Covid-19 lock-down business news update 13 May 2020.
13 May 2020.
James Salmon, Operations Director.
The Covid-19 lock-down continues and we are having to make do in a new normal.
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.
Covid-19 general news
The UK started its slow return to work today as some of the measures announced by government at the weekend came into effect.
Anthony Fauci, America’s leading infectious-diseases expert and a member of the White House’s covid-19 task-force, warned of “needless suffering and death”, should stay-at-home orders end too soon. Small clusters could turn into outbreaks, he told the Senate. Dr Fauci’s message contrasted sharply with the rhetoric of President Donald Trump, who has encouraged states to ease restrictions.
In a sign that Russia’s covid-19 epidemic is accelerating, the country reported more than 10,000 daily infections for the tenth day in a row. It now has the second-greatest number of infections in the world, after America. Brazil, another emerging hotspot, reported 881 deaths from the virus, its highest daily total yet. Both countries’ presidents want lock-down restrictions loosened.
Markets.
Yesterday the FTSE 100 tested the 6000 mark trading with an intraday high of 6013 before closing 55 points up at 5,994.
European shares edged higher as well following a clutch of upbeat quarterly earnings reports, but investors remained cautious of a resurgence in new covid-19 cases as hard-hit economies lift lock-downs.
US markets however fell 2% overnight. US Consumer Price Index fell 0.8% in April, marking the biggest monthly decline since December 2008, according to latest statistics. The market was expecting a fall of 0.7%. The U.S. government’s sweeping fiscal effort to contain the economic damage from the covid-19 pandemic came to light Tuesday in its monthly budget statement, with a record $737.9 billion deficit in the month of April.
Oil Prices were boosted by an unexpected commitment from Saudi Arabia to deepen production cuts in June to help drain the glut in the global market that has grown as the covid-19 pandemic crushed fuel demand.
Gold Prices rose as the dollar gave up some of its earlier gains, amid worries of a resurgence in covid-19 infections in some countries and lingering trade tensions between the United States and China.
UK in recession
The UK economy shrank by almost 6% in March as the nation went into lock-down, plummeting the country into what may be its deepest recession in more than three centuries and far worse than any quarter during the financial crisis of 2008/9.
The economy shrank by 2% overall in the first three months of 202.
Economists had predicted a drop of 2.5%
The sharp decline is only a small part of the damage of the restrictions to control covid-19, which were in place for all of April and look set to continue in some form for months to come.
The UK economy was already weak and the lock-down has pushed it over the edge with the Bank of England forecasting the economy will contract by 25% this quarter.
FSB warns a third of small businesses may close forever
A survey by the Federation of Small Businesses has found that a third of small firms that have temporarily shut during the covid-19 lock-down are concerned they will never reopen.
Over 25% of businesses paying a mortgage or lease on their premises have failed to make, or faced severe difficulties in making, repayments as a result of the pandemic’s economic impacts, the FSB warned.
UK consumer spending drops over a third during lockdown
Consumer spending fell 36.5% in April compared with the same month last year, according to Barclaycard data, as shops and pubs shut to limit the spread of COVID-19.
The contraction came despite a strong performance of grocery shopping and online sales. Separate data from the British Retail Consortium show that online sales rose 60% in April, well above the 12-month average of 8%.
Overall sales fell 19.1% last month compared with an increase of 2.4% last year, the BRC said, the steepest fall since the trade body started recording sales in January 1995.
Job retention scheme is extended until October
Chancellor Rishi Sunak has extended the government’s covid-19 job retention scheme until October and has promised workers they will not see a dip in their salary until it ends.
The government’s covid-19 job retention scheme has been extended until October.
Chancellor Rishi Sunak said the furlough scheme will remain the same until the end of July, but from August to October there will be “greater flexibility” including allowing part-time workers on the scheme and asking employers to contribute toward some of it.
The government says it will still pay at least 50% of wages through the scheme after July.
“Employers will be able to bring furloughed employees back part-time. We will ask employers to share the costs of paying people’s salaries,”
Mr Sunak said, adding “Workers will, through the combined efforts of government and employers, continue to receive the same level of overall support as they do now at 80% of their current salary up to £2,500 a month.”
The scheme will cost £40bn for every three months it runs, according to the Office of Budget Responsibility (OBR).
Many employers yet to receive furlough scheme money
Hundreds of employers who have furloughed workers amid the COVID-19 outbreak still have not received money through the government’s job retention scheme, according to a poll of more than 900 firms commissioned by comparison website KnowYourMoney.co.uk.
The survey found that nearly half of UK firms have furloughed staff, but 71% have not yet received support through the scheme.
Eighty-six per cent of micro-businesses and 65% of small businesses have not yet received support, according to the survey.
Furlough scheme amounts to bailout of landlords
Economists have warned that the government furlough scheme is effectively an implicit bailout for landlords and banks, as almost half the funds awarded by the scheme will be spent on rent and debt repayments.
