Covid-19 lock-down business news update 14 May 2020.
14 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
Health authorities have approved Roche Holding AG’s antibody test, a key step for the government as it looks to ease lock-down restrictions.
Boris Johnson was accused of lying to parliament after being asked about the government’s covid-19 guidance on care homes. Labour leader Sir Keir Starmer asked the Prime Minister today why the government’s advice up to 12th March was that it was unlikely that care home residents would be infected with covid-19. Sir Keir also said there were 18,000 more deaths in April than the average for that month, but only 8,000 were recorded as covid-19-related and asked the government to account for the other 10,000 unexplained deaths.
The World Health Organisation warned that it might take five years to bring covid-19 under control and that the virus may never be fully eliminated. It could become endemic, albeit manageable, in the way that for example, HIV is.
An eagerly awaited study has suggested that only 5% of the 2 million people tested in Spain have been infected. Nowhere near the 60 to 80% needed for herd immunity.
The call to restart the economy also hasn’t taken off as some might have hoped. While some activity is increasing it seems to be far more gradual than was hoped as business slowly devise working plans for partial opens. With parents stuck with childcare while schools are closed, protective equipment hard to come by and many firms facing reduced demand for their goods and services, many businesses are simply unable or unwilling to open up.
Insurance market Lloyd’s of London today said it expected to pay out £2.5bn-to-£3.5bn in claims stemming from the covid pandemic. This is on par with the September 11 attacks in 2001 and to the combined impacts of hurricanes Harvey, Irma and Maria in 2017.
Federal Reserve Chair Powell has warned that America faces a slow and painful economic recovery without additional government relief. The dark forecast from the head of the US central bank is a turnaround from early April, when he said he expected a robust rebound. It comes as lawmakers debate additional spending to shield the US economy from covid shutdowns. He said that “additional policy measures” may be needed to prevent the mounting risk of long-term damage to the economy from the covid-19 pandemic.
Friction between the US and China is firmly back in the news. The US is claiming Chinese hackers are attempting to steal research on virus vaccines and treatment.
Markets.
Shares on the FTSE 100 declined yesterday by 1.5% to 5904, while the 250 was down 1.8% following news that UK economy shrank by a record 5.8% in March and by 2% for the first three months of 2020.
It also came as little surprise that UK retail sales plunged in April as a consequence of the enforced lock-down which has seen the vast majority of shops closed to the public.
Sentiment was also mired by fears over a second wave of infections as countries make tentative steps to ease out of lock-down.
Travel & Leisure stocks and engineering companies with exposure to the aviation industry took the worst knocks with banks shares also suffering.
US stocks also fell as investors started to take on board that we are not going to see a V recovery and the realisation that the slow economic recovery is going to require further fiscal and monetary support. The S&P fell 1.75% and the NASDAQ fell 1.55%
Chancellor in recession warning
Chancellor Rishi Sunak has warned that “a significant recession” in the UK is likely. This came after a fall in GDP of 5.8% was recorded in March, with the economy shrinking 2% in the first quarter of 2020.
The Office for National Statistics said there had been “widespread” declines across the services, manufacturing and construction sectors.
Mr Sunak said the Government has taken action to “support people’s jobs, their incomes, livelihoods at this time and support businesses so we can get through this period of severe disruption and emerge stronger on the other side.”
Ruth Gregory, senior UK economist at Capital Economics, said the figures showed the UK economy was “already in freefall within two weeks of the lockdown going into effect”, while Melanie Baker, senior economist at Royal London Asset Management, commented: “The economic damage from roughly only a week of lockdown is striking,” before predicting that activity growth in April “will be much worse.”
Suren Thiru, head of economics at the British Chambers of Commerce, said: “The speed and scale at which coronavirus has hit the UK economy is unprecedented”.
London firms struggling as pandemic effects hit
A YouGov survey commissioned by City Hall’s London Growth Hub has revealed that some 23% of London firms are close to collapse, with 5% saying they will not last more than a month.
Mayor of London Sadiq Khan has written to Chancellor Rishi Sunak and Business Secretary Alok Sharma, outlining concerns and urging them to “continue to take whatever action is needed to support our economy and to fight off unemployment, homelessness and poverty.”
“That must urgently include more help for small and medium-sized businesses which are struggling to pay rent and making more companies eligible for government support grants,” he added.
Pandemic spawns new reporting term ‘Ebitdac’ to flatter books
The FT reports that a new metric dubbed ebitdac – earnings before interest, tax, depreciation, amortisation and coronavirus – is being utilised by firms seeking to flatter their financial results.
Return to offices may hit productivity
The Telegraph looks at how businesses in London will return staff to offices despite two-metre social distancing rules that mean public transport capacity could be cut by up to 90%.
It says many employers are having to stagger shifts or have fewer workers on site overall, which is likely to affect productivity.
The piece notes a PwC poll showing that 22% of Londoners never want to work from home again, even though two thirds felt they were more productive when doing so.
7 in 10 firms have furloughed staff
Analysis by the British Chambers of Commerce suggests 71% of businesses have furloughed a portion of their workforce.
The poll saw 63% say they would be able to call furloughed staff back to work as the Government started to lift lockdown restrictions.
