19 Small Business Grant Fund and Retail, Hospitality and Leisure Grant Fund have not yet received funding.
The Government announced the grants, of £10,000 to £25,000, on March 17, and around half of the £12bn available has so far been distributed.
People spend more in small shops
A survey by PwC has found that one in six people are now spending more money in small local shops and over one in five said they would continue to do so after the restrictions are eased.
British households to spend £23bn less
Researchers at the Centre of Economic and Business Research expect British households to hold on to £23bn in savings in the months to come as people drastically rein in their spending. This is despite average incomes predicted to fall by £515 in the second quarter of the year.
Loophole in furlough scheme leaves 100,000 out of job retention scheme
Analysis by the Institute for Employment Studies (IES) shows an estimated 100,000 people who left their jobs in March but didn’t start their new role until after the lockdown began are not eligible for financial support. Tony Wilson, director of the IES, urged the Treasury to extend the date to the end of March so that job movers could be included in the job retention scheme.
Three years to recoup lost growth
EY Item Club ’s latest economic forecasts warn that the UK could take until 2023 to recoup the growth lost to the coronavirus lockdown, based on the assumption that it is lifted next month. A 6.8% slump in GDP during 2020 and a 7.5% slide in consumer spending is predicted. Mark Gregory, EY UK’s chief economist, said “businesses need to prepare for a period of prolonged change”.
Unlock, or Britain faces being the worst hit Western economy
Economist Gerard Lyons fears that if the UK does not begin to exit its coronavirus lockdown soon its economy could be the worst hit in the West.
Writing in the Sunday Telegraph, he examines the assumptions around behaviour and the importance of avoiding a second wave of infections; suggesting geography and sector-specific risk assessment combined with a traffic light system indicating permitted activities can help mitigate the risk of unlocking the economy.
Company car users on furlough can save thousands of pounds
Furloughed employees can hand back company cars to their employer if they are not using them during the coronavirus lockdown, saving themselves thousands of pounds in tax, says John Hood at Moore Kingston Smith.
Families urged to embrace ‘intergenerational financial support’
The Express on Saturday reported that pensions have seen their values drop in recent weeks amid market turbulence.
Claire Trott, head of pensions strategy at St. James’s Place, says that certain pensions, such as defined benefit schemes, will not be impacted at all, but for those in defined contribution pension schemes “it will take a little more thought and planning to decide if now is the best time to access benefits.”
She also advised people to embrace intergenerational financial support, commenting: “Supporting other generations during this crisis can seem a daunting task if you don’t know what to look out for… Thinking about money as a family, rather than each generation trying to manage alone, is a great place to start and has the added benefit of introducing younger generations to financial planning.”
Families fear for future mortgage hopes
Millions of people may have had their hopes of getting a mortgage dashed by COVID-19 because many self-employed workers fear banks may not look kindly on borrowers whose income fluctuates, according to a report by Trussle.
In addition, families who were ready to step on to the next rung of the housing ladder are said to be worried that purchases could be delayed by more than a year.
The online mortgage broker also found that would-be buyers expected to wait more than five months on average before they resume their property search. This would mean few transactions taking place before winter, which is usually a quiet period for the property market.
Insolvency profession facing chaotic times ahead
The insolvency profession in the UK is braced for an overwhelming flood of business failures as the fallout from the coronavirus pandemic starts to materialise, the Times reports.
Mark Phillips, QC, a senior insolvency lawyer, said the country cannot expect a relatively small profession to be able to “manage the thousands of businesses that are going to be faced with debt accumulated during the lockdown” by using a conventional approach.
Mr Phillips helped develop a new “consent protocol” that helps practitioners to give company directors licence to continue to manage the day-to-day affairs of a firm.
But Duncan Swift, president of R3, warned that the approach was not without risk. “There has to be a huge amount of trust in management teams to do the right thing,” he said. “This is not to denigrate management teams, but most do not have the experience to deal with the acute stress and cashflow pressures of the sort that these demand and supply shocks are causing.”
New jobs fall two-thirds despite higher demand for health workers
New analysis shows the number of new jobs in the UK has dropped by almost two-thirds compared with last year, with a rise in health sector work failing to offset steep falls elsewhere.
Need for stability post-COVID-19 could change attitudes to debt
Emma Dunkley reports in the Sunday Times on growing calls for changes to tax rules to make taking on debt less attractive, so companies are more resilient in times of trouble.
With debt interest charges tax deductible, but no tax benefit to holding more equity, companies have found it “very attractive to run businesses with high debt levels,” says Peel Hunt’s head of research Charles Hall.
Xavier Rolet, the former head of the London Stock Exchange, comments: “There is a need for a recalibration of the fiscal treatment of debt versus equity to boost economic growth, reduce the boom-bust cycle and help scale up innovative smaller businesses.”
Retailers say future rates bills should be tied to the post COVID-19 economy
Retailers are calling for new rateable values to be linked with economic circumstances post-COVID-19 rather than the revaluation that took place in April 2019 arguing that bills will be dramatically out of date.
Andrew Goodacre, chief executive at the British Independent Retailers Association, said: “We must have the reference point for determining future rates bills at a time post-coronavirus, so they are an accurate assessment taking into account the full impact once this crisis has passed.”
Companies based in tax havens should not get state aid
Tax campaigners are calling on the UK to follow the lead of countries such as France, Denmark and Poland which have imposed conditions on or banned companies based in tax havens altogether from claiming financial aid from the state.
Robert Palmer, executive director of Tax Justice UK, said: “If the Government is going to bail out companies involved in tax havens, it needs to impose a series of conditions that means they are actually paying their fair share of tax.”
Ed Davey, acting leader of the Lib Dems, went further saying: “Companies that have funnelled earnings offshore to avoid paying their fair share of tax do not deserve support when times get tough.”
The Mail on Sunday details a slew of tycoons who live in tax havens but are using British taxpayers’ money to furloughed staff at the companies they run.
Writing in the Sun, Karren Brady supports the idea that only those who are UK taxpayers should have access to financial aid. Sir Richard Branson, she says, “should ask the British Virgin Islands to bail him out.”
DON’T LET CORONAVIRUS 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