In a new paper from the IPPR think tank, economists say that up to 45% of the net cost of the furlough scheme will be spent on rent and debt repayments to landlords, banks and other lenders, amounting to £10bn under a three-month shutdown, and £21bn for six months.
“The long-term effects of rising indebtedness on the one hand, and a likely rebound in asset prices on the other, are likely to further widen inequalities between the working poor and the asset-owning wealthy, the report argues.”
Bank of England to keep negative rates under review
Bank of England deputy governor Ben Broadbent has said the Bank will keep the idea of negative interest rates in the UK under review, as it had done since the financial crisis.
Asked about the policy on CNBC, he said it was a matter of “balanced judgement”.
He went on to say that it is “quite possible that more monetary easing will be needed over time,” with many analysts believing this stimulus will come in the form of an increase in the Bank’s £645bn QE programme.
Emergency business loan fraud concerns
Royal Bank of Scotland has had to review as many as 20% of the applications for the emergency business loan scheme after they were flagged as potentially fraudulent, the Telegraph reports.
According to UK Finance, over 304,000 businesses have now received almost £15bn through the state-backed covid-19 loan programmes.
John Cronin, a Goodbody analyst, said fraudulent claims are a concern for banks lending under the scheme. “I also am concerned about banks lending to businesses that are not creditworthy ,” he added. “There is no pre-COVID-19 viability assessment.”
Separately, Rishi Sunak, the Chancellor, yesterday revealed that 267,000 loans worth £8.4bn had been made under the government’s Bounce Back Loan Scheme since it launched on May 4th.
House moves and viewings to resume in England
House moves and viewings will be able to resume again in England from today, under new covid-19s rules announced by housing secretary Robert Jenrick.
Carrying out viewings, house moves and trips to letting or estate agents will now be legal again.
According to property website Zoopla, around 373,000 property transactions across the UK, with a total value of £82bn, have been put on hold due to lock-down measures.
COVID-19 pushes up demand for advice among millennials
According to new research from Quilter, millennials are leading an increasing demand for advice during lock-down.
The research found that 64% of millennials aged 18-30 would consider getting financial advice.
The research also showed that 48% of millennials are saving more, and 52% of those nervous about their finances would consider using a financial adviser.
Quilter Financial Planning head of adviser recruitment and acquisition Scott Stevens comments: “It is encouraging millennials are leading the charge and it is important that we encourage this group to keep up their saving habits and invest appropriately.”
Treasury assessment points to tax hikes to pay £300bn virus bill
A Treasury document outlining possible measures to recover the UK’s finances after what could be a £300 billion bill for rescuing the economy in 2020 indicates income tax could rise and the triple lock on state pension increases could come to an end.
A two-year public pay freeze could also be announced as part of efforts to restore fiscal credibility and boost investor confidence in the UK, the document states.
The confidential paper reveals a “baseline” scenario that gives Britain a £337 billion budget deficit this year, compared to the forecast £55 billion in March’s Budget. The equivalent of a 5p increase in the basic rate of income tax would be needed to fund the increased debt.
The worst case scenario envisages a £516 billion deficit and the best case picture leads to a £209 billion deficit this year.
If Britain’s economy does not recover soon, the document warns, the country could be thrown into a sovereign debt crisis .
Insolvency practitioner has some work ahead
FRP Advisory has delivered a strong performance this year, with the administrations of Carluccio’s and Debenhams boosting revenue to 16.4% to £63.2m in the year just ended. A note from analysts at Cenkos Securities indicates the outlook is bright too: “The UK faces a severe recession in 2020. This provides a positive market backdrop for FRP.”
TUI
Tui has warned that up to 8,000 jobs will go as it seeks to cut costs by 30% because of the covid-19 pandemic. The firm said its turnover and earnings would be significantly lower in the current financial year, with cost savings only partly compensating for the slump. Tui has been bolstered by a €1.8bn (£1.6bn) state-backed loan in Germany.
Chinese investor acquires bedding company
A Chinese investor has bought the mattress and bedding division of Breasley Pillows (trading as Breasley, Breasley Foam, Salus and Uno) after Benjamin Wiles and Philip Dakin of Duff & Phelps were appointed Joint Administrators of Breasley Pillows earlier this month.
Mr Wiles commented: “We are thrilled that we have been able to secure the future of the mattress and bedding division of Breasley, saving 60 jobs in the process. This was especially important to us in the current climate.”
Carnival UK planning ‘large number’ of redundancies
The giant cruise company Carnival UK has revealed a plan to make large numbers of staff redundant in Southampton. The company’s Cunard Line and P&O Cruises brands employ around 1,100 people in the area. President Josh Weinstein warned that if severe measures were not taken Carnival “may not successfully get to the other side of this”.
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