Of the 601 companies which participated in the survey, 36% have either applied for a bounce back loan or intend to. Almost one in five said that they had concerns about repaying the loan.
Self-employed grant scheme sees 110k first day claims
The first day of the Government grant scheme for self-employed people whose businesses are affected by covid-19 has seen claims worth over £340m.
A total of 110,000 people submitted claims worth an average of £3,090 by midday on Wednesday under the new Self-Employment Income Support Scheme, HMRC chief executive Jim Harra said.
Derek Cribb, chief executive of the Association of Independent Professionals and the Self-Employed, said the initiative provided “a much-needed lifeline to those self-employed people who are eligible for it.”
“We continue to urge the Government to open out support schemes to these struggling groups,” he added.
Taxman sees 800 furlough scheme fraud claims
HMRC says it has received 795 reports of potential fraud related to the Coronavirus Job Retention Scheme.
A Government spokesperson said: “HMRC is committed to ensuring the tax systems we operate are used fairly and efficiently and, where necessary, will take action to ensure compliance with the relevant rules, regulations and legislation that govern the UK taxation systems.”
PM warned over tax increase
The Times reports that Boris Johnson has been warned against raising taxes, with senior Conservatives telling the Prime Minister that he risks “entrenching” the impact of the coronavirus crisis if he does so.
With a leaked Treasury document suggesting the pandemic would cost the exchequer almost £300bn this year, potentially requiring income-tax rises, a public pay freeze and an end to the triple lock on state pensions, a cabinet minister has said. “We should be looking at policies that open up the economy – we will need fiscal stimulus. Taxes need to be lower rather than higher.”
The Times’ Oliver Wright, Eleni Courea and Greg Hurst consider Chancellor Rishi Sunak’s options for cutting the deficit, including scrapping the triple tax lock, a manifesto pledge vowing no increases in income tax, national insurance or VAT for five years.
They also weigh options including changes to pension tax relief and corporation ta x increases. The Guardian highlights that think-tanks including the Institute for Fiscal Studies and the National Institute of Economic and Social Research have suggested tax increases may be the solution for tackling the budget deficit.
Firms look to tracing technology
The Telegraph explores how businesses are planning to manage the spread of covid-19 among staff, highlighting that PwC is building a tracing app for its 275,000 workforce, with a tool being tested by PwC’s Shanghai office.
A PwC poll shows that a quarter of finance chiefs are considering using contact-tracing technology as part of their return-to-work strategies.
Accountants poised to help firms during difficult times
City AM ’s Ian Hall argues that good accountants’ services “have heightened relative value in these tough times,” noting that businesses would be well advised not to give in to the temptation to cut back on accounting costs.
Mike Suffield, director of professional insights at the ACCA, says: “Accountants help navigate the Government support available, manage liquidity and cashflow in the near term.
They will build forecasts and review business models as organisations adapt and look to identify opportunities as they and the economy emerge from the pandemic,” while Michael Izza, chief executive of the ICAEW, says chartered accountants have been “looking to see what can be done from firms’ own resources, then looking at what government schemes can help.”
Auditors face greatest challenge amid pandemic
Accountancy firms, which have taken a reputational hit from a number of corporate collapses in recent years, face “the most challenging working environment of their careers” as they seek to identify potential fraud and calculate businesses’ chances of surviving the covid crisis, reports the Times’ Louisa Clarence-Smith, adding that they are doing so while in lockdown and under increased regulatory scrutiny.
Noting that the Financial Reporting Council (FRC) strengthened the requirements for auditors to sign off on going concern last year, she cites Stephen Griggs of Deloitte who says: “The risks are not different from those you would normally find as an auditor but the risk is turbo-heightened and more pronounced than it’s ever been around going concern.”
Jonathan Holt, head of UK audit at KPMG, comments: “We are going to see a lot more material uncertainties in going concerns in accounts,” adding: “This situation is quite unique. It’s much more difficult to predict than, say, the banking crisis or even Brexit. You can’t look back on history as a guide to the future.”
Scott Knight, head of audit at BDO, says: “There are noises that some accountancy firms are avoiding signing off audit reports until things become clearer due to heightened reputational risks”.
Ms Clarence-Smith notes that David Rule, executive director of supervision at the FRC, has said the regulator will take the challenges of the current environment into account when it carries out its audit quality review for this period. She also suggests companies will see audit fees increase to account for the additional work required during the pandemic, with Fiona Baldwin, head of audit at Grant Thornton, saying fee increases are being discussed on a case-by-case basis with each client.
Estate agents in England allowed to reopen
Plans to restart England’s housing market have been announced by the Government, with estate agents permitted to open and viewings allowed to take place, among other updates.
Housing Secretary Robert Jenrick said: “Our clear plan will enable people to move home safely, covering each aspect of the sales and letting process, from viewings to removals,” adding: “This critical industry can now safely move forward, and those waiting patiently to move can now do so.”
Property markets in Wales, Scotland and Northern Ireland remain closed under lockdown regulations however.
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.
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
Keep up to date with the latest news by following us on social media:-
The Credit Protection Association – Prompting Punctual Payments – Ethical, Effective, Efficient, Economical